Bacon: The region fell short of annual investment seen in 2014 and 2015, but total investment still exceeded the $1-billion mark for the sixth straight year. The year started out on pace to keep up with recent annual postings, but lost steam in Q4. It remains to be seen if there will be a rebound in 2017, but San Diego has a track record of being a relatively safe place for investment, especially in the life sciences. Expect a continued positive trend.

GlobeSt.com: What factors are at play that will continue to influence San Diego's VC investment numbers for the foreseeable future?

Bacon: It's possible that this is a reflection of investors tightening their checkbooks due to uncertainty, but that may relax in the coming quarters especially considering recent strong upward trends in the stock market. We should consider that companies in San Diego may be seeking and receiving other forms of investment besides venture capital. All-in-all, though, the region continues to be a hub of innovation in tech and science, which is what drives investment to the region. Sectors like genomics, bioinformatics, cybersecurity and robotics are thriving in San Diego, so we should expect the money to follow in the coming years.

SAN DIEGO—Over the previous couple of years, the San Diego region was getting historically high amounts of venture-capital investment, so Q4 2016's slowdown may be a single-quarter anomaly or a regression toward the historic average, CBRE EVP Bill Bacon tells GlobeSt.com. The firm reports that total VC investment in San Diego firms was $209 million in Q4 2016, down 35% from Q3 2016 and down 55% from Q4 2015, according to data from the PwC/CB Insights MoneyTree Report and Mattermark. Deal volume was 21, which is considerably lower than the quarterly average of 53 deals.
CBRE also reports that for San Diego, this was the lowest quarter for VC investment since Q4 2010, and investment volume was well below the quarterly average (since 2013) of $376 million. VC investment was lower nationwide as well; it was the lowest quarter for total US investment since Q4 2013.
We spoke with Bacon about what the pullback means and how this will play out in the future.

GlobeSt.com: What's behind the slowdown in San Diego's VC investment for Q4?

Bacon: It is challenging to say definitively what is behind this trend or if it is a trend at all. With VC investment, there can be a lot of fluctuation quarter to quarter when one or two deals can really drive the numbers in a region the size of San Diego. Over the previous couple of years, the region was getting historically high amounts of investment, so this may be a single quarter anomaly or a regression toward the historic average. Either way, the recent numbers are still really positive considering investment was down nationwide.

GlobeSt.com: What does this slowdown indicate about this year's VC investment numbers in this market?

Bacon: The region fell short of annual investment seen in 2014 and 2015, but total investment still exceeded the $1-billion mark for the sixth straight year. The year started out on pace to keep up with recent annual postings, but lost steam in Q4. It remains to be seen if there will be a rebound in 2017, but San Diego has a track record of being a relatively safe place for investment, especially in the life sciences. Expect a continued positive trend.

GlobeSt.com: What factors are at play that will continue to influence San Diego's VC investment numbers for the foreseeable future?

Bacon: It's possible that this is a reflection of investors tightening their checkbooks due to uncertainty, but that may relax in the coming quarters especially considering recent strong upward trends in the stock market. We should consider that companies in San Diego may be seeking and receiving other forms of investment besides venture capital. All-in-all, though, the region continues to be a hub of innovation in tech and science, which is what drives investment to the region. Sectors like genomics, bioinformatics, cybersecurity and robotics are thriving in San Diego, so we should expect the money to follow in the coming years.