San Diego’s Top 10 Deals: Q3 VC Funding Still Strongly Favors Life Sciences

Xconomy San Diego — 

Venture funding for high tech companies made a stronger showing during the third quarter, but life science deals still accounted for more than half the capital invested in the San Diego area, according to the latest MoneyTree Report. Venture investments in local biotech, medical diagnostics, and device companies also made up the most of the deals counted during the second quarter.

Of the $231 million total that was invested in 32 San Diego companies during the quarter, $129.7 million (56 percent) was invested in 17 companies (53 percent) specializing in drug discovery and development, diagnostics, or medical devices.

In the previous quarter, 72 percent of the total VC investment in the region ($148 million of the $204.9 million total) went to life science startups. In the same quarter of 2009, San Diego’s life science companies got 65 percent of the total ($163 million of the $252 million total).

The total amount of all venture capital invested in the San Diego region increased about 13 percent from the previous quarter (when $204.9 million went into 28 companies). But it was down 8 percent from the same quarter of 2009 (when $252 million was invested in 36 companies). The MoneyTree Report is prepared by the PricewaterhouseCoopers accounting firm through a partnership with the National Venture Capital Association and Thomson Reuters.

Media and Entertainment startups in the San Diego area got the second biggest share of venture capital, with three companies receiving $61.6 million (27 percent) of the total invested.

San Diego’s software sector accounted for the third biggest chunk of venture capital, with $19.3 million (8 percent) invested in five deals.

Here is a list of the top 10 deals in San Diego, based on data from MoneyTree:

1. SkinIt, San Diego. Provides adhesive “skins” to personalize laptops, mobile phones, and other consumer electronics. $60 million. Investors include ABS Capital Partners, Northwest Equity Partners.

2. Otonomy, San Diego. Developing drug treatments for hearing loss and balance disorders. $38.5 million. Investors: Novo Ventures, RiverVest Venture Partners, Avalon Ventures, Domain Associates, TPG Biotech.

3. AutoGenomics, Vista, CA. Provides automated microarray-based diagnostic technology for identifying genetic disorders, infectious diseases, cancer, and pharmacogenetics. $17.6 million. Investors: Undisclosed.

4. Zeebo, San Diego. The startup has developed a wireless game console and education system for Latin American and Asian markets. The MoneyTree Report shows that Zeebo raised $15 million, but it is more likely that Zeebo extended a previously disclosed round by $1.5 million. Existing investors include Qualcomm and Tectoy S.A. a Brazilian video-game developer.

5. Accumetrics, San Diego. Accumeterics makes an automated diagnostic device used to help doctors calibrate the dosages of commonly used anti-clotting drugs, such as aspirin and clopidogrel (Plavix). While the MoneyTree report shows the company raised $14.2 million, Accumetrics told me its most recent funding of $7 million was part of a Series E round that totaled $24 million. Investors: The BBT Fund/Apothecary Capital; Kaiser Permanente Ventures; RiverVest Venture Partners; Arnerich Massena & Associates; Essex Woodland Health Ventures.

6. Auspex Pharmaceuticals, Vista, CA. The company is developing deuterium-based analogs of clinically validated drugs in multiple therapeutic areas. MoneyTree reports that Auspex raised $13.8 million, although it is likely an extension of a $12 million round we reported in July. Existing investors include Thomas McNerney & Partners, CMEA Ventures, and Costa Verde Capital.

7. Cylene Pharmaceuticals, San Diego. The biotech is developing an oral drug for multiple myeloma. Funding for the $12 million round came from Sanderling Ventures, HBM BioVentures (Cayman), Novartis BioVenture Fund, BioVentures Investors, Lilly Ventures, Mitsui & Co., and Morningside Venture Investments.

8. Cebix, San Diego. The biotech is developing a human proinsulin C-peptide as a supplemental treatment for complications from type 1 diabetes. MoneyTree reports $11.7 million in venture funding. Existing investors include Sofinnova Ventures, InterWest Partners, Thomas McNerney & Partners.

9. Verve Wireless, Encinitas, CA. The startup has developed Web-based technology that enables newspapers and other media customers to distribute news and advertisements to mobile devices. $7 million. Investors include BlueRun Ventures and The Associated Press.

10. Fallbrook Technologies, San Diego. Fallbrook has been developing a continuously variable transmission that promises improved energy efficiency in electric vehicles and other modes of transportation. $6 million. Existing investors include Robeco of The Netherlands, NGEN Partners, and angel investors.

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