Aerial San Diego Courtesy CBRE | Courtesy CBRE

This Market’s VC Investment Soars to $594M

Carrie Rossenfeld Finance & Capital Markets

San Diego’s venture-capital activity surged in 2018, setting a record for single quarter investment volume at $594 million, according to data from CBRE Research, PwC/CB Insights MoneyTree Report, Pitchbook and Mattermark. The previous record was $539 million set in Q4 2015.

This milestone comes on the heels of an annual record set in 2017. Yet, despite the higher dollar volume, deal count was lower than average at 23 deals.

M&A activity in San Diego continued to mirror the national trend with 28 known M&A deals in Q1 alone, says CBRE. This figure includes announced or completed deals involving San Diego companies either as the acquirer or the acquired. Qualcomm made international headlines as Broadcom attempted to acquire the iconic San Diego company, but the effort was thwarted by an investigation from the U.S. Committee on Foreign Investment, which cited national security threats if the acquisition succeeded (via SEC).

The largest deal this quarter went to Silvergate Capital Corporation, a UTC-based commercial bank that received $114 million venture funding from cryptocurrency venture capital firm Digital Currency Group, CBRE reports. The announcement noted that the funding would be used to fund the company’s fintech ventures, as Silvergate was an early adopter of Bitcoin-related financial services (via PR Newswire).

The report also reveals that investment in San Diego-based life-science companies hit a record-high $417.9 million from 15 deals in Q1. Biotech/pharmaceutical received $335.9 million in Q1, nearly doubling the recent average. The largest life science deal this quarter went to Gossamer Bio, a biopharma R&D company founded by former executives of Receptos, which raised $100 million in a seed round (via SDBJ). Crinetics Pharmaceuticals ($63.5 million), Singlera Genomics ($60 million) and Expansion Therapeutics ($55.3M) were other biotech/pharmaceutical companies that received large deals (via Pitchbook). Medical device/diagnostic companies received $82.1 million, led by surgical device company Vertiflex, which received $40 million in Q1 (via Press Release).

Also, investment in tech companies in San Diego slowed compared to recent quarters, with seven deals totaling $62.1 million. Nearly half of this investment went to Midigator, which received a $30 million Series A round (via Business Wire). The chargeback management solutions company deploys a software platform that helps merchants and financial institutions fight fraud. Boomcloud360 was the other large recipient at $10.8 million of seed funding (via Pitchbook). The company has developed an external sound processor, BoomStick, which enhances the sound of existing headphone devices.

In M&A activity, CBRE reports that San Diego-based Impact Biomedicines reached a $7 billion agreement to be acquired by New Jersey-based Celgene, pending approval from the FDA (via Reuters). Celgene also made a four-year $101 million equity-investment/partnership agreement with San Diego-based Vividion Therapeutics (via SDBJ). The partnership will focus on oncology, inflammation and neurodegeneration, building on Vividion’s discovery platform.

In addition, Escondido, California-based One Stop Systems raised $19 million in its IPO in February (via MarketWatch). The high-performance computing company fell short of its target to raise $23 million in its IPO.