New Survey to Measure Technology Business Creation in Seven Key Innovation Sectors in California

Business Wire,  June 23, 2008  

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CONNECT Launches CONNECT-track with Baseline Data from 2007, First Quarter 2008

SAN DIEGO -- CONNECT, San Diego's technology and life sciences accelerator, today announced the launch of CONNECT-track, an independently-verified tracking of new technology company formations in California in seven innovation clusters: software, communications, pharma/bio/medical, computer and electronics, environmental technology, defense and transportation, and recreational goods.

The quarterly survey was developed by CONNECT in partnership with the San Diego Institute for Policy Research to measure the vitality and velocity of innovation as measured by the number of new technology-based start-up companies throughout the state.

"CONNECT-track will provide an important measure of economic strength in California - the dynamics of new business creation in the innovation clusters," said Duane Roth, CEO of CONNECT. "CONNECT-track will help effectively track cycles of growth and serve as a valuable indicator of the vitality of the region's knowledge-based economy. We were pleased to see growth in San Diego start-up technology-based companies from 2006 to 2007 and now we have a baseline for measuring and comparing these trends throughout the state."

The first results compiled for 2007 show the state adding 3,227 companies in the seven innovation categories, with 1,852 in Southern California and 1,087 in Northern California. The top counties were: Los Angeles, 823, or 25.5 percent; Santa Clara, 388, or 12 percent; San Diego, 367, or 11.4 percent; Orange, 331, or 10.3 percent; Alameda, 170, or 10.3 percent; San Francisco 117, or 3.6 percent; Riverside, 107, or 3.3 percent; San Mateo, 113, or 3.5 percent; San Bernardino, 91, or 2.8 percent; and Contra Costa, 83, or 2.6 percent.

During 2007, the leading innovation categories statewide were software, 1,041, or 32.3 percent; pharma/bio/medical, 693, or 21.5 percent; computer and electronics, 691, or 21.4 percent; and communications, 553 or 17.1 percent. According to CONNECT-track, the number of new company formations moved rapidly upward throughout the year: 428 in the first quarter, 510 in the second quarter, 922 in the third quarter and 1,367 in the fourth quarter.

San Diego followed a similar pattern: 49 in the first quarter; 64 in the second; 105 in the third; and 149 in the fourth. Its leading categories were: software, 111 or 30.2 percent; pharma/bio/medical, 98 or 26.7 percent; computer and electronics, 73 or 19.9 percent; and communications, 61 or 16.6 percent. The fourth quarter total of 149 was the highest in the 15 quarters in CONNECT-track, exceeding the previous record of 105 set in the second quarter of 2005.

San Diego's total of 367 in 2007 was up 59.6 percent from 230 in 2006, said Roth, and also up from 329 in 2005, the first full year of data for the county that was compiled by CONNECT.

"San Diego's economy has become increasingly more dependent on the high value, high wage jobs created by technology and life science firms," Roth said. "During 2007, we added one new innovative company a day. This type of economic activity will help keep our region strong with high-paying jobs in the tech sector and a vital innovation economy that attracts global capital here to fuel further growth."

CONNECT-track also released data for the first quarter of 2008, with a total of 430 new companies formed statewide. Leading counties were: Los Angeles, 124 or 28.8 percent; Santa Clara, 53 or 12.3 percent; San Diego, 47 or 10.9 percent; and Orange, 41 or 9.5 percent.

"We'll be analyzing to see if there are seasonal patterns to new company formations as well," Roth said. "The first quarters of both 2007 and 2008 were about the same. We are looking forward to seeing if the growth pattern from last year is replicated in 2008."

Support to launch the tracking report was provided by Procopio, Cory, Hargreaves & Savitch LLP, Roth Capital Partners, and the County of San Diego. CONNECT had the support and cooperation of the California Labor Secretary Bradshaw, in identifying appropriate data sources covering new corporate filings and first employee hiring which had been compiled statewide through 2005 - and providing a historical context. CONNECT and the San Diego Institute for Policy Research (SDI) collaborated on the completion of the baseline index. Complete results are available at www.connect.org.

About CONNECT

CONNECT is a non-profit organization dedicated to creating and sustaining the growth of innovative technology and life science businesses in San Diego. Each year CONNECT delivers more than 300 programs and services that benefit more than 2,000 CEOs and companies. CONNECT is widely regarded as the nation's most successful regional program linking inventors and entrepreneurs with the resources they need for success. Its programs include: Springboard, Venture Round Table, Frontiers in Science and Technology, FrameWorks, CEO Strategy Forum and Connect with CONNECT; affiliate programs including The Center for Commercialization of Advanced Technology (CCAT), Tech Coast Angels (TCA), and MIT Enterprise Forum (MITEF); and its awards and recognition programs, Hall of Fame, and The Most Innovative Products (MIP) Awards.

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