News Summary
San Diego County has witnessed a 35% decline in venture capital investments for startups in the second quarter of 2025, marking the third consecutive quarter of reduced funding. Venture capitalists invested approximately $755 million in local startups, with 58 deals reported, down from 68 a year earlier. This decline reflects a national trend, influenced by economic uncertainties and a selective funding environment. Despite these challenges, sectors like life sciences continue to secure significant funding, indicating a mixed landscape for San Diego’s entrepreneurial ecosystem.
San Diego County has experienced a significant decline in venture capital investments, with a reported 35% drop in funding for startups during the second quarter of 2025 compared to the same period a year earlier. This marks the third consecutive quarter of reduced investments, indicating a troubling trend in the local startup ecosystem.
During the three-month period ending June 30, 2025, venture capitalists invested approximately $755 million in San Diego-based startups. The county also saw 58 venture capital deals, a decrease from 68 in the same quarter of 2024. Such a decline in both investment capital and the number of deals is concerning, as it aligns with similar reductions observed in previous quarters, specifically during Q2 and Q4 of 2024, which recorded the fewest deals since 2018.
The investment downturn in San Diego mirrors a broader national trend as major cities, including Chicago, San Jose, New York, and Boston, are also facing declines in venture capital funding, ranging from 25% to 33%. Various experts attribute this decrease in investments to multiple economic factors, including ongoing economic uncertainty, tariffs, federal funding cuts, and a more selective environment for capital allocation.
As a result of these challenges, many companies are opting to remain private for longer periods. Industry professionals highlight this shift as a response to the current venture capital landscape issues. The increasing costs of doing business, exacerbated by tariffs, are described as an “uncertainty surcharge,” further discouraging potential investors.
Venture capitalists are adopting a more discerning approach, urging their portfolio companies to “extend the runway” and exercise caution regarding funding opportunities. In this challenging environment, capital efficiency has become crucial for San Diego’s startups, leading to some consolidation as investors seek higher-quality ventures.
Despite the overall decline in investments, certain sectors, particularly life sciences and artificial intelligence, continue to attract significant funding. Six of the top ten local funding deals were in the life sciences sector. Leading this momentum is RayThera, a biotech firm that secured the largest local investment of $110 million. The funding will facilitate the company’s efforts to advance its lead drug candidates through phase 1 clinical studies focusing on small molecule therapies in immunology.
Biolinq, another San Diego healthcare tech startup, successfully raised $100 million in Series C funding to advance its regulatory approval for a novel glucose sensor. In the artificial intelligence space, Clearspeed raised $60 million in Series D funding, providing voice-based risk assessment services globally, along with Flock Freight, which also raised $60 million in Series E funding, operating as a freight brokerage that incorporates AI technology.
Interestingly, there were no local initial public offerings (IPOs) in the second quarter of 2025. However, Bolt Medical, based in Carlsbad, was acquired by Boston Scientific for $443 million, which could rise to an additional $221 million based on meeting regulatory milestones. Additionally, Carlsmed, another Carlsbad med-tech company, went public after the quarterly report, selling shares at $15 each, and its stock closed at $12.72 after trading began.
In a bid to stimulate regional economic growth, Prebys Ventures announced the launch of a new impact fund, allocating $50 million to bolster tech and life sciences startups in San Diego. This initiative is led by Mike Krenn, highlighting ongoing efforts to support the local entrepreneurial ecosystem amid challenging investment conditions.
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Additional Resources
- San Diego Union Tribune: Economic Uncertainty Stunts Investments in San Diego Startups
- Wikipedia: Venture Capital
- San Diego Business Journal: Buyback Ventures’ Untraditional Model
- Google Search: San Diego Startups
- Fierce Biotech: Fundraising Tracker
- Encyclopedia Britannica: Startups
- PR Newswire: Prebys Foundation Launches $50M Venture Fund
- Google News: Venture Capital Decline 2025
Author: STAFF HERE SAN DIEGO WRITER
SAN DIEGO STAFF WRITER The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
