An Xconomy Analysis: Five Ideas to Boost San Diego’s Software Sector

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vital role in helping them get established. But there are fewer big companies left to re-seed the ecosystem, and experienced software executives are becoming a limited resource. There are drains on other regional resources as well.

For example, venture capital funding for San Diego startups has declined substantially over the past decade, especially for tech startups. A five-year average of quarterly venture investments in San Diego from 2010-14 (according to MoneyTree Data) ranges from $223 million to $247 million a quarter, with about 80 percent now going to life sciences startups. A decade ago, the five-year average (2000-04) ranged from $316 million to almost $387 million, according to MoneyTree data—and investments were divided more evenly between tech and life sciences startups.

Of course, launching a software company can cost far less today than it did a decade ago, but the total number of deals also has declined over the past decade by about 25 percent, from a yearly average of 154 from 2000-04 to roughly 114 from 2010 to 2014 (with incomplete data for this year).

UC San Diego campus and Torrey Pines Mesa

UC San Diego campus and Torrey Pines Mesa

San Diego’s freshly minted software engineers are also being lured out of town. More than 400 students graduated from UC San Diego this year with undergraduate degrees in computer science engineering and electrical and computer engineering. Hundreds more graduated with degrees in other engineering fields (and another 406 undergrad engineers graduated from San Diego State University), which means San Diego has an abundant supply of skilled candidates for IT jobs, at least at the entry-level.

But according to the alumni office at UCSD, a surprising number of recent graduates who find a job in San Diego leave the area within five years of graduation. The obvious reason is that tech companies pay substantially higher entry-level salaries in the Bay Area ($80,000-$100,000) than in San Diego ($50,000 to $70,000, with only Qualcomm in the $80,000 range).

Aside from the disparity in compensation, new computer science grads want to work for “hot” companies like Google, Facebook, and Twitter, and they don’t mind that the cost of living is substantially higher in the Bay Area. It’s hard to overcome that mindset, but they simply may not be aware of the … Next Page »

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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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4 responses to “An Xconomy Analysis: Five Ideas to Boost San Diego’s Software Sector”

  1. Tony Maniaci says:

    The three companies moved to Texas because they received money to move there. I can understand moving to the Bay Area but why Texas unless it is reduce costs, or as usually happens, they are paid to go. Vista is based in Austin.

    • Yes, I thought we had put to rest the idea that the 3 companies leaving San Diego had anything to do with San Diego, per se. It’s an easy way to make an argument, I guess. The companies didn’t just up and leave, they were *acquired* by a private equity company. Private equity typically seeks out companies with flat revenues, reduces their operating costs while while searching for new growth, in order to flip them.

  2. Bruce, we totally agree with you that providing solid tech talent is really an important part of helping more companies grow and stay in San Diego. Thank you very much for the shout out. LEARN, Notch8’s bootcamp is starting its first class January 5th and we’ve already secured enough desire for interns to fill several classes worth. There is absolutely no doubt in my mind that there is serious unmet demand here.

  3. Bruce, we totally agree with you that providing solid tech talent is really an important part of helping more companies grow and stay in San Diego. Thank you very much for the shout out. LEARN, Notch8’s bootcamp is starting its first class January 5th and we’ve already secured enough desire for interns to fill several classes worth. There is absolutely no doubt in my mind that there is serious unmet demand here.