Weekly San Diego Tech News - August 20, 2021

Computer. Welcome. Hey Jonah, how you doing?

What's up man? Doing really well.

Welcome everyone to the weekly San Diego tech news by Neil Bloom and Jonah Peake from Fresh Brew Tech. Every Friday at 12:30pm Pacific on Clubhouse, we get together and read the top five tech news from San Diego. And now we record them for you as well too. I'm Neil Bloom, entrepreneur, investor and community builder.

And I'm Jonah Peake, serial tech entrepreneur, investor. And both of us are just huge fans of San Diego and the tech community. Missed this week, so we wanted to just record it for you. We couldn't get together live, but let's dive in. Cool. So the first story is kind of near and dear to us with our biotech roots here in San Diego. Demand for lab space is increasing 280% in San Diego during the pandemic. So kind of interesting. JLL put out a report. We are surpassing pre Covid levels for biotech demand. You know, so the industry is booming. It's expected to continue on this trajectory. And you know, that's bringing in increased leasing investment into biotech. And we talked about a new space going into downtown which is, which is amazing. Kind of focused on biotech. And the demand is so high, in fact, the office buildings are now being converted into lab buildings, which is kind of wild to see. Part of this is driven by the confidence of people coming back into offices. You can imagine work from home is a bit harder when lab space is required. These spaces are now being converted so they can actually safely get back into the lab, let's say. But another thing to consider is the fact that companies are in some ways not seeing as many employees race back into the office. So what they're doing in some cases is upgrading their facilities. This is also helping with hiring and recruiting, saying, hey, we've got an even better facility. Come on in and leave that living room. We've got some pretty awesome stuff going on here that's mostly focused on biotech, but really we're starting to roar back. We're seeing the same trends in wireless tech companies, semiconductors, computer technology and gaming firms. You know, there's a bit of a theme there, you know, maybe you need a little bit more hands on. Maybe collaboration's a little bit easier when you get around a table. If you say, but the general trend is higher quality office space is going in. Life science is really gobbling that up and it's really just seen an uptick for these modernized buildings. So super cool to see. I love that our we're really leaning into biotech here and it's taking, it's taking over office space, some of the vacancies from, you know, typical, typical buildings. So it's awesome to see and can't wait to see that downtown facility finish.

Yeah, the biotech to downtown is such a big deal, you know, just to see that potentially 2 million square feet of new, brand new office space in downtown could be all biotech. I know a million has already been claimed right on the water there. But the other big project being, you know, the mall, the old mall, you know, is unclaimed yet by any big tech company. And it easily could be biotech too. Could be really interesting. Cause like you said, it is hard to do biotech working from home. Mostly because the lab coats, right, like they're, you know, it's, you can't only work in a lab coat as well as all of us been working in PJs. So that's true.

And you know what's really interesting, you know, and I don't know if this is quite, quite the same theme with bio, but you know, you kind of see that line around UTC of north county not wanting to drift super far south and south county drifting up past north. But you know, if we really start to build out downtown's biotech, you know, we might shift a serious amount of people downtown and that could really change kind of how the community structured and you know, for, for the better in a lot of ways. And like you said at the mall, I mean there's, there's more opportunity and.

Attract a whole new class of talent who want to be, you know, still do want to be in urban environments. Right. Could get some young biotech talent here, which would be pretty epic. So interesting to see almost 300% growth of biotech space. But let's jump into our second story. We need the right sound effect for new venture fund in town. I don't have it for you, so consider that your sound effect. Harpoon Ventures just raised their third fund. And so this is. They're very specific around helping companies unlock federal contracts for startups. So they're kind of a govtech focused venture fund. They started in 2018 and they're both ex servicemen, Will and Larson, one a Marine and the other a Navy SEAL before they entered the business world. But this is fund number three. And so with them understanding the whole government space, specifically military and Aerospace, this $125 million fund is focused on helping investing companies who want to get big deals and big contracts from the big boys up in D.C. obviously the federal government is one of the largest enterprise buyers in the world. From equipment to software, they manage a million person just military workforce, let alone everything else. So they're a big buyer and it's kind of an interesting thesis for them to just go after govtech kind of companies. So their first 10 portfolio companies have closed over 25 million in government deals. And their big way of investing is co Investing alongside big VCs Google Ventures, Andreessen Horowitz and Sequoia. Wouldn't we all like to co invest there? I think we do all say we co invest alongside them as long as we see that another company's got them on Crunchbase. So take that with a grain of salt, unless they really do get it on syndicates with these venture firms. But they want to help startups win 682 billion a year in government contracts. This is the budget that potentially the Pentagon has and other departments have to spend. And what they're hoping to help these companies with is use their expertise to help companies understand longer sales cycles, the contract uncertainty, compliance requirements and much more rules than the commercial markets. But obviously if you win these, they're huge, right? It's a customer that has money. They can just hit print if they need a little more. As we've seen. Huge budget, right? 700 billion in the Department of Defense alone. And just so just for compare, the US venture capital market, 164 billion has been invested in startups for comparison. So it's a big, giant, giant market. You want to tell us a little more, Jonah, about Harpoon's growth and starting story?

Yeah, this is really cool. I kind of love the specific sort of thesis of what they're doing, but since inception, and really they're only three years old, which is kind of mind blowing. They've helped startups access almost 5,500 million in federal contracts, 52 federal contracts across eight different agencies. So there is a lot of money flowing around and it's not always easy to access. I think in some cases people might be intimidated by how you get access to military funding or even some of the hoops you have to jump through. I know Omni Sync was doing some cool work to help people get SBIR grants in that space, but it also makes sense. I mean the government is going to need, you know, greater sort of technology and autonomous weaponry, drones, cyber warfare and info war, which we've talked about in the past, you know, from a civilian side. But you know, places are needing to be more secure now that we're more increasingly online and you know, hopefully they're able to plug in more of the startups that they're working with into some of these major contracts and really help secure the country. So pretty interesting, pretty interesting angle that they're taking there. Yep.

Yeah. Congrats Will Larson and the Harpoon team. We're, we're excited for you and we look forward to co investing alongside you as well too. Let's jump into our third story.

Yeah, so this one's really interesting. So Scripps, Whitaker, Whittier. Excuse me. Diabetes Institute getting 3.1 million for a glucose device study. So this is super interesting. The National Institute of Health is looking to study type 2 diabetes and using CGM to sort of help people manage their blood sugar controls while admitted into the hospital. So when you're in the hospital, they're able to actually apply a CGM or a continuous glucose monitor, which is typically used for type 1 diabetes. But what's really interesting is now they have this acute care, this sort of rigorous gold standard research condition, meaning someone's in a facility, they can track their ailments over time. But what's really interesting about CGM is you're actually getting readings every five minutes of the way that your blood glucose is moving. And so that's what they're tracking. But over time, what you're actually able to do, and this is maybe a little futuristic, we're able to get more readings and other conditions. So maybe there's some, you know, some other sort of levels in the blood that you can track, you know, maybe some vitamins, some other things of that nature. But what, what actually is, is interesting about this is when you have a patient who is in the hospital who's recovering, you know, you don't want to necessarily agitate them. You want to be able to get these readings. And typically what you have to do is go into the room, you have to actually suit up because these patients are infected with COVID and put on a lot of protective gear and then prick fingers and, you know, not only is unpleasant, but that's using, you know, a significant amount of, you know, protective equipment for, for these nurses and doctors in these rooms. And so in some ways you can just walk by the room and you know, in the case maybe you have a over a reading. So, you know, CGM was approved for outpatient out of the hospital 99. So really kind of, you know, it's been a long time, but it's pretty limited for people in the hospital, which is surprising. And these regulations were sort of starting to loosen But Covid really accelerated it. And so CGM companies were actually able to get access to the hospital room during COVID because it's super important to track people's, you know, people's vitals and people's blood glucose along the way. Obviously, if these levels get out of whack or are kind of significantly high, which is typically what you're tracking in type two, you know, you can. You have increased risk of heart attack, kidney damage, nerve damage. And part of the reason for all of that, if you want a quick science lesson, is when you have obviously arteries, blood vessels and capillaries, Capillaries, the smallest and the size that they are, is basically allow for one red blood cell to fit through at a time. But when cells have too much sugar in them or they're holding too much sugar, think of them as more or less like an overinflated, like, donut that you would take into the pool. So they're a little more rigid. They don't sort of flex and bend and have the ability to move through the capillaries as easily. And so they kind of crash around a little bit and potentially cause some, some damage along the way. So it's super important when you start to see these higher numbers, these higher trends that you bring them down, get those cells kind of a little bit more flexibility so they can work their way through the capillaries and don't cause damage to, to nerves or other sort.

Of.

Blood parts of the blood system that might be impacted by this. So pretty cool. They're able to now pull in high levels of measurements, 288 measurements to really per. It looks like per day to advise on better treatment for patients. And that's only going to help us live better lives, but also hopefully get out of the hospital much quicker.

I love this science by Jonah. We get another one. This science lesson has been brought to you by the good people at NBC News. The more you know.

Thanks, Jonah.

What's also great to see about this is the just the density of diabetes tech in San Diego. Right. We know there are some big players in the space from Dexcom, from Tandem Diabetes Companion Medical recently getting acquired. And now we've got. And now it shows that our research institutes also are getting recognized and are working on things that obviously turn into companies. Right. So you see this life cycle, which is fantastic. See technology developed in a lab and turn into companies and then. And then recycled back. So this is great to see and we hope that this paves the way for new medical devices coming out of our Local region. Speaking of bread and butter. Yeah, exactly. Speaking of other bread and butter coming out of our San Diego region, electric vehicles and the need for it. San Diego is a big, clean tech town. And we're also going to be and have been one of the leaders in adopting solar and electric vehicle charging. And the infrastructure is needed. And so now's the time to kind of take the lead on that. San Diego Gas Electric is taking a lead on building out infrastructure. And so with the goal, this is for our fourth story here. The goal is to grow our electric vehicle chargers and vehicle use more than 10x over the next. I think it's nine years. I think it's by 2030. I think we'll get to that in a second. We have a fantastic climate for electric cars. Epic sun, tons of solar. You could see it on almost every building now. And I think we have been for one of the longest times, San Diego has been one of the highest per capita installed, you know, solar places. But now we need charging stations as our next infrastructure infrastructure piece. So the region needs 150,000 new charging stations, which is pretty insane because did you know, Jonah, there's only 150,000 gas stations in America. What? Yeah, yeah. But yet we need 150,000 charging stations just in San Diego alone to meet the same need gas stations have. They can have anywhere from 10, if not 20, charging station or fueling station. Right. Within one station itself. Right. And so because of the time it takes for a car to get charged up, it could take an hour sometimes we need more. We need more chargers to, to meet the needs. And so, you know, pretty big goal to support this from California. 100% zero emission vehicle sales by 2030, I think 2030, all cars sold in the state need to have zero emissions. Gas powered cars can stay on the road for 20 years, but every year without a zero emission sale requirement means a substantial addition to total emissions. So, you know, big focus is get them off the road. And so there's 3 million vehicles registered in San Diego. Almost. Almost as of 2019, almost as much as people, which is interesting. Yeah. And in 2020, there were 69,000 electric vehicles and 6,500 electric vehicle charges. So, yeah, we got some work to do here, that's for sure.

I didn't want to take this on a tangent, but I thought it was really interesting to think. I mean, 2030 is not that far away. Right? I mean, we're thinking 10 years. It's really not that much. So. Okay, so what do you think in like to all these gas stations everywhere. Are they going to turn into something different? Are they going to be, I don't know, are they restaurants now? Like what are we, what are we turning all this space into? Because in some ways they're pretty interesting real estate right off of freeways. I mean maybe they turn into charging stations, but maybe something else. I don't know. What are you thinking?

Yeah, it absolutely makes sense because of just they're put in such great retail spots. You know, I would think that charging electric vehicle charging is for sure something to think about. But I think the way that we charge is going to be very different. And a company we've invested in, EV Match has shown that, you know, people kind of with electric vehicles, you kind of top off everywhere you go, whether every place, whether it's the office, the home, everywhere you go you're looking for a charger and you're plugging in. So it won't always be that hey, I'm going to pull off the freeway and just like, you know, get a quick charge. Because it's not going to, you're not going to get quick charges that often. So it'll be really interesting. It's a good question you pose.

You know, fun fact. On top of that, I don't think gas stations actually make all that much money on the gas. I think that's kind of like the get you in here to go into the store, get some snacks. So maybe they're, maybe they turn into some other sort of restaurant type facility. I don't know. I just don't think that gas is like the really the money maker in that scenario.

Interesting. Well, it's going to take a lot to redo our infrastructure, that's for sure. 50 billion to build out the US charging network just to accommodate the expected growth by 2030. And luckily we just had this new infrastructure bill that passed and it puts aside 7.5 billion to spend on the charging infrastructure, which doesn't feel like a lot, seven and a half billion, but it's a start. And so we hope that that trickles down into here in San Diego. We know it'll bring new jobs, that's for sure. Around 10,000 in California alone. And so it's good for the economy, good for the planet. And San Diego Gas Electric's VP of Energy Procurement and sustainability, he said that the gaps in our fueling infrastructure for zero emission vehicles are so large no single entity can solve the problem on its own. Regional collaboration is critical and couldn't agree more. And I think luckily we've got pretty, you know, bipartisan, if you want to use that word, agreement in San Diego. Like, this is something we want to do and have to do. So excited for, you know, have a plan and move forward on it.

Yeah. Electric vehicle, Jonah? No, not yet. But, you know, I've always dreamt of having solar panels on the roof of the garage charging car. Like, I think that's just such a cool, like, thing. My parents will probably get an electric car before me. They have solar panels in Vermont and, you know, they're gonna be like, yeah, my car charges off the sun. I'm gonna be so jealous. But, yeah, San Diego's the spot for that for sure.

How about you? No, I don't have one yet. I hope to. I kind of also hope to not have to have a car at some point soon. You know, I was kind of was hoping there was going to be this just fleet of moving vehicles, kind of like, you know, Uber as a service where you just go, no one owns a car. And you go, you hop in one and it takes you to your places. I'm okay with, you know, less car ownership. And if they're electric, great. I'm okay with that too. So we'll see a lot of things in the works to change how we get from place to place, that's for sure.

20, 30, it's 10 years. Like, a lot can happen. You might. You might be summoning an electric car autonomously to your car in the next eight to ten. So maybe even sooner.

We'll see flying DeLorean, man. You know, like, this could all change if we really do create Mr. Fusion. So there still is that hope as well, too. We shall see our last story here. This is a great one. Seismic San Diego software company work focused on sales enablement tools. They just raised another 170 million on the road to a possible IPO. And this puts them at over a $3 billion valuation. So they are far over the unicorn line now. We just need them to go public. Come on, guys, we want to buy some stock. Um, these Seismic's been around since, I think to about 11 years, and they've raised over 440 million in funding. So they've taken a lot of money in to get to where they're at. And they, you know, at the same time, they're also buying another company called Lessonly, which is going to help on coaching and training of using their platform and other sales tools too. So, you know, Lesson Lee Co. That raised 29 million out of Indianapolis 200 people are now Joining Seismic, this is not their first acquisition. I think this is possibly either their fifth, sixth or seventh. They have bought up other players in the space. They're the whole lesson, lead teams. Joining Seismic, they didn't disclose price, but I'm guessing they didn't spend their whole 170 million on this. So probably good junk less than that. Um, but still it's great. It's a great way for a company to grow and hire. Honestly, it's hard to hire 200 people. It's time intensive, it's expensive. Every day that someone's not in that seat is lost opportunity of scale and growth. So buying, you know, 200 people is a great way to do that. And it's kind of like this interesting, you know, bolt on. You see this in Salesforce and the ServiceNow market where you buy, you know, service based kind of providers who can offer sales training on your own platform. So you kind of already get sales infrastructure there. You also get people who know your platform and have been advocating for it too. So yeah, that's pretty great.

You know what's crazy though is they've been using, they've been sort of contracting, working together for like two years. They know each other super well. So I'm, I got to imagine the integration is pretty, pretty simple. But you made a super interesting point. I mean, I think the last couple pods we've talked about just the challenges of hiring, hiring and recruiting and I mean, you're going one by one, right? I mean you're trying to get offers out. It's really competitive. So if you can find a way to acquire or acqui, hire like a team of 200 and then you keep the entire team, I mean, that sounds like a really good move. I have to imagine the economics make great sense and if they're already plugging that type of product into what they're doing in their infrastructure for training people with customer service and sales, I mean, gosh, it just makes perfect sense for their future plan.

Yeah, totally agree. So full steam ahead for Seismic. They've been talking IPO for a while. They've been over the $100 million mark annual recurring revenue, and they hit the $200 million recurring revenue mark this year too. So they're very well positioned to go public. It's just kind of on them. Do they need it or not? They obviously can get private capital whenever they need in that regard. But we know that an exit usually does a few things. It kind of recycles the capital full circle. People who've invested, who've been in there for quite a while. Both employees and early investors get a chance to cash out if and when they want to, which is always good because then usually that recycles back into starting into other startups, which usually creates more jobs too. So seismic. Keep it up. Congrats and we're excited for your continued success. Let's jump into so those are our five stories of the week. You know, you can always see them on our Social Fresh Brew Tech and in our newsletter, but some other things we want to read out from this week's Tech News Fresh Brew Tech newsletter. Some fundings so got a bunch of biotech fundings. You know when you start seeing this weekly it's you start to glaze over a little bit like yeah, more, more drug discovery companies are raising money. But yeah, but it's awesome to see that a company like Zinthera doing drug Discovery just raised 50 million in its series B. In Grail Therapeutics doing Nervous system disease medicine raised a $32 million series. Aardvark Therapeutics clinical stage biopharmaceutical raised 29 million on a series B. And they actually raised from a local San Diego company, Sorrento Therapeutics, which is interesting to see. Debut biotech raised 22.6 million in series A. So as much as we say this becomes kind of standard process, this is all going into world changing drugs and discovery for changing our lives for the better. So don't want to go over that fact that that life changing technology is happening here in San Diego which is pretty epic. Some tech deals that also got recently got funded in Tondo Open Source software company raised 11 million on a series B and Juno Live, a community building SOFTW company. Maybe we should check this one out. Jonah 3 1/2 million dollar series seed with some local angels. So great to see in that regard. Some acquisitions. We love to spot out acquisitions more because it's interesting to see the diversity of some of our industries here in San Diego. We love to talk about biotech or tech but a company like Monster Tool which is a carbide cutting tools for aerospace, automotive, medical, energy heavy equipment based in Vista. They are getting acquired by GWS Tool Group based out of. Oh actually I don't know where they're based out of but in either case interesting to see kind of an aerospace, automotive, high tech kind of machinery company acquired.

How we feel about aerospace here?

We love it. Another big blockbuster acquisition, Vividion Therapeutics was acquired for one and a half billion dollars. Great to see. We just talked a five And a half billion dollar acquisition in biotech last week, Biolegend. So these also, we don't want to gloss over, but it starts to feel like, yeah, this just happens here. And we love to see that on the tech side too. For a company like Lawn Love, which is a marketplace for connecting you with landscape workers, they were acquired by lawnstarter out of Austin. And so Lawn Love, we love the team. Jeremy Yamaguchi and team, they are staying here in San Diego and they're just teaming up and doubling down on the landscaping world. So good one to end on here.

Yeah, I love seeing that, especially when you see kind of. They came about when Uber was like, hey, you know, you can do. You can do this model. And everyone's like, you can. And then, you know, handy comes out and that's kind of where I got into the space. But then you see Lawn Love spring out and everybody says, how do I apply this to different. Different aspects? What's cool about Lawn Love that I was noticing is, you know, you could just be, you know, a lawn care business, and you're like, hey, send me some leads, send me some business. And so kind of a cool little twist on kind of how you do the on demand economy or how to use it.

Yeah, totally agree. Super cool. Congrats to the team. And that's our show. Make sure you subscribe to Fresh Brew tech's newsletter@freshbrewedtech.com and follow us on Twitter as well. I'm Neil Bloom and Jonah. What's yours?

I'm at Jonah Peak. Let's keep it simple and clean.

Yeah, Peak with an e at the end. Thanks everyone for listening in and we hope to catch you on Clubhouse again soon, or continue to listen here on the podcast. Cheers, everyone.

See ya.