Record Funding Available for Startups
The VC funding boom was driven mostly by life science and tech startup companies, with the former raising over $1.8 billion, while the latter secured $400.7 million in funding. The substantial business funding was accumulated through a total of eight transactions, with the startup companies from those industries receiving business investments between $100 and $300 million.
“These eight deals accounted for roughly half of the quarterly investment volume,” said Michael Combs, associate field research director at CBRE.
“There were also several sizeable tech deals nearing $100 million and it was one of the strongest quarters on record for tech investment. It was a diverse mix of companies receiving funding, but the largest rounds were for biopharma R&D, artificial intelligence and digital marketing companies primarily.”
Although many would agree that the boom in VC activity was driven by the coronavirus pandemic, Combs claims it is hard to tell what made the actual impact. But on the other hand, he said that there is a positive correlation.
Combs adds that San Diego-based startup companies generated almost $7 billion in funding in four quarters since the pandemic started. He highlights that over $5 billion went to startup companies in the life science business industry.
The surge in funding is also expected to affect the real estate business industry as the majority of those companies are likely to use the capital to fund their expansion plans. Combs pointed out that historically, companies were making real estate moves after such business funding rounds.
Combs said he expects VC startup funding in San Diego startups to keep breaking records this year, noting that the previous two quarters have raked in $2 billion per quarter, which is a difficult figure to match.
However, if the levels remain close to that number, “we will likely see another record-breaking year for VC funding,” says Combs. Some startup companies have already raised more than $50 million and $100 million in funding in Q2, with the volume being particularly strong for the tech industry.
Another research published by Connect/San Diego Venture Group and PitchBook-National Venture Capital Association Venture Monitor, shows the local startup companies have secured $2.4 billion and $2.54 billion, respectively, in the period between January and March, marking a 200% jump year-over-year (YOY).
“San Diego is building a better name for itself with venture capitalists outside of the region. So, you’ve got a lot more VCs that have one deal here. And once you get one deal, it’s easier to do your second deal,” said Mike Krenn, chief executive of Connect/San Diego Venture Group.
The difference in those figures is associated with the timing of business funding rounds. For instance, Venture Monitor had Prometheus Biosciences raking in $130 million in Q1 2021, while Connect/San Diego Venture Group had Prometheus raising business funds in Q4 last year.
Startup Savant reported last month that the San Diego-based startup company Yembo raised $8.5 million in a Series A financing round led by Imagen Capital Partners.
San Diego VC funding has been rising toward new record highs, with the companies from this city raising $2.3 billion in the first quarter of this year.
About the Author
Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.