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Tuesday, Jun 25, 2024

Venture Capitalist: More Local Funding Needed

Local venture capitalist Dan Wood, co-founder of San Diego-based IngleWood Ventures, says big businesses and government should invest more money in the biomedical community here.

He wrote a letter recently to regional life science trade organization Biocom, UC San Diego and high-tech networking group Connect. Wood named Qualcomm Inc., Sempra Energy and Science Applications International Corp. as companies that “have no track record” and have not “shown any current desire to support the local VC industry other than their own in-house strategic VC funds.”

Qualcomm spokeswoman Tina Asmar said the company invests in wireless technology “on a broad scope, including in support of converging wireless with medical services.”

Sempra spokeswoman Jennifer Andrews said while the energy company does not invest in the biomedical industry through venture capital funds, it participates in a number of community projects that include charitable giving.

SAIC officials were unavailable for comment.

Local venture capitalists and biotech executives say about 79 percent of the venture capital that life science companies here get comes from outside the county.

“San Diego, despite being the seventh largest city in the nation, is a town of over 80,000 small businesses with only three Fortune 500 companies,” Wood wrote in his letter.

Still, venture capitalists across the country put more money into San Diego biotechs in the second quarter than biotechs in any other area of the nation except Silicon Valley, according to PricewaterhouseCoopers. Venture capitalists invested about $296 million in health care industries in the second quarter in San Diego.

Much of the money biotechs survive off here comes from out of state and even out of the country. A good portion extends from San Francisco, said local biotech pioneer Ivor Royston, who founded San Diego’s Forward Ventures.

Royston, who is also one of the founders of the first San Diego biotech, now-extinct Hybritech, Inc., said Forward Ventures invests in life science companies all over the country, including many in San Diego.

Most of IngleWood’s clients are in Southern California. There are around five homegrown venture capital firms in San Diego, including IngleWood and Forward Ventures , not nearly as many as the San Francisco Bay Area, say industry members.

To fill the gap in funding for smaller biotechs, several venture capitalist firms based elsewhere have been locating satellite offices in San Diego to invest in and foster startup life sciences companies, Royston said.

Wood believes the gap would be further served if community leaders pooled money to develop a “mega fund,” a billion dollar-plus fund to help biotechs.

Royston said such a fund is not necessary to have a healthy biotech industry.

In the September issue of Venture Capital Analyst, a trade journal published by Dow Jones & Co., editor Tom Salemi wrote that perhaps San Diego’s one “knock” as a biotech hub is its “lack of a homegrown venture capital mega fund.”

“However,” Salemi wrote, “if one were to rank the cities by capital raised and deals done, San Diego certainly warrants a mega fund of its own.”

Royston brushed the idea of a mega fund away, saying few cities have them.

Wood and Royston agree, though, that San Diego , including businesses and community leaders must step up efforts to foster startup life science companies.

Royston’s company has about $500 million in capital under management, while IngleWood has about $40 million in committed capital and is about to start another $150 million fund, the companies said.

IngleWood tends to invest in companies that are in earlier trials with products, whereas Forward Ventures’ clients are mostly in mid- to late-phase testing.

“We’re having to go to Arizona, New Mexico, Utah,” Wood said. “We’re not getting the support we need from the community.”


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