San Diego hauls in $4.8B in VC in 2022

Coming off a record year in 2021, local startup investment reached $4.85 billion this past year.

Feb 7

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At Quaclomm’s annual CEO Summit, CEO discussed its new $100M Snapdragon Metaverse Fund to 300 CEOs, investors and technologists as well as the impact of 5G and AI on the industry.

Founders,

San Diego hauled more than $4 billion from venture capitalists.

Maturing into a powerhouse life science hub and robust startup ecosystem, San Diego has become home to several multibillion-dollar startup: ClickUp, Flock Freight, and TuSimple, which continue to expand their presence here.

In 2021, San Diego had a record breaking year with $9.4 billion invested — becoming one of the fastest growing tech hubs in the U.S. alongside Seattle, Washington DC, Denver, and Austin.

While last year was a challenging fundraising year, founders and investors remain optimistic on the year ahead.

Please enjoy this breakdown of San Diego’s VC activity in 2022.

High-Level Overview

$4.8 billion invested, down 50% from the year prior
Ranked 11^th nationwide (behind Austin and Washington DC)
Minority-funded startups remain in the low single-digits
National Resilience ($625M), Shield AI ($225M), and RayzeBio ($160M) had the largest fundraising rounds

While it was difficult for startups fundraising nationally, San Diego maintained strong numbers compared to other large metros and top tech hubs.

In 2023, Pitchbook predicts a decline in startup funding activity, however it forecasts a strong year for early-stage investment deals.

Please note: this report a collaboration with Interlock Capital, Managing Partner Neal Bloom and Connect San Diego Venture Group.

Headquartered in La Jolla, National Resilience is manufacturer of complex medicine. It employs 1,600 workers and has raised $2 billion over the past two years.

Largest Deals and Investments

The top venture investment deals in San Diego were National Resilience’s $625 million raise and Shield AI’s haul of $225 million. Other sizable deals included:

Drata ($200 million)
RayzeBio ($160 million)
The Honest Kitchen ($150 million)
Aspen Neurosciences ($147 million)
Escient Pharmaceuticals ($120 million)
BIOLINQ ($115 million)

There were fourteen $100 million-plus fundings rounds in 2022.

This included biotech firms Nalu Medical ($104 million) and Plexium ($102 million), life science startups Capstan Therapeutics ($102 million), Endeavor Biomedicines ($101 million), and software firms Events.com ($100 million) and Powerflex System ($100 million), among others.

Data pulled from Connect San Diego Venture Group’s Funding Tracker.

**Avalon BioVentures raised $135M to back more life science companies. Its investment team from left to right: Sergio Duron, Jay Lichter, Tighe Reardon and Sanford Madigan of Avalon BioVentures.**

New Funds

Fund-raising by VC firms was also a bright spot for San Diego.

Blueprint Equity ($175 million)
Avalon BioVentures ($135 million)
Qualcomm’s Snapdragon Metaverse Fund ($100 million)

Founded in 2018, Blueprint Equity invests in business-to-business software, fintech and tech-enabled services companies. Its second fund seeks to invest capital into 15 companies and is headquartered in Solana Beach.

With its $135M Fund, Avalon BioVentures plans to invest in over 50 biotech and health tech companies. Based in La Jolla, its portfolio includes Vertex Pharmaceuticals, Amira Pharmaceuticals, Neurocrine Biosciences and more.

Qualcomm Ventures which has ~$2 billion in assets under management, aims to back virtual and augmented reality startups. It plans to invest its capital into startups focused on the metaverse.

In September 2022, San Diego region’s largest craft brewery Stone Brewing was acquired for $165 million by Sapporo, a top selling Asian beer brand in the U.S.

Notable M&A Activity

There were several major acquisitions last year including:

MaxLinear buying Silicon Motion Technology for $3.8 billion
Viasat selling off its government division to L3Harris for ~$2 billon.
Resmed acquiring German-based MediFox Dan for $1 billion
Sapporo snatching up Stone Brewing Co. for $165 million

In addition, Illumina won its legal battle with U.S. antitrust regulators over its $7.1 billion acquisition of cancer blood test maker Grail in August 2022.

2023 Outlook

Overall, it was a strong year for San Diego.

Looking ahead, founders may find it more difficult to raise this year.

Investors are also spending more time on due diligence and making conservative bets.

Connect, a San Diego-based organization that help founders pitch hundreds of venture capitalists across the U.S., believes founders with strong business metrics will continue to thrive in today’s difficult fundraising market.

“As long as you are building a real business, there is still money out there,” said Mike Krenn, Head of Connect San Diego Venture Group told the SDUT. “You need to have the business metrics to dictate subsequent funding, and I think the companies here are well-positioned for that.”

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