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VCs Hot on the Trail Of ‘Cool Companies’

Approved’s CEO Andy Taylor, right, CTO Navtej Sadhal, middle, and Principal Software Engineer Mark Pitman work out of the EvoNexus incubator downtown. The company was one of 12 of the 30 in the “Cool Companies” class of 2016 to get funded.

San Diego Venture Group 2017 Picks to Meet With VCs

Accel Robotics

Abreos Biosciences

Additive Rocket Corporation

Allbound

Amydis Diagnostics Inc.

Antsle Inc.

Approved

BenRevo Inc.

Brojure LLC

Brax Software Inc.

CourseKey

CureMatch Inc.

Direct Cannabis Network

Doctible Inc.

Epitracker Inc.

Fabric8Labs Inc.

Fantasy Sports Co.

Grolltex Inc.

Guru

Industry

KLOTHO Therapeutics Inc.

LoanHero Inc.

Measurabl

MemComputing Inc.

Molecular Assemblies

NanoCellect Biomedical Inc.

Nanome Inc.

Orison Inc.

PathSense Inc.

PetDesk

Quelzal

Sun Genomics

TRUEPIC Inc.

Xycrobe Therapeutics

Veyo

Yembo

Zesty Platform Inc. (Zesty.io)

Venture capitalists from Silicon Valley and other startup hubs are starting to keep closer tabs on the tech scene in San Diego.

That might have something to do with a rather noisy nonprofit called San Diego Venture Group and its president Mike Krenn, a guy who’s been plugging local startups to investors up north for the past few years.

San Diego has few VCs in the city, so new businesses looking for startup capital generally get their checks from nonlocals. Money flows in pretty regularly for biotech and other life science companies, but tech startups often get left in the cold.

But Krenn says that San Diego’s reputation with tech investors is starting to improve, a trend that stood out to him while collecting RSVPs for an upcoming event he puts on once a year. The event is called “Cool Companies” — a party that brings together San Diego’s top startups with people who can fund their ventures.

110 Investors

“Cool Companies” has been around for a while, but in the past the event was sort of small beans. In 2014, something like 20 VCs showed up. This year, however, 110 investors have RSVP’d for the event. That includes 40 venture capitalists from Silicon Valley and 22 from Los Angeles, including big-time investor groups Sequoia Capital, Andreessen Horowitz, and Upfront Ventures.

“San Diego is one of the ecosystems bubbling up with a lot of investor and startup activity,” said Jay Zhau, a venture capitalist with San Francisco-based Walden Venture Capital, who plans on attending the event.

Zhau went to the Venture Group’s “Cool Companies” event last year, and said he was “intrigued by the quality of companies coming out of San Diego.” He said product execution was on par with tech companies he sees in the Valley. Perhaps more exciting, however, was that there’s less competition for him in San Diego.

“If you’re a good investor, you try to get involved with companies at the earliest stage,” Zhau said.

VCs all fight for the same promising deals. For some startups, investors will “bang the door down to get their check in” before other VCs can beat them to it, Zhau said.

“In the Bay Area, you’re in a market that’s highly saturated with a lot of investors and capital,” Zhau said. “When the market is overheated, it’s good to step out and go to a place other investors think is not worth their time to visit.”

Unbridled Optimism

It must be said that Krenn, a favorite among young entrepreneurs in San Diego, is a devout loyalist to San Diego companies and a marketer through and through. He often chooses to see silver linings where others might see bad news.

For example, when asked what he thought about low VC dollars coming to San Diego in the first quarter (the lowest San Diego had seen since 2013), Krenn replied, “Well… it depends on how you see it, right? San Diego brought in more than Austin, Chicago and Seattle that quarter.”

Despite having mostly rose-colored glasses about San Diego, Krenn also has some hard data to back up his optimism about local tech startups.

Out of the 30 companies Krenn presented last year at his “Cool Companies” event, 12 have since raised money from venture capitalists, including AttackIQ ($8.8M), Soci ($8M), and Portfolium ($5M). And these weren’t just early-stage seed rounds, but Series A rounds with “legit VC funds,” Krenn notes.

“This is the best run we’ve had in the tech space in probably five years,” Krenn said.

Zhau agreed, “that’s pretty good odds.”

The San Diego Venture Group has announced this year’s top tech startups to be highlighted at the “Cool Companies” event on June 15. This year’s list includes 37 companies (see accompanying chart for company names).

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