San Diego’s Top 10 Venture Deals: Most of the Money Goes to Life Sciences

Xconomy San Diego — 

[Corrected 4/19/10, 1:00 pm. VentiRx Pharmaceuticals CEO Michael Kamdar says the company raised $25 million, not $12.5 million. See below.] The folks who count every leaf that falls off the money tree for venture-backed startups have graciously provided a breakout of the 10 biggest VC deals in San Diego so far this year. This list was drawn primarily from the MoneyTree Report, which is prepared by the National Venture Capital Association, PricewaterhouseCoopers, and Thomson Reuters. We’ve supplemented the list with information from the archives of Xconomy San Diego—since we wrote stories about all of these deals—as well as regional data provided by Dow Jones VentureSource.

While the MoneyTree survey counted $222 million invested in 29 deals in the San Diego area, it’s still a relatively small sum for this region. I’ve got more on that, but first, here’s our list of the top 10 deals from the first quarter:

1. Tandem Diabetes Care (San Diego), $31 million, second tranche of Series C.

2. PatientSafe Solutions (San Diego) $30 million, undisclosed round.

3. Tioga Pharmaceuticals (San Diego) $18 million, undisclosed round.

4. Sotera Wireless (San Diego) $17.45 million, undisclosed round.

5. Genomatica (San Diego) $15 million, Series C.

6. Elevation Pharmaceuticals (San Diego) $14.96 million, Series A.

7. EMN8 (San Diego) $14.46 million, undisclosed round.

8. VentiRx Pharmaceuticals (San Diego and Seattle) $25 million, extended Series A.

9. Avaak (San Diego) $10 million, Series B.

10. AwarePoint (San Diego) $10 million, Series E.

The top 10 deals on the list account for $173.35 million, or roughly 78 percent, of the $222.5 million that venture investors sunk into 29 deals in the San Diego area during the first quarter of 2010, according to the MoneyTree Report. That’s quite a bit more activity than we saw in the same quarter a year ago. Venture capitalists invested only $91.9 million in 16 deals in the San Diego area in the first quarter of 2009, according to the MoneyTree Report. It’s also relatively smaller than the quarterly VC investments we’ve seen in San Diego before the markets crashed in late 2008.

As you might expect, San Diego life sciences were the biggest recipients of venture investments during the quarter, with six companies (Tandem Diabetes, PatientSafe Solutions, Tioga Pharmaceuticals, Sotera Wireless, and Elevation Pharmaceuticals) getting a total of $124 million. AwarePoint, which specializes in asset management and tracking systems specifically for clinics, hospitals, and medical centers, is an IT startup that could probably qualify as a seventh life sciences deal, which would bring the total to $134 million.

Dow Jones VentureSource said its survey of venture capital investing showed almost $192 million was invested in 21 deals in the greater San Diego area. “Most of that $192 million in this quarter went into the medical device and equipment category of health care,” says Mike Schoenfeld, venture capital advisory group leader in the Los Angeles office of the Ernst & Young accounting firm. He notes, though, that the deal size has gotten smaller, with startups now getting an average investment of less than $10 million. They likely received $20 million a decade ago, he says, adding, “What that is saying is that VCs are becoming choosier.”

But Schoenfeld says he doesn’t worry about the disappearing act among San Diego’s hometown venture capital firms. “From a high-level perspective, we’re going to continue to see money going into this market,” Schoenfeld says. “VCs are not going to go away.”