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San Diego’s Innovation Economy Strong, With Some Emerging Concerns

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economic signals affecting San Diego’s biggest technology clusters—in life sciences, software, communications, and other sectors—during the first quarter of 2012.

Venture capital firms invested a total of $356 million in 22 companies in San Diego during the first quarter, the highest amount since the third quarter of 2009. (As we reported at the time, however, one deal accounted for $144 million of that.) More than two-thirds of the total capital was invested in early stage companies, and the new ventures created 171 new jobs in the region (a decrease from 2011 when startups created an average of 296 jobs per quarter.)

San Diego also hit a patent record during the first quarter, according to the report, with 1,284 being granted to San Diego inventors.

The report shows that entrepreneurs founded a total of 58 tech companies here during the three months that ended March 31. That was the lowest total for this region since the first quarter of 2010, when 35 startups were founded. It marked a 29 percent decrease from the fourth quarter of 2011, when 75 startups were founded, and a 17 percent decline from the year-ago quarter, when entrepreneurs founded 70 startups here.

So what happened? There were many fewer software startups during the quarter—just 15, in contrast to 2011, when the quarterly average of software startups was 27.

The report also shows biomedical research for San Diego universities and institutes amounted to $115.6 million during the first quarter. That was down 21 percent from the previous quarter ($148.1 million) and off more than 55 percent from the year-ago quarter ($257.8 million)

The report says the drop is the result of the National Institutes of Health operating under a continuing budget resolution. Further reductions are expected, as the government’s efforts at deficit reduction are projected to bite deeply into research grant awards.

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