First Startups Take Flight From San Diego’s EvoNexus Incubator; Irvine Company Launches Initiative to ‘Renew’ University City as a Tech Hub

EvoNexus, the free incubator launched last November by San Diego’s CommNexus telecom industry group, is preparing to send its first fledgling startups into the wild—and to choose a few new startups to replace them.

The comings and goings are taking place as both EvoNexus and CommNexus are settling into new office space themselves, just months after the privately held Newport Beach, CA-based Irvine Company took both organizations under its wing. The nonprofit telecom group and its EvoNexus incubator moved rent-free into the fourth floor of an Executive Square office building in San Diego’s University City neighborhood about two months ago, according to CommNexus officials. The arrangement is part of a broader initiative by the Irvine Company to renew the area as a center of innovation for technology startups, which were priced out of the market during the go-go years of Southern California’s combined tech and real estate booms.

“We’re trying to bring the idea and brand back,” says Doug Holte, president of office properties at the Irvine Company. The real estate developer and property management company owns more than half of the office buildings near the upscale University Towne Center shopping mall, which serves as the de facto center of the area also known as UTC. Adding to the confusion is the fact that the community also is sometimes referred to as the “Golden Triangle,” because the Interstate 5, State Route 52, and Interstate 805 form a triangle around the master-planned mix of condos, apartment buildings, hotels, shopping malls, hospitals, and office buildings.

Holte says the Irvine Company, which owns about 33 million square feet of office space from Silicon Valley to San Diego, has been working to “re-introduce UTC” as a tech hub on the strength of its original concept as a commercial and residential center for UC San Diego, a few miles to the west.

CommNexus has been helping the Irvine Company promote the area, and last night the industry group hosted an invitation-only “open house” for the local tech community. In an interview yesterday, CommNexus CEO Rory Moore told me, “We look at UTC as a new convergence tech cluster,” with the EvoNexus incubator as a key source for the innovation. The nonprofit telecom industry group founded EvoNexus in mid-2009 as a way of keeping the flame of innovation flickering in San Diego amid the Great Recession’s capital crisis and a dearth of venture capital for San Diego’s local tech startups.

And the Irvine Company, Holte says, wants “to be the landlord viewed as the most flexible to their business plans, although we’re happy to provide space to bankers and law firms too.”

The Irvine Company’s initiative comes at a time when the vacancy rate for commercial office space is estimated to be as high as 34 percent in some San Diego area markets. Even Holte estimates the vacancy rate is somewhere between 22 and 30 percent, depending on whether you include the unused and available space that remains under lease.

There also are signs that the Irvine Company is serious in its attempts to woo early stage innovators and technology startups.

IO Semiconductor, a fabless semiconductor startup that is one of the two companies planning to leave EvoNexus, was surprised by the favorable lease terms the Irvine Company offered for nearby office space in the University City area. IO Semi’s CEO, Mark Drucker, tells me it was not a location he would have had several months ago on his top 10 list of local places to move. “We would’ve expected it to be out of our price range,” Drucker says, adding that nothing has yet been decided.

IO Semi, which was among the first three startups selected for the EvoNexus incubator, is ready to move on after 14 months. The biggest reason, Drucker explains, is that the startup recently raised about $8 million in a Series A round financing that included a loan convertible to stock. The capital, which came from an unnamed “strategic investor,” was contingent on a successful technology demonstration, Drucker adds.

The other startup leaving the EvoNexus nest is EcoATM, which has been developing a business around kiosks that automate the trade-in and buy-back process for mobile phones and other used consumer electronics. The company’s “eCycling Stations” electronically and visually inspect the devices, assess the current value, and administer promotions that offer consumers real-time incentives.

The startup’s CEO, Tom Tullie, says EcoATM is moving into offices near Qualcomm’s corporate headquarters in San Diego’s Sorrento Mesa, because “We raised enough money to be out on our own.” The company announced earlier this month that it had raised an undisclosed amount of VC funding from Coinstar and other investors. I’ve been told it was about $4 million by someone familiar with the deal.

With EcoATM departing in September and IO Semi leaving a month or so later, EvoNexus expects to have space for three new startups, according to Cathy Pucher, the incubator’s executive director. In its most recent round of applications, EvoNexus received nearly 50 applications, which Pucher says are still under review. Companies selected for the incubator get free office space that is fully furnished, including utilities, Internet access, and business mentoring by local executives and other volunteers. Startups will be allowed to stay for as long as two years, and will have no obligations to EvoNexus after they depart.

Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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3 responses to “First Startups Take Flight From San Diego’s EvoNexus Incubator; Irvine Company Launches Initiative to ‘Renew’ University City as a Tech Hub”

  1. Brett says:

    It does make sense to have some more tech companies in the UTC area. It is central and closer to downtown,uptown, and the beach cities where some of the “creative class” talent that we are trying to woo prefers to live. Not to mention biking distance to UCSD. Plus, a long term plan is to have more direct public transportation including light rail/trolley lines go from downtown to UTC.

    It would be great for another hub somewhere closer to midtown/uptown/or downtown to form. This would be similar to the mini-hub of social networking/web 2.0/gaming companies that have formed in SoMa in San Francisco versus the traditional Silicon Valley locations further south near Sand Hill Rd.

  2. Great comments Brett. I have been surprised that a number of software and Internet companies have taken root in downtown San Diego. I’m guessing they can find less expensive space there, with urban amenities in Gaslamp district that appeal to young workforce.

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