San Diego startups still raising venture capital but at a slower pace than past couple of years

After last year’s record venture capital haul for San Diego entrepreneurs, 2022 looks to have gotten off to a slower start in terms of fundraising — with fewer mega $100 million-plus deals inked so far.

But venture capital is still flowing into the region, led by funding for life science startups. As of March 15, nine of the top 10 funding deals locally have been in the biotech/health tech sector, according to data from Connect/San Diego Venture Group.

That’s a bit of twist from last year, when software and other technology firms led the way for big funding rounds. Those deals included $400 million for productivity software outfit ClickUp, $215 million for logistics tech provider Flock Freight and $210 for defense tech firm Shield AI.

It is still too early to say how this year will turn out. “There have been so many venture funds that have successfully raised and have capital to deploy to new private companies,” said Nancy Hong, managing director of Rivervest Venture Partners in San Diego, which specializes in backing life sciences startups.

But with economic uncertainty roiling stock markets — coupled with plunging valuations for some startups that went public over the past couple years — venture capitalists are being careful, said Hong.

“So that means it will take a little bit longer for companies to get their financings done, and people need to be realistic about valuations,” she said, “because everyone is thinking first about their portfolio companies and reserving more heavily for those future financings over any new deals and really pricing out what makes sense for a new investment these days.”

Here are some recent venture capital deals for San Diego life sciences companies.

Nalu Medical of Carlsbad raised $104 million last month for its minimally invasive system to treat chronic nerve pain. The company will use the money to expand commercial operations, product development and clinical evidence for its neuro-stimulation system that delivers electrical pulses to the nervous system to modulate pain signals to the brain.

MVM Partners and Gilde Healthcare led the round, with participation from Pura Vida Investments and Aperture Venture Partners. Existing investors also participated.

Plexium, a precision medicine firm working on targeted protein degradation to treat cancer and other diseases, raised $102 million in February to advance its pipeline of products toward clinical trials.

The San Diego company has a validating partnership with Amgen for oncology. The funding round was led by BVF Partners and TCG X, with participation from Softbank Vision Fund 2, RA Capital Management, Surveyor Capital and Pappas Capital. Existing investors also participated.

Creyon Bio, based in San Diego and North Carolina, corralled $40 million earlier this month. The drug development company focuses on RNA-based medicines with the goal of making precision medicines on demand a possibility for populations ranging from one patient to millions.

The seed and Series A funding was led by DCVC Bio and Lux Capital. Other investors include Casdin Capital, Alexandria Venture Investments and BioBrit.

Molecular Assemblies said Tuesday that it has raised $25.8 million to advance its proprietary enzymatic DNA synthesis technology toward commercialization, including an unidentified customer validation program later this year.

The San Diego company said enzymatic DNA synthesis can overcome bottlenecks in the current chemical DNA synthesis method, accelerating innovation in fields from therapeutics to agriculture to biomaterials.

Casdin Capital led the round, with previous investors Agilent Technologies, iSelect Fund, Codexis, LYFE Capital, and Argonautic Ventures participating.

Eclipse Bioinnovations, an RNA genomics company co-founded by UC San Diego School of Medicine professor Gene Yeo, said Tuesday it had raised $14 million to advance its technology platform aimed at accelerating drug discovery based on RNA.

The Series A financing was co-led by Alexandria Venture Investments and iGlobe, with participation from Photon Venture Alpha and Phoenix Venture Partners. The company originally was supported by a National Institutes of Health Small Business Innovation Research Grant.

“COVID-19 RNA vaccines have validated the enormous potential of RNA as a therapeutic modality. Given the central role of RNA in regulating biological processes and disease, we believe that the field is poised for significant growth,” said Peter Chu, co-founder and chief executive of Eclipsebio.

Arima Genomics, which provides technologies that deliver three-dimensional information about the genome, said Tuesday that it has raised $7 million in a preferred stock financing round.

The company said most DNA sequencing methods provide linearized DNA data that doesn’t capture structural information. Arima Genomics adds the structural element, helping researchers understand disease mechanisms needed to develop therapeutic approaches such as cell- and gene-based therapies.

New investors Genetron Health, Tech Coast Angels, Ladder Ventures, and Hiaqua Investments joined existing backers Agilent Technologies, Co-win Ventures, Vectr Ventures, and Berkeley Catalyst Fund in the round.