Economy

San Diego startups fared extremely well in 2020

Written by Hannah Schmidtler

Businesses have faced a multitude of hardships this last year. However, San Diego startups unexpectedly raised a record high $6.1 billion in venture capital in 2020. That is nearly double the venture capital raised in 2019, which was $3.35 billion. 

Mike Krenn, the head of Connect/San Diego Venture Group, explains his shock at this wonderful news. “I thought after we hit $3.4 billion (in 2019) if we could replicate that, great. Then COVID hits, and we still crushed it, which is crazy.”

Nationally, venture capital investment was $156 billion in 2020 up from $138 billion in 2019. On the national level, Airbnb and Doordash were two of the top performing IPOs in 2020.

Most investments in San Diego occurred in the biotechnology/life science sector, which experienced record increases due to the pandemic and demand for health services. Some believe that the boost to  biotechnology/life science companies could last for years due to renewed interest in vaccines and antiviral therapies. 

Other record investments in 2020 were seen in software, autonomous driving, logistics, and other technology firms.

Many were concerned that Covid-19 related fears would scare off investors and thus derail takeovers and IPOs; making it impossible for venture capitalists to get a payback. Despite these fears, IPOs stayed strong. In San Diego alone eight companies went public in 2020.

“The startup ecosystem played a critical role in the technology, services, and healthcare support the country has relied on over the past 10 months, and the industry’s resilience and long-term investment eye will be pivotal to the country’s economic recovery in 2021 and beyond,” said Bobby Franklin, president and chief executive of NVCA.

Takeovers also fared well during the pandemic. The largest takeover in San Diego was that of Merck, a multinational pharmaceutical company, which was bought by VelosBio for $2.75 billion.

Photo via Pandle