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Economic Drivers

July 15, 2013

 

Gwynne Shotwell just might work for the coolest company on the planet - or as she puts it "In 10 years or so, it might be the coolest company on another planet." Shotwell is talking about SpaceX, the company where she serves as president and COO. Even the most sophisticated in the audience at San Diego Venture Group’s July 12 Venture Summit gasped at the video of SpaceX rockets being tested that blast off and then return to the launch pad. “Grasshopper” is a 10-story Vertical Takeoff Vertical Landing (VTVL) vehicle that SpaceX designed to enable a rocket to return to earth. The ultimate destination? Mars – which Shotwell described as a “fixer-upper planet.” Her humorous and very informative talk left everyone thinking about the power of dreaming big.

Dave Titus, San Diego Venture Group’s president gave a “Venture Status Update” that included both good news and sobering news. Venture fundraising has dropped over the last five years even though the number of firms has stayed about the same. Active funds are down 20 percent in the last five years and the first half of 2013 looks to be following this trend. The industry is consolidating – the top 20 firms raise 55 percent of all the dollars with an average fund size of $400 million. The remaining firms have an average fund size of $41 million.

One surprising statistic shows that since 2008, venture investing has surpassed venture raised, resulting in deficit spending. Titus cited some reasons that could account for the discrepancy – imprecise data, investment coming from non-traditional funds (family offices, foreign investors, hedge funds) and the rise of corporate venture capital. Corporate venture has increased 50 percent in the last three years but seems to be leveling off. On the local front, Qualcomm Ventures is the second largest technology corporate venture fund in the world, exceeded only by Intel.

According to Titus, financings will be harder – he told the entrepreneurs in the audience to plan for that reality and practice, practice, practice your pitch! As for the good news: exits are up with 21 venture-backed IPOs in the second quarter of 2013 and 11 biotech IPOs.

Citing sectors like enterprise software and hardware, Titus told the 600-plus attendees “Hard things are popular again and San Diego is good at hard things.”

 

 


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July 2, 2013

San Diego Venture Group Cool CompaniesIn 2012, the San Diego region raked in upwards of $1.1 billion in venture funding, beating Texas, Colorado, the DC Metroplex and other locales. At the San Diego Venture Group’s Annual Venture Summit on July 12, participants will be able to interact with more than 120 VCs and 30 “cool” companies.

The Venture Summit is one of the most popular events produced by SDVG and connects numerous top entrepreneurs from the region with many investors from Southern California, the Bay Area and other areas to showcase how the innovation climate thrives in San Diego. The Summit will feature a keynote by Gwynne Shotwell, president and COO of SpaceX, as well as other San Diego innovators including Chris Anderson (3D Robotics), Dr. James Mault (Qualcomm Life) and Larry Stambaugh (San Diego Zoo Bioinspiration Centre.)

For the second year in a row, the Venture Summit will include 30 San Diego “Cool Companies.” From social media to software and algae biofuels, companies making this year’s roster include Roambi, Sapphire Energy, and Embarke. They are indicative of the dynamic industries that fuel San Diego’s innovation economy.

Venture Summit is not the only venture-related activity that’s happening in San Diego on July 12. On that day, companies from around the globe will hand in WBT logotheir submissions to present at WBT Innovation Marketplace. Now in its 11th year, WBT Innovation Marketplace brings together the largest collection of vetted and mentored companies and technologies emanating from top universities, labs, research institutions, and the private sector. More than 10 years of research shows that one in three WBT presenters goes on to license, secure venture funding, or sell their IP outright. Last year, the show moved from Arlington, Texas to San Diego, so it could benefit from the region’s world-class talent pool and strong venture capital community.

Companies are invited to apply to present at the Oct. 22 showcase.

With all of the venture activity going on throughout the region, it’s no wonder San Diego has been identified as a high-tech challenger to Silicon Valley.


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June 27, 2013

He ought to say "Move over Jon Stewart." Beaulieu had an EDC audience laughing about economic forecasting. Not exactly an easy thing to do. Humor aside, Beaulieu - who serves as principal at ITR Economics - has an impressive record of accurate forecasts - 96.2 percent accuracy looking 12 months into the future. In a fast-paced and animated presentation, Beaulieu gave the crowd what they came for: actionable information about the coming year. He says while GDP has been growing at a tepid pace in 2013 there will be a slowdown in 2014 as industrial production slows. He cautioned not to project 2013 growth rates into 2014. "Focus on efficiencies, training and outsourcing," he said. And as the country grows toward energy independence, Beaulieu sees an increase in manufacturing in the U.S. Longer-term he looks for good years in 2015 – 2018. However, according to Beaulieu’s research, this will be followed by a noticeable recession in 2019.

"The U.S. is fundamentally healthy," he said. "There's more upside than things to worry about." He pointed out that California maps to the U.S. in terms of trends.

Beaulieu mentioned a list of problems including Europe’s financial stability, China’s slowing growth rate and sequestration. But he parried these with quick explanations. Germany and France are committed to the European Union and will exert a strong influence on policy. China will not melt down; the new leadership is taking a longer view and is letting growth slow down as the government sets up for economic stability. Using a chart to contrast projected spending before and after sequestration, Beaulieu made it clear that the delta between the two is small compared to overall spending.

The presentation included some very positive observations about Mexico’s economy. “Their manufacturing index is up, they are producing better goods, and their management is national now – not ex-pat,” Beaulieu said, at one point calling it “Canada to the South.”

You can check out Alan's presentation here.

 

 

June 14, 2013
By Jennifer Storm
 
Breweries and biotech companies abound. Strong public/private collaboration. A modernized downtown. A breathtaking waterfront. Until I came back from Yokohoma, Japan last week, I thought San Diego was the only place where this existed.
 
I was representing EDC as part of the World Trade Center San Diego’s trade mission to Japan, along with BIOCOM and San Diego Regional Airport Authority, to learn about further strengthening ties between the two regions. Last week, I boarded a plane at Lindbergh Field. Nearly 12 hours later, on one of the most immaculate airplanes I have ever seen, I stepped foot in Narita Airport in Tokyo thanks to Japan Airlines' direct service. A few days and a bus ride later I found myself on the way to Yokohoma, Japan – San Diego’s sister city. 
 
From an economic standpoint, it’s an optimal time to launch flight service between San Diego and Japan. Much like the U.S., Japan is climbing out of recession. As such, they’ve adopted liberal spending policies – known as Abe-nomics –to spur investment and growth, so there is a strong potential for increased foreign direct investment .  
 
YokohamaWhile in Yokohoma, Japanese business leaders exhibited their strong interest in partnering with San Diego companies. We were met with a delegation of 40 business leaders who had ties to San Diego or were interested in creating them. The strong link between Yokohama and San Diego was very apparent- I even met the sole distributor of Stone Beer in Japan! 
 
Traveling to Japan also helped me put things in perspective back home. It’s amazing how two distinct countries could have so much in common, yet also have the opportunity to learn so much from one another. The infrastructure in Japan is outstanding. You can move from one place to another with absolute ease.  This is something we’re working on in San Diego, but admittedly, we’re just not there yet.
 
On the other hand, while touring a biotech company, I had the opportunity to chat with one employee who had previously spent time at the Salk Institute. He noted that although he prefers Japan on a personal level, he misses the creative freedom of working in the U.S.  If he discovered something while in his lab at Salk, he had the freedom to explore that opportunity, in the hopes that it would lead to further research. Although it varies from company to company, he echoed that Japan has more of a regimented work environment. 
 
Although each city has excelled in similar industries, we have a lot of lessons to learn from each other. After all, isn’t that what siblings are for?
 
To learn more about San Diego’s most recent business delegation to Japan, you can read Joe Panetta’s guest column in the U-T.  
 
May 30, 2013

San Diego Regional EDC 48th Annual Dinner

America leads the world in innovation says Jim Clifton, author of The Coming Jobs War and Chairman and CEO of Gallup, but innovation alone is not enough to fuel job growth. Clifton was in town to give the keynote speech at San Diego Regional EDC’s annual dinner. More than 800 people listened in almost total silence (no mean feat for a group that size) as Clifton talked about the difference between innovation and entrepreneurship. According to Clifton, we know how to test for intellectual talent and scout intellectual talent but we have no mechanism to determine who can best take those ideas to the marketplace. And without a customer, the best ideas do nothing for job creation.

Clifton picked up on the dinner’s recurring theme of collaboration as reflected in the comments of EDC Chairman Stath Karras and EDC President and CEO Mark Cafferty. He referred to his concept of “tribal leaders” in a community, those who constantly question and suggest new approaches to issues. “When leaders get their strength together, there is no limit to what you can do,” Clifton said, recognizing that most of the region’s leaders were in the room.

Clifton acknowledged one of San Diego’s best examples of a tribal leader – Malin Burnham – who was instrumental in bringing Clifton’s ideas to the business community and in bringing Clifton himself to San Diego.

Clifton made it clear that no one should be looking to Washington for solutions to America’s problems. “We have to win the world back one great city at a time,” he said.

EDC’s annual dinner also honored former EDC Chairman Bill Geppert with the Herb Klein Civic Leadership Award. Geppert was humble and gracious in his remarks, mentioning many beloved San Diegans who came before him as great civic leaders.

Many people took to twitter to discuss the event:

 

 

May 23, 2013

What everyone in the world wants is a good job.

It sounds simple enough. If a region can create these so calledgood’ jobs, then it will prosper. But how do we do this? Cue Gallup Chairman Jim Clifton.

Clifton, author of The Coming Jobs War, says we should focus on creating good jobs because as jobs go, so does the fate of nations. Economic stability hinges on leadership’s ability to create these good jobs. San Diego, with its geographic destiny and strong business climate, must continue to leverage its assets and traded economies – military, tourism and innovation – to pull ahead in the great jobs race.

Fast forward to less than a week from now, we’ll be sitting at the Hilton San Diego Bayfront hearing Jim Clifton discuss how San Diego can get ahead in the race for good jobs at EDC’s 48th Annual Dinner.

For the past 47 years, EDC’s Annual Dinner has been full of excitement, celebrating the Mega-Region’s rich and diverse businesses. With more than 850 elected officials, and community and business leaders in attendance, this year promises to be no different.

Of course, none of this would be possible without the generous support of our numerous sponsors and investors, and our dinner underwriter, Point Loma Nazarene University.

Register here for the dinner and make sure to join the conversation on twitter #EDCAnnualDinner

If you want to see a round-up of some of last year’s highlights, you can check them out on facebook: https://www.facebook.com/media/set/?set=a.10150851843796717.403117.60837071716&type=1&l=12c6879af9

May 16, 2013

At EDC, we're always looking for new ways to tell San Diego's unique story. With the release of the Brookings Metropolitan Export Initiative was a good time to try it out. Using Storify, we integrated pictures, tweets, quotes and other forms of media from the event. Here's what we came up with:

 

Help us keep the conversation about the critical role exports can play in the region's global competitiveness strategy 

May 13, 2013

“It’s clear to us we are a global city,” said City of San Diego Mayor Bob Filner as he kicked off a press conference and town hall on May 13. Its focus was the need for the San Diego region to increase export activity in order to grow jobs and economic prosperity. It may be clear to San Diego, but it might not be clear to the rest of the world. He's out to change that perception and at the same time create more of the middle class jobs that were once the backbone of the San Diego economy. "We have not fulfilled our potential," he said, adding that we have the political will to change.

Each speaker commented on the findings of a market assessment that was the catalyst for the gathering. The market assessment is the first key step in the Brookings Metropolitan Export Initiative, a program focused on helping eight regions create collaborations from the ground up to design and implement customized metropolitan export plans.

City of San Diego City Councilman Mark Kersey pointed out that San Diego has lots of advantages other areas don’t have, such as our technology sectors.

Michael Masserman, from the U.S. International Trade Administration came to offer his agency’s support which includes opening markets for exports and entering into trade agreements to facilitate exports. “Jobs in export-oriented companies pay 15 – 20 percent higher wages that their non-exporting counterparts,” said Masserman.

Elliott Hirshman, president of San Diego State University, discussed the importance of international engagement in educating the workforce of the future citing a substantial increase in international programs at San Diego State.

Peter Cowhey, dean of the School of International Relations and Pacific Studies at UC San Diego, presented highlights from the market assessment. Cowhey, along with two of his graduate students, was responsible for conducting the survey and collecting the data for the market assessment. “San Diego is punching well below our weight,” said Cowhey, pointing out that although San Diego is the country’s 17th largest metropolitan economy, we rank only 55th when examining exports as a share of our regional economic output.

The market assessment revealed that San Diego’s exporters see a need for infrastructure development in three major areas: port, airport and cyber infrastructure.

Bob Nelson, vice chair of the board of port commissioners, agreed that if the region is going to see growth in exports then we need to see growth in infrastructure. The Port has in the works infrastructure improvements worth close to $100 million.

Robert Gleason, board chair of the San Diego County Regional Airport Authority, said that San Diego International Airport has a critical role to play in increasing export activity. That includes additional international non-stop service and increasing cargo capacity. An added benefit of more international visitors (which are also considered exports) is that they typically spend almost double what a domestic visitor spends on a trip.

Steven Weathers, president and CEO of World Trade Center San Diego, an organization that provides direct services to exporting companies, said that many people ask him, “What’s the big goal?” His answer? “Job creation – sustainable, diverse, job creation.”

photo left to right: Mayor Bob Filner, City Councilman Mark Kersey, Michael Masserman, Peter Cowhey, Bob Nelson, Robert Gleason, Elliot Hirshman, Steven Weathers

Access the full report: San Diego Metropolitan Export Initiative Market Assessment

Media coverage 

Region needs to boost exporting, report saysU-T San Diego
Local leaders push boosting trade, The Daily Transcript  
San Diego could be exporting more, Brookings Institution reports, KPBS

 

 
 

                                  

April 22, 2013

 

The cornerstone of a successful economic development program is having strong data to ensure that we are making informed decisions about growing the economy. At EDC, we have been fortunate enough to partner with and benefit from the countless area organizations, companies and universities that have provided substantial economic data. Although we don’t see these partnerships slowing down, with the launch of our new research bureau, we will be putting out a quarterly snapshot of our own. 
 
We’ve heard countless times that San Diego has a strong VC cluster, a healthy tourism industry, and a world-class talent pool, but as we strive to make our region globally competitive, we want to know how we stack up with other metro areas. Our Q1 snapshot is our data-driven approach to answering that question.
 
The quarterly snapshot will report on key economic metrics that are important to understanding the regional economy and San Diego's standing relative to other major metropolitan areas in the U.S. Please take a look, share with friend and colleagues, and let us know what you think. 
 
http://www.sandiegobusiness.org/sites/default/files/EDC-SnapShot-2013-0415.pdf

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April 19, 2013

The Sunrise Powerlink is a 117-mile, $1.88 billion 500kV electric transmission line from Imperial Valley to San Diego. At the recent regional economic forum Michael R. Niggli, SDG&E President & COO, presented a case study on the Sunrise Powerlink project detailing the economic impact of the project and some of the ways in which the project worked to protect sensitive species during construction. The project was the largest infrastructure project in SDG&E's history. Completed in June 2012, it has already made a tangible difference in system operations and is crucial to alleviating the summer capacity shortages that threaten the area due to the ongoing outage at the San Onofre Nuclear Generating Station.

Economic impact:

  • It's a veritable “renewable energy superhighway” that delivers 1,000 megawatts of power – enough energy for 650,000 homes
  • Generated an astounding $3.2  billion in economic activity and 23,000 jobs for California
  • Injected $1.7 billion into the U.S. economy - $1.1 billion of which was spent in Southern California
  • Catalyst for renewable energy construction; local projects currently under construction generating more than $5 billion in spending and 3,000 jobs

Protecting sensitive species:

  • Created a 13-mile construction free zone for bighorn sheep lambing season from January 1 – June 30
  • Established no-fly zones of more than 4,000-feet around golden eagle nesting sites from December 1 – June 30
  • Relocated hundreds of flat-tailed horned lizards relocated Imperial Valley construction yards and protecting them with specially-designed exclusion fencing
  • Installed special fencing to protect arroyo toads in project locations
  • Preserved in perpetuity more than 11,000 acres of scenic habitat for future generations to enjoy

Sunrise Powerlink enhances reliability, accesses renewable energy and significantly boosts economic development. Businesses are looking for a healthy, reliable power supply. Sunrise Powerlink provides that - while at the same time it is encouraging renewable projects and promoting cleantech industries.