2020 in Review & Venture Outlook Ahead — Editorial by Matt Kroe

Well, 2020 was… something.

One thing that 2020 brought us here in San Diego was an absolutely phenomenal influx of venture capital funding. In just a few short years, San Diego county has matured from a metropolitan area that raised less than $2B in 2017 to one that has ballooned to over $4.6B in 2020 (this number is likely to rise a bit more as financial details continue to settle, and the SDUT has reported that total funding eclipsed $5B).

Connect San Diego Incoming Venture Capital Past 5 Years

This number looks even more remarkable when we look back at the most uncertain and tumultuous year most of us have ever experienced. The year in funding began pretty strong with three deals raising at least $50M, and seven raising more than $10M in January alone. This slowed a bit in February, as there were no confirmed investments resulting in more than the $20M Blue Nalu reported. And March? Well, March brought us a shelter-in-place order and a sense that things we’re just going to be on hold for a while. Before the announcement, Design Therapeutics raised $45M, Cloudbeds raised $82M, and Events.com raised $34.5M in the first 12 days of the month; and despite these orders, Aspen Neuroscience raised $70M in the last few days of the month — all of which are incredible for our region regardless of any extenuating circumstances.

This is where the deals being announced really began to surprise me: between the beginning of April and the end of the year, at least 12 deals totaling over $100M were announced, illustrating the Venture Capital community’s interest and respect for San Diego’s surging innovation scene. 10 of these 12 deals were investments in San Diego based Life Science companies, which lines up with the frequently repeated notion that San Diego is a Life Science hub. But, I don’t want to ignore the amazing traction that our local Tech sector is seeing; multiple investments worth tens of millions of dollars and two of at least $100M. The size and frequency of these funding rounds in both major industries shows me that San Diego’s current generation of tech and life science startups are reaching a level of maturity that I have not yet experienced in the few years that I’ve been paying attention, and I’m excited to see where we go next.

I’d also like to take a moment to highlight San Diego’s early stage deal flow in 2020. The first few months of the year included a nice variety of early stage deals being announced alongside the growth and later stage deals, but this news slowed as our state went into lockdown in March. For the next few months, we saw few to no weekly announcements of a Seed or Series A deal as we had become accustomed to, but this changed around mid-year. Understandably, there was hesitancy to take on the risk of a Seed or Series A investment when so much was up in the air, and an industry that relies so heavily on crucial in-person interactions was hoping to wait it out until conditions allowed this to occur. As we all know, this never came in 2020, and as a result the industry adapted and figured out how to make these deals happen regardless of the circumstances. This led to a ton of Seed and Series A activity in the second half of the year, and has me excited to see this next generation of startups grow and hopefully find the same success that our current generation of later stage startup companies is finding.

Funding in San Diego has started this year in a full sprint! Deals over $50M have seemingly become commonplace and I can’t wait to see what innovative ideas our local entrepreneurs think up next!

Check out the data here.

If you’d like to learn more about the current state of the Venture Capital industry, please join us on February 16th, as we talk with Bobby Franklin (CEO, National Venture Capital Association), and David Coats (Co-Founder & Managing Director, Correlation Ventures) about what they saw over the last year and what they think we can expect in 2021.