Entrepreneurship

Venture Capital and the Innovation Economy

Worsened less than 1 percent from
2016 to 2017

How are we doing?

The entrepreneurship indicator received a thumbs-down because San Diego’s total venture capital investments saw a 5% decrease from 2016, even though the total investments topped $1.2 billion. The number of jobs created by the innovation economy increased by 5% and the software sector accounted for the majority of San Diego’s innovation startups in 2016, with pharma/biotech/medical devices coming in second. The number of patents published and granted declined slightly from 2015 to 2016. See more information.

San Diego’s venture capital investments in 2017 totaled $1.2 billion, a $63 million decrease from 2016 to 2017. Silicon Valley was one of the five major metro regions in California that saw an increase in total venture capital raised from 2016 to 2017.

Data Source: PwC/CB Insights MoneyTree Report, 2018

Why is it important?

  • San Diego is a growing hub for high-tech and startups. It is important to invest in technology and innovation and create more collaborative workspaces, which will encourage new entrepreneurs and their businesses to come to the San Diego region. Such actions will spur cross-sector economic growth, jobs, ideas and innovation in our region.
  • The San Diego region ranks #4 in the U.S. Cleantech Leadership Index. This is due to San Diego’s leading number of solar installations; commitment to measuring, reporting and reducing greenhouse gas emissions; and high levels of electric vehicle deployment.

Data Source: CONNECT, San Diego Innovation Report, 2017

Data Source: CONNECT, San Diego Innovation Report, 2016

Among San Diego’s innovation startups created in 2016, 59% were in the software sector with the pharma/biotech/medical devices sector coming in second with 20% of new startups. For more on data on the innovation economy, check out CONNECT’s Innovation Report.

Data Source: CONNECT, San Diego Innovation Report, 2017

Data Source: CONNECT, San Diego Innovation Report, 2016

San Diego startups created a total of 1,729 new innovation economy jobs in 2016, a 5% increase from 2015. There were job gains in computer and electronics and a drop in communications jobs.

San Diego saw a slight slowdown of patents being published and granted. In 2015, a total of 6,957 were published and 6,443 patents were granted, while in 2016 only 6,794 were published and 6,252 were granted, a decrease of 2% and 3% respectively.

Data Source: CONNECT, San Diego Innovation Report, 2017

  Idea for Change

Helping underserved communities access entrepreneurship resources helps strengthen the economy and make it more inclusive. In 2017, the City of San Diego, the Jacobs Center for Neighborhood Innovation, and CONNECT partnered to open CONNECT ALL, the first diversity focused business accelerator designed to grow local early stage businesses in San Diego’s most disadvantaged communities. The accelerator will have a dedicated co-working space at the Jacobs Center, located in San Diego’s Diamond neighborhood, a historically underserved community that has been identified as part of San Diego’s federally designated Promise Zone. Local governments, nonprofits and businesses should continue to invest in these programs.

  Bright Spot

The San Diego Regional Energy Innovation Network is a California Energy Commission-funded program to support startups with electric energy-focused technologies in San Diego, Imperial, Riverside and San Bernardino counties. The program provides resources through a consortium of partner organizations to help entrepreneurs successfully bring their innovations to market. To date, the program has worked with 17 companies, launched 14 new pilot projects, secured $22 million in funding and created 23 new jobs.

  What are we measuring?

We measure entrepreneurship by tracking year-over-year change in total venture capital raised in the region. We also track the number of patents published and granted over time, the total jobs created by innovation startups and the number of innovation startups created by sector each year. Learn more about the data.