Innovation Economy Now Generating 25% Of San Diego GDP
San Diego County now ranks in the top 10 metro areas nationally for startups and fourth statewide, behind Los Angeles, Santa Clara and San Francisco—but is No. 1 in California for life sciences startups. San Diego's growing innovation economy is affecting real estate, as speakers will discuss at Bisnow's San Diego Healthcare Leadership and Life Sciences Forum on Sept. 28.
San Diego's innovation sector launched 405 companies in 2015, down slightly from 449 startups in 2014, CONNECT, a San Diego-based innovation company accelerator that helps entrepreneurs gain access to the resources needed for success, reported last week.
These early stage companies created 1,650 new jobs. The innovation sector now accounts for $52B, or 24% of the region’s total $214B GDP and provides 149,440 good-paying jobs, according to the report. The authors said an estimated 403,890 jobs, or 30% of the region’s labor force, are indirectly dependent on the innovation economy.
San Diego Mayor Kevin Faulconer (center) announced highlights of the 2016 CONNECT Innovation Report surrounded by local entrepreneurs. From left: Abreos Biosciences chief scientist Dr. Dina Uzri, Benefunder managing director Tom Paparatto, DeskHub president/CEO Jay Chernikoff, Mayor Faulconer, CONNECT president/CEO Greg McKee, Chalk Digital founder/CEO Craig Hagopian and CureMatch CEO Stephane Richard.
While at DeskHub’s expanded co-working space, Mayor Faulconer said, “This is further proof that San Diego’s innovation economy has matured to a point where it’s a vital part of our economic future. It’s no wonder why more and more smart, creative people and businesses are choosing San Diego as their home.”
“It’s no secret that the innovation economy is critical to the region’s prosperity, but, more importantly, innovation is the cornerstone to ensuring that San Diego keeps its place on the global stage long into the future,” said CONNECT's Greg McKee. CONNECT has served as a road map for policymakers and corporate executives, helping them to identify the region’s most pressing needs for the past 11 years, he said.
The report provided insights on how local companies are creating new jobs, fostering startups, cultivating growth of existing businesses and attracting investment. Highlights showed San Diego had more than 400 new startups established annually for the third year in a row.
This sector attracted $1.2B in venture capital in 2015 in 104 deals, up 35% from the previous year and approaching the 2007 record of $1.9B. The software and life sciences sectors led for newly formed companies, with 255 and 82 startups, respectively. Additionally, there were 50 new communications, computer and electronics firms; eight new aerospace, navigation and maritime tech companies; seven new environmental tech firms; and three new recreational goods manufacturing companies.
For the first time, the report compiled available data on angel investment of $2M or less in San Diego companies. The researchers reported 122 firms raised $74M in angel funding in 2015. Fifty-three companies in the life sciences sector, which included biotech, healthcare tech and pharma, received $28M, or 35% of funding from angel investors. Internet software companies closed 16 angel deals, totaling more than $11M, while applications software and consumer products sectors accounted for $6.5M each.
Learn more about SD's growing innovation economy and how it is impacting real estate at Bisnow's San Diego Healthcare Leadership and Life Sciences Forum on Sept. 28.