Phase III: Growing the Best Damn Innnovation Ecosystem on the Planet

2024: The Path Forward / Creating Scale — Intelligently

Connect has been at the center of transforming San Diego into a leading innovation hub over the last forty years (see history of last ten here). We are a top five venture capital region. While the results are exceptional, the goal has always been to create “better,” not simply bigger. We have come a very long way, we have more to do. We can use help. We will achieve better outcomes, and accelerate the pace, if we work together.

The Good, And The Challenge to Be Great:

The fiscal impact depicted here is the result of years of dedicated effort. It’s led to $20 billion being deployed in local investment in just the past four years. That’s seven times the figures from 2013 to 2016. People sometimes gloss over that fact — it’s just a number. But that is 20 .. billion … dollars .. of capital coming into our region. 100 percent imported growth capital. And it’s not yet compounded by the fact that each innovation job creates 2.8 other jobs.

As amazing as the past ten years have been — it’s much bigger than simply $20B dollars. Those investments create the foundation for our region’s economic future. We’ve attracted investments across the entirety of the tech and life sciences spectrum. That’s incredibly important. With defense, tourism, multiple stellar universities, and a thriving innovation economy — we have all the pillars for a resilient macro-economy. San Diego is at the cusp.

San Diego Relative to Other Markets:

In the century going forward, having a strong and diverse innovation economy will be a meaningful differentiator for regional health and community well-being. Certain markets will flourish. Some will be recognized within the global innovation economy. San Diego has a legitimate chance to be one of the great regions on the planet.

Overcoming Challenges:

We’ve come a long way since 2015, despite what many considered the enormous headwind facing San Diego: There were very few funds located in the region. Fast forward to 2024, and there still aren’t.

But we didn’t let that stop us. We created our own regional success. We’re now in our next growth phase. We are seeing an emerging flight of both companies and investors to the region. We’ve overcome the perception barrier with both investors and founders — it’s now acceptable to build a company in a region accepted as an innovation hub.

It’s rather incredible when you look at the numbers, what we have achieved:

Recent data from Pitchbook depicts an incredible story. With focus and execution, San Diego has surpassed cities like Seattle (with 3x the VCs, and 10x the resident capital), Austin (4x VCs, 7x resident capital), and Washington DC (5x VCs, 11x resident capital). Despite fewer venture capital firms and far less regional capital, San Diego continuously punches above its weight and outraises them all. That is the work the Connect championed and drove. Certainly there was much help — but it was Connect’s hard work at the center of it.

Goals Going Forward:

The goals evolve as the community gets bigger. And as the community grows with success, the scale creates fragmentation. Remember, bigger is easy. Better is the goal. Is everyone on the same mission? Success creates profiteering. The goals evolve, as do the challenges.

Connect’s goals (for San Diego’s innovation ecosystem) are relatively straightforward to articulate. But to achieve them — it requires leadership, focus, funding, and ideally — many oars collectively rowing in the same direction. Some of our key goals:

• Continue to attract investment to the region, creating more high-quality jobs.
• Continue to develop all sectors across tech and life sciences. Robust is better.
• Make it easy, desirable, and successful for investors to relocate here.
• Continue to attract high-quality talent and entrepreneurs
• Further develop the pre-seed, seed and Series A investor channel
• Help first-time founders get to the next level (the pipeline)
• Continue to increase positive metrics around diversity, equity and inclusion across all of the innovation ecosystem.
• Create a better spread of high-quality jobs across San Diego county. Make it desirable for companies to open offices around the region.
• Create a more vibrant and functional downtown for businesses.
• Build wider bridges and opportunities with our friends across the border.
• Further develop excellence in tech transfer, getting technologies out of our universities and research institutions.
• Extend our reputation as a global innovation hub.
• Improve access to channel, distribution and customer channels. Improve access to big tech and pharma.
• Maintain our San Diego identity. Integrate newcomers and investors into our ecosystem. San Diego is their new community.
• Build community and a sense of “pay it forward.” Remember what brought you here. Remember what it was like when you were building your first company. Be better. Be San Diego.

• Always remember that while “bigger” is good, and while “scale” is good — being “better” is what makes us happy.

BIG THINGS WE CAN DO TOGETHER:

Building a Global Brand: Expand The Five.Ten.Thirty Conference

When we started out on this mission ten years ago, we focused on the build. Much like a startup. We focused our messaging directly at the VCs. Change their perception, get their money to SD.

When the conversation shifted to talent — we focused messaging there, put in the work, and resolved that challenge.

As we continued to make gains, it made sense to go on the offensive. We have the story to tell, with the substance to back it up. Time time to start broadcasting our message outside of San Diego.

We launched Five.Ten.Thirty (aka .. Innovation Day) in 2022 as a test. Connect stepped up, gathered the community, and leaned in hard. We took over half of Petco Park, wondering how many people would come. We thought 800. And then 2,800 people showed up. In 2023 — we expanded and took over the entire park. 3600 people showed up.

The goal from the start of Five.Ten.Thirty was always to ratchet up. Year over year. Silicon Slopes attracts 10,000 plus to Salt Lake City. SXSW attracts 30,000 to Texas. There is no reason San Diego shouldn’t surpass those numbers — with our own program, with something that is ultimately San Diego.

That is the vision behind Innovation Week, and why we call it Five Ten Thirty. Because the decisions we make today carry an impact five, ten, and thirty years into the future.

It’s important to note — San Diego has several very unique advantages in its quest to build a marquee, multi-day event, that attracts global participation:

• We have a ridiculously beautiful waterfront to hold such an event. It’s easy to imagine. From Petco, to the Shell, the convention center, Seaport Village and the Embarcadero. IQHQ. The port terminal. Seriously — name a city that has anything remotely as attractive as a destination.
• Walking distance access to hotels and venues.
• We have two international airports. Lindberg is just a five minute drive from downtown, and Tijuana is just a fifteen minute drive. We have direct access to all of LATAM.

And there is also a truly unique, advantageous lever for our San Diego community:

• This event is being led by a regional-focused, 501c3 nonprofit. It’s hard to overstate the importance of that. Our view and approach is not solely profit driven. We don’t drop into a market like A16, scream real loud, then retreat the next week. We’re here to stay. We are purpose driven. We always build with community in mind.

When we say “better” not biggest — that is what we mean.

We like to say, “we can build what we can envision.” So as the name Five.Ten.Thirty implies — the question is: What are we doing as a region NOW, to take us where we want to be in 2030, 2035, and then 2055.

XEO is a cohort-based, cross-disciplinary program, designed to elevate diverse talent within the local tech and life sciences ecosystem. The alumni group is now 100 persons strong. The program has proven itself — the heavy lift of launch is behind us. Over 20% of participants have already received promotions. This program is squarely creating the next generation of leaders in San Diego.

The alumni network is an incredible group of insanely smart, talented and engaged individuals. They will create change at scale. They will be hiring managers and future leaders. Their influence and reach will expand. It’s hard to overstate how proud we are of this program, and the individuals who participate — both cohort members and the industry speakers who give their time. Again, this is part of the “better” approach.

This program needs further support. There is no reason this program can’t go national, then global, much like YPO. The bonds that hold these individuals together are actually stronger than that of YPO. Imagine this group being led by a nonprofit. Imagine the global headquarters being in San Diego. And then imagine an annual gathering of all graduates, from all regions, coming together around San Diego for Five.Ten.Thirty/Innovation Week.

That’s what Five.Ten.Thirty — and Connect — is all about. Impact. Meaningful Impact. At scale. For Good.

Lots of people talk about change. Why not be thoughtful — and create it.

2024 began with the launch of the TL Fund — a philanthropic fund designed to invest in early stage startups. The fund will make its first investments in June 2024.

Unlike any other fund, this fund operates without a management fee, and without any single person getting a carry. All returns go right back into the Foundation’s fund, so that it can exponentially grow into the future, and continue to seed San Diego’s innovation economy. I am operating as CEO, taking zero salary, zero carry.

This fund has the potential to be monumentally impactful — for future generations, into perpetuity. A $15M fund can grow into a $30M fund, and into hundreds and hundreds of millions over time. Imagine all those returns just continuously getting recycled into our community.

But raising that first $15M is a hard and heavy lift. Investors get no return. Selling “economic opportunity” doesn’t pull anyone’s heart strings — but as we try and articulate — our economy is foundational to the entire region’s well-being. The philanthropy network is excessively well guarded. No one makes intros. If you feel so moved, please send philanthropists our way.

It’s worth noting, the Foundation is supported by an independent board. Once the fund grows to a sufficient size, it has the ability to make grants to support the economy across the megaregion. Be it STEAM initiatives, or access in underrepresented communities, it will be empowered to further our collective goals.

Scale with Efficiency:

Connect will continue to do all of its core work. And as the region grows, we will continue to stretch ourselves. These things we discuss are all “in addition to.” Connect will continue to run education programs, office hours, first-time founder gatherings, scrub sessions, CEO gatherings, Cool Companies, Venture Summit, XEO, VC deal shopping, etc — in both tech and life sciences — all with a 12 person team. [View 2023 Impact Report]

When we say “scale with efficiency,” you can see the challenge. It’s why we say we “operate at the center.” We know we are not doing this alone. We appreciate all the help we can get, with “the strength of our weak ties”, across all areas of the platform, elevating the entirety of the region.

Policy Leadership:

City leaders are paying attention, as are County leaders. This is a relatively new phenomenon — in just the last five years. It’s not just defense and tourism any more. Connect has brought CEOs together with policy makers. The San Diego Economic Development Corporation (EDC) does a great job of gathering public officials and large corporate leaders. They are expert at navigating the public terrain — and getting difficult issues through our regulatory channels. Together, we will continue to bring more tech and life science leadership to the table, to help guide decision-making and policy development. Regional support at these levels is important.

Leverage Our Strengths / All Those Goals Listed Above:

That long list of bullets above are all doable. We just need to keep them top of mind as we execute. We need to work together, support the organizations and people that are working in those areas. Capitalism can still be a driver, but “community” also needs to be a part of the approach. Both can work together, and guide our efforts.

We need SDSU’s Innovation District to succeed. We are better if tech and life sciences thrive downtown — alongside childcare solutions. Mexico is a huge asset to this region, we need to help our neighbors succeed. We have one of the most successful university networks in the world. They are doing their part, we can help there too. The airport is getting a hugely important makeover, set to launch in 2025. The Port has one of the few in-the-water accelerators in the country. The research institutes. The defense sector is just getting started here with the commercial sector. We have every tech industry sector with substance here.

It’s a big deal: we have both life sciences and tech here with a strong foothold. There are only two other regions in the country that can say that — San Francisco and Boston.

Our potential is limitless. We just need to execute on it intelligently. With a goal to not just be bigger — but to be better. With a thoughtful approach, where we collaborate and elevate together, with a long term vision.

Our Challenge/ Others Challenge as Well: Fundraising:

It’s somewhat taboo to address. But what the heck:

When we fundraise to support this growth — it simply doesn’t resonate. The economy is “boring.” It’s not “community-oriented enough” is one comment I recently heard from the media. The “economy message” evokes no emotions. Yet this economy is at the foundation of our community. It creates more philanthropic endeavors. It enables more arts and culture. It creates companies that cure disease and solve for climate change and other global challenges. Fundraising is the single biggest issue organizations like Connect face. We are constantly fundraising, which limits our ability to “do.” And certainly, to do more.

Just 10 years ago, we all operated in a billion dollar innovation economy. All the talk was lamenting the many challenges we faced. Well, we now operate in a $5B innovation economy. The change has been gradual, so it’s hard to compare 2015 vs 2024, let alone 2023 vs 2024. But it’s absolutely tangible. Let’s remember where we came from, and let’s continue the course for where we want to be.

Execution Meets Strategy:

We’ve been saying it for years: We can build what we can envision. We’re all innovation instigators. We do things that have never been done before. We have an amazing village.

WE ARE SAN DIEGO. And with your continued help, there’s no limit to what we can achieve together.

Together, let’s build the best damn innovation ecosystem on the planet.

The Connect Team:

Cait Kelly, Petra Stegmann, Christie Marcella, Tre Braquet, Taryn Goode, Gretel von Son, Matt Alamo, Sam DeLeon, Val Reyes, Kylie Alsonso