Entrepreneurship

How Are We Doing?

The entrepreneurship indicator received a thumbs down because San Diego County’s total venture capital investments decreased by 6% in 2019. While this is a moderate decrease, it comes after particularly strong 2018 figures. Average annualized wages in the innovation sector continue to outperform wages in the rest of the economy.

Want to know more about what we're measuring?

thumbs down

Worsened more than 1 percent from 2018 to 2019

The San Diego-Carlsbad region saw venture capital investments of $2.5 billion in 2019 down from $2.7 billion in 2018. The number of venture capital deals increased slightly from 136 in 2019 to 142 in 2019. The Bay Area (San Jose, San Francisco, and Oakland) continues to lead the State, and indeed the nation, in venture capital with $47.3 billion across 1,722 deals.

Wages in all sectors of the innovation economy are substantially higher than the average wages across the rest of the economy. Employees in the environmental technology area saw the largest increase in annualized wages from 2017 to 2018.

Compared to other counties in California, the San Diego-Carlsbad region had fewer newly formed startup companies with 365 innovation startups in 2018.

Among San Diego County's innovation startups created in 2018, software remains the leading industry with 64% or 233 new companies and over 700 new jobs (representing 45% of total jobs in the innovation economy). The pharma/biotech/medical devices sector came in second with 16% of new startups. Overall, the number of new innovation companies established in San Diego decreased by 21% from 2017 to 2018.

The number of patents issued to applicants residing within San Diego County increased by 5% in 2019 to 6,224. This is the first increase in patents issued since 2014.

Why is Entrepreneurship Important?

High quality of life means the region boasts a thriving economy, a healthy environment, and is an equitable place for all San Diegans to grow and prosper.

  • Environment: Entrepreneurship can drive technological developments aimed at tackling local environmental problems. The Port of San Diego has a Blue Economy Incubator program that supports the creation, development and scaling of new water-dependent business ventures. In 2019, the program supported a number of new cleantech initiatives including ecoSPEARS Inc., a startup developing an eco-friendly cleanup solution to extract and destroy toxic contaminants from sediment, soil, and groundwater.
  • Economy: The innovation economy has broad positive spillover impacts for the San Diego region. Connect 2018 Innovation Report estimated that the innovation economy directly generated over $61 billion in sales. Accounting for indirect and induced impacts, the report estimates this accounts for 413,00 jobs and 24% of the total regional economy. Looking specifically at technology employment, a recent report by Cushman & Wakefield found San Diego has the 9th highest concentration of technology jobs in the United States and has added 28,800 jobs over the last eight years with an annual growth of 3.1%. Contributing to this ranking are the substantial military presence in the region and the University of California’s San Diego life-science centers. 
  • Equity: Despite the increasing ethnic diversity of the U.S. population, a 2017 study from the Kauffman Foundation shows that people of color own fewer businesses, and these businesses begin smaller and stay smaller. According to the 2019 State of Entrepreneurship report, African Americans experienced the fastest growth in entrepreneurship and there was a significant increase in new Latinx entrepreneurs. From a gender perspective, the rate of new entrepreneurs among women also increased by 15.4% compared to 2016. New research from the Stanford Institute for Economic Policy Research on the impact of COVID-19 on small businesses indicates that Black, Latinx, immigrant, and women-owned businesses have disproportionately lost their businesses.

Regional Response

Projects

Lead Inclusively, a technology-enabled Diversity, Equity and Inclusion Consulting Firm, raised $1.5 million in funding led by Christopher Craig and Fran Craig, angel investors. The company, based in San Diego, will use the new capital to further develop its Software-as-a-Service platform that creates learning apps based on the science of behavior change and habit formation.


Food tech startup, Plantible, raised $4.6M for their product which is extracted from duckweed, an aquatic plant, and is more protein efficient than beef, peas, and soybeans.

Partnerships

The Southern California Energy Innovation Network (SCEIN) is an incubator led by Cleantech San Diego and funded by a grant from the California Energy Commission to support startups with electric energy-focused innovations in San Diego, Imperial, Riverside and San Bernardino counties. SCEIN provides free resources through a consortium of partner organizations to help entrepreneurs successfully bring their technologies to market. To date, the program has worked with 43 companies who employ more than 248 people, and has raised a total of $47 million in private capital and $9 million in public (grant) funds.


 

What Are We Measuring?

We measure entrepreneurship by tracking year-over-year change in total venture capital raised in the region as reported in the PwC/CB Insights MoneyTree Report. This report captures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S. It includes the investment activity of professional venture capital firms with or without a U.S. office, small business investment companies, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. We use data from Connect’s annual San Diego Innovation Report to track job creation, startups and wages in the innovation economy. The innovation economy includes sectors on the leading edge of research, innovation and development of technologies. We also track the number of patents issued to applicants residing in San Diego County over time. Learn more about the data.