Startups sprouting in San Diego

Jan 16, 2012

By Dean Calbreath; San Diego Union-Tribune
2011 may have been best year since recession began for startups, but funding is hard to find
Between January and September last year, roughly 240 new high-tech and biotech enterprises were launched in San Diego County, positioning 2011 to be the best year for tech startups since the recession began, according to Connect, a support organization for the local tech industries.
That would be a good omen for the local economy, because young firms tend to create jobs at a faster pace than established companies, besides producing innovations that fuel further growth. Such firms as Hewlett-Packard, Microsoft, Adobe and Electronic Arts were all formed during recessions (or, in H-P’s case, the Depression) and went on to become industry leaders during the recovery.
Michael Bernick, an employment specialist affiliated with Santa Monica’s Milken Institute, says the growing spirit of entrepreneurialism, led largely by younger workers, is “the most encouraging dynamic today for California’s employment future.”
But today’s startups still face major challenges. Many will die before they get off the ground. Historically, half disappear within the first five years, and less than 30 percent last a decade. And even for those that are well-positioned for survival, it can be a struggle to find financing in an economy that is still suffering the aftereffects of the Great Recession.
Last year, venture capitalists invested around $200 million per quarter in San Diego firms – less than half the rate they were investing before the recession began. And there’s no sign of the situation improving anytime soon.
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