United States
San Diego
"San Diego's strength is its breadth of innovation: Tech, Life Sciences, Defense, and Healthtech are all colliding and collaborating. Nearshoring is easy with Mexico just 20 miles from downtown, and the great weather further contributes to the ecosystem being perfectly positioned for continued growth."
Highlights
San Diego’s tech startup sector has seen rapid growth in recent years, aided by the availability of tech talent from the area’s many excellent universities and military bases. The city’s famous sunshine, high quality of life, and business-friendly environment have all helped attract founders and talent. But as in most ecosystems, VC fundraising in San Diego was down in 2022 compared to 2021’s heights — by 45% — although 2022 totals still compared favorably to historical figures. Overall VC funding increased by 55% from 2018 to 2022.
More than 220 accelerator programs, incubators, and investors focused on San Diego tech startups have helped the ecosystem grow. San Diego State University and Techstars partnered to create Techstars San Diego Powered by SDSU, and Greater Than Tech seeks to support the next generation of female scientists, engineers and entrepreneurs. Startup San Diego supports startup founders in San Diego and fosters a cohesive, collaborative community.
The city also plays its part, with the San Diego Regional Economic Development Corporation’s Inclusive Growth Initiative aiming to create 50,000 new quality jobs in small businesses by 2030. Qualified sites can take advantage of an extension of the U.S. Foreign-Trade Zone program offering international traders, importers, and exporters special customs privileges. San Diego Startup Week is one of the nation’s largest startup events, taking place each June.
In September 2022, biotechnology company Capstan Therapeutics raised $165 million in financing. Security compliance and automation platform Drata raised a $200 million Series C round in December 2022, taking the company’s valuation to $2 billion.
Ecosystem by the Numbers
Sub-Sector Strengths
Cleantech
San Diego’s Cleantech sector has an economic impact of $8.2 billion. Cleantech San Diego, a supporting organization of the Cleantech Forum North America, connects startups with investors and corporate partners. In July 2022, San Diego Gas & Electric, in collaboration with Cleantech Nuvve, announced the success of a pilot project to use electric school buses. In July 2022, battery materials company Wildcat Discovery Technologies raised a $90 million Series D.
Life Sciences
San Diego is ranked the fifth strongest Life Sciences labor market for research talent in the U.S., with the highest density of biochemists, biophysicists, and other biological scientists and the second highest density of chemists. The development of Bioterra, a $202 million biotech facility, was announced in late 2022. Targeted radiopharmaceutical company RayzeBio raised a $160 million Series D in September 2022. Clinical-stage company Escient Pharmaceuticals closed a $120 million Series C in November 2022.
AI, Big Data & Analytics
In July 2022, a National Science Foundation initiative created the Institute for Emerging CORE Methods in Data Science, a $10 million institute at the University of California San Diego. The Emerging Topics in Artificial Intelligence 2022 conference was held in August. In April 2023, the Artificial Intelligence for Early Drug Discovery conference gathered experts in the field. In December 2022, defense technology company Shield AI raised an additional $60 million in Series E financing, closing out the round at $225 million.
Reasons to Move Your Startup to San Diego
Business-Friendly Environment
San Diego has reduced permit processing times and fees and modified codes to provide businesses with regulatory relief. Its Online Business Portal further assists entrepreneurs. The City's Economic Development Department has a proactive Business Expansion, Attraction and Retention Division that works directly with businesses in targeted industries, providing assistance and incentives.
Quality of Life
Housing is significantly cheaper in San Diego than in other top California hubs, and the overall cost of living is more affordable. Job growth for the next 10 years is estimated to be 34.9%, outpacing the 33.5% forecast for the rest of the country.. San Diego’s Climate Action Plan sets a goal of net-zero greenhouse gas emissions by 2035. SANDAG’s Regional Transportation Plan seeks to reduce local reliance on cars.
Tax Incentives
City of San Diego tax incentives include the Business Cooperation Program, which can provide tax rebates when a business implements new practices for sales, purchasing, or tax accounting. The Fee Payment Incentive Program allows businesses to recoup certain fees associated with submitting and securing building permit entitlements.
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