Venture Activity Surged in San Diego in 2015, and Top 10 Deals

Fund Raising

VC investors poured $ 334.1 million into 27 deals in San Diego during the last three months of 2015—a surge that helped carry venture funding in the region to a three-high, according to a year-end tally by the MoneyTree Report.

The total was more than twice as much as the $ 123.7 million that VCs invested in 22 San Diego startups during the last quarter of 2014, but down from the $ 435.9 million that went into 33 local startups in the previous quarter, according to the report.

The quarterly VC activity report is prepared by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters. (Xconomy covered MoneyTree’s nationwide data last week.)

San Diego-based Sapphire Energy led the fourth-quarter charge by raising $ 91.9 million, according to the MoneyTree data, and a biotech startup, eFFECTOR Therapeutics, raised $ 40 million during the last three months of 2015.

Sapphire CEO James Levine said in an e-mail (January 23, 2016) the financing deal involved both cash and debt (exchanging some debt for equity). “We have not announced additional details,” Levine wrote.

Sapphire set out to prove that algae could be used to produce a variety of transportation fuels, but the company has been undergoing a strategic shift under Levine, who wrote, “The funds will be used to continue to execute against our Omega Oils strategy.”

Total venture funding for San Diego companies in 2015 amounted to nearly $ 1.2 billion in 101 deals—nearly 40 percent more than the $ 833.8 million that went into 102 deals here last year.

One of the biggest surprises of 2015, though, was a significant increase in venture funding for software startups, with $ 233.3 million invested in 27 deals. It was a 139 percent increase over the previous year in funding for software deals in San Diego, according to MoneyTree Data.

“There were two deals that accounted for $ 80 million of the software funding, but even if I remove those two deals the numbers are still up significantly,” according to Ryan Spencer of PricewaterhouseCoopers’ San Diego office.

“If you look at the sectors that San Diego software investment cuts across, you have deals for companies serving sectors such as enterprise data, security, and transportation, but we also saw about a quarter of these software deals relate in some way to the life sciences sector,” Spencer wrote in an e-mail (January 23, 2016). “Software companies are showing that they are quick to identify and fill critical market needs, and they also operate very capital-efficient business models.”

San Diego’s life sciences industry raised the most venture capital, though, as the sector usually does here, with $ 605.5 million—or about 52 percent of all capital invested here. The previous year, it was $ 558 million, and in 2013, venture investors raised $ 523.1 million.

Here are San Diego’s 10 biggest VC deals of 2015, according to the MoneyTree report:

Suja Life    (Q3) $ 149.4 million Health Food and Beverage
Sapphire Energy    (Q4) $ 92 million Industrial Biotechnology
aTyr Pharma        (Q1) $ 76.3 million Biotech (Therapeutic Proteins)
SmartDrive Systems (Q1) $ 50 million Transportation Software (Telematics)
Genalyte       (Q3) $ 44 million Biosensors for Medical Devices
Cidara Therapeutics  (Q1) $ 42 million Biotech, Anti-fungal
AnaptysBio    (Q3) $ 40.8 million Biotech, Monoclonal Antibodies
eFFECTOR Therapeutics   (Q4) $ 40 million Biotech, Immune Response Effectors
Metacrine  (Q3) $ 36 million Biotech, Metabolic Regulators
Tealium   (Q1) $ 30.7 million Web Marketing Software