Why Comma.ai, Maker of Self-Driving Tech, is Moving to San Diego

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In 2017, SDVG set up an office in one of the WeWork co-working spaces in San Francisco for use by traveling San Diego startups. It also put up an ad on a digital billboard along U.S. 101 in Palo Alto that posed cheeky questions to the engineers driving by. (Think: “Enjoying traffic?” and “Did you check the surf report this morning?”)

While Krenn readily admits Comma’s move isn’t part of any sort of mass exodus from Northern California to its sunnier counterpart in the south, he also believes it isn’t a one-off instance of a Bay Area startup seeing the benefits of San Diego’s ecosystem.

In Krenn’s eyes, it’s part of a growing body of evidence that San Diego has joined the list of locations, such Austin, Denver, and Seattle, that are obvious landing spots for Silicon Valley companies looking to leave.

Plus, every relocation of a VC-backed company to San Diego means another investor is gaining increased familiarity with the region, he adds.

Talk in town of Silicon Valley eyes turning toward San Diego isn’t new: About two years ago, Bizness Apps’s founder Andrew Gazdecki followed the path Comma is now traversing.

The thought process behind the move, which he detailed in an article on TechCrunch, caused another entrepreneur to post a response critical of San Diego as a startup scene, which was then, in turn, the subject of a missive by Ashok Kamal, now executive director of the region’s Tech Coast Angels chapter.

Gazdecki sold the company for an undisclosed amount to Austin-based private equity firm Think3 last year.

The broader notion of increasing investment outside of the U.S.’s traditional tech hubs has been a topic of discussion in entrepreneurial circles for some time. AOL co-founder Steve Case launched a $150 million “Rise of the Rest” seed fund to invest outside of places like Silicon Valley and Boston in late 2017.

A report published in October by the Center for American Entrepreneurship, a research organization in Washington, D.C., placed San Diego in the second tier of startup cities globally, a group of 13 that includes Austin, Chicago, and Seattle in the U.S. Its authors looked at more than 100,000 venture capital deals made in about 300 places across the world between 2005 and 2017 to make the determination.

Together, the second tier of cities accounted for 18 percent of global venture capital investment from 2005 to 2017. (The report identified the San Francisco Bay Area, Beijing, Boston, London, Los Angeles, and New York as the world’s top tier regions for entrepreneurial activity, together accounting for more than half of all VC funding in that time.)

Most of that money has traditionally gone to the life sciences, rather than high-tech companies. Software startups have been gaining traction of late, though. (Read more about how the region’s tech reputation is changing here.)

Comma has raised outside funding of about $8 million in two rounds: $3 million in a round led by VC stalwart Andreesen Horowitz in 2016 and a new infusion of $5 million last year. The company isn’t disclosing the source of the 2018 financing round.

But Biasini says the company is trying to make it on its own at this point.

“If we succeed according to our plan, we might not need to raise money from VCs again,” Biasini wrote in a March 13 post on Medium detailing the rationale for the relocation. “And if we need to, Silicon Valley is only a one-hour flight away.”

Of course, nothing’s a sure bet in startup land.

“Did we make the right choice by moving to San Diego?” Biasini wrote. “Time will tell, but for now we are all very excited and we can’t wait to start working at our new home.”

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Sarah de Crescenzo is an Xconomy editor based in San Diego. You can reach her at sdecrescenzo@xconomy.com. Follow @sarahdc

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