Is San Diego on radar of enough venture capitalists?
By Jonathan Bikoff

San Diego County, with its population of 3.3 million , is an often-overlooked hub for innovation, entrepreneurship, education and research. It boasts a diverse population and a thriving binational conurbation with Tijuana, Mexico, with a combined population of 5.2 million . The county has a gross domestic product of $268 billion and Tijuana contributes an additional $27 billion in trade exports to the U.S. each year, growing 19 percent in 2021 alone.

San Diego has been growing steadily in recent years, and many entrepreneurs and investors are recognizing the potential of this bustling city. From Qualcomm and Dexcom to Illumina, Raen, and Vuori, San Diego companies are not just creating the next big app — they’re changing the world through innovation.

The city has a long and storied history, beginning in 1542 when the Spanish arrived in the area and established a portal for connectivity with Spain and Mexico. In 1821 , San Diego became part of the Mexican Empire, and after the conclusion of the Mexican-American War in 1848 , San Diego and the rest of California were ceded to the United States and eventually admitted into the union as a state in 1850 .

San Diego stands out in terms of quality of life, with an index of 179 compared to the mean of 143 in San Francisco, Los Angeles, New York and Chicago. It also leads these cities in six out of eight indicators, such as purchasing power, safety, health care and pollution. This is further supported by anecdotal evidence, making it an ideal place to live.

Today, with the majority of the U.S. full-time work force being “ remote-capable ,” employees, founders and innovators no longer need to live in less favorable cities. The removal of this “ball and chain” allows people to live wherever they want, and San Diego certainly presents a compelling option.

Presently, there are 11,285 privately and publicly held companies headquartered in San Diego. 11,046 have valuations less than $50 million. Meanwhile, there are only 276 angel groups/incubators, venture capital and private equity firms, and family offices headquartered in San Diego, only 25 of which have assets under management over $50 million.

This indicates a potential gap between local capital requirements and local investment capacity — an enormous opportunity for new venture capitalists to move into the market. Perhaps some corporations have already caught on — Microsoft, Google, Amazon, Apple and Meta have all either established offices in San Diego or have recently acquired leases to pursue future office plans.

The city is also home to over 80 educational and research institutes, including UC San Diego, San Diego State University and the University of San Diego. UC San Diego’s Jacobs’ School of Engineering ranks 10th in Best Engineering Schools by U.S. News. The school is also ranked third in America’s Top Public Colleges by Forbes, after UC Berkeley and UCLA. This may be another motivation behind the aforementioned tech companies’ expansion in San Diego.

The city of San Diego stands both as an example of American glory — a successful and diverse mixing pot — and a strategic cradle for numerous institutions and individuals. The opportunity is here and it is largely untapped.

The city is becoming a Silicon Valley of its own, and entrepreneurs and investors alike should recognize the potential of San Diego and take advantage of the incredible resources and growth prospects it has to offer.

San Diego is an attractive option due to the large number of talented engineers graduating from UCSD’s Jacobs School of Engineering ( around 2,250 annually ) and the city’s reputation for being one of the happiest places in the U.S.

The big tech companies that have been investing in the area are likely to help retain talented individuals who may eventually use their skills to found startups.

San Diego is also home to some of the wealthiest neighborhoods in Southern California, such as La Jolla, Torrey Pines, Rancho Santa Fe and Carmel Valley. The wealth in these areas is largely disaggregated and noninstitutionalized, but as the Millennial and Gen Z generations come into their own, they may choose to invest their inherited wealth closer to home. San Diego is a city on the rise, and with its diverse population, thriving industries and high quality of life, it is an ideal place for entrepreneurs and investors looking to make an impact.

With its untapped potential, San Diego is a city that should not be overlooked.

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Bikoff is an investment banker and venture capitalist. He lives in Point Loma.