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Funding for San Diego startups tumbles to smallest quarterly investment total in 8 years

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Funding for San Diego startups tumbles to smallest quarterly investment total in 8 years


San Diego County startups raised only $590 million in the third quarter, a 60% drop compared to a year ago and the smallest quarterly investment total in eight years. 

The number of deals told a similar sluggish story. The county saw 48 venture capital deals inked in the three months ended Sept. 30, according to a report by PitchBook, an industry research firm, and the National Venture Capital Association. That’s a decrease from 61 deals in the third quarter of last year and the lowest quarterly count in seven years.

Nizar Tarhuni, executive vice president of research and market intelligence at PitchBook, said: “Fundraising continues to lag amid ongoing market hesitancy, driven by years of capital influx the industry was ultimately unable to absorb.”

Mike Krenn, managing director for Prebys Ventures, offered additional insight: “Both early-stage money and growth capital is increasingly difficult to raise, both for tech and life science companies. And we’re seeing the hottest sector of the day, AI investment, is largely concentrated in the Bay Area, with billion-dollar funds deploying large amounts of capital at very rich valuations. That, too, is affecting all regions, not just San Diego.”

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Krenn added that while the total dollar investment for San Diego County is “certainly low, that’s attributable to the fact that we didn’t have any large rounds. We already have one $200 million round logged for Q4.”

He’s talking about San Diego-based Crystalys Therapeutics, which Krenn’s fund invested in. Crystalys is a clinical-stage biopharmaceutical company that recently announced a $205 million Series A financing. It was co-founded by James Mackay, a veteran biotech leader with 40 years of drug development experience and six drug approvals.

Its drug — a pill called dotinurad — has been approved in Japan and China and is providing “meaningful relief for people living with gout,” a common inflammatory arthritis, said Crystalys CEO Mackay. “Our experienced team is now well-positioned to accelerate dotinurad’s development in the U.S. and Europe as a much-needed second-line therapy for patients who do not respond adequately to first-line treatments.”

AI focus

“AI’s rapid momentum continues to reshape the U.S. venture landscape, driving deal count growth and capturing the majority of capital deployed in Q3,” Tarhuni said: 

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Nationally, top AI investments went to Anthropic in San Francisco, which raised $13 billion in September, and xAI in Palo Alto, which raised $10 billion in July, according to PitchBook.

Locally, three of the top 10 deals went to AI startups. 

Alvys, a Solana Beach transportation management system using artificial intelligence and automation to transform freight operations, said in September that it raised $40 million in Series B funding. 

Founded in 2020, Alvys said its customers achieve a 30% increase in monthly loads, a 10% sales boost, 90% faster accounting, 80% reduction in data entry, and savings of hours weekly in dispatch and administrative tasks. 

“We’re scaling enterprise-grade solutions with AI at the core,” said Nick Darman, Alvys founder and CEO. “That means using AI, automation, and integrations to remove wasted steps, give teams smarter decision-making in real time and help carriers and brokers grow their operations and their profit margins without adding overhead. This funding helps us push toward that goal even faster.”

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Turnout, which was founded about a year ago in San Diego, is an AI-powered consumer service that streamlines complex government and financial processes such as tax debt relief and Social Security Disability claims. It said in September that it raised $21 million in seed funding. 

Its AI automates nearly 60% of tasks by pulling transcripts, checking eligibility, pre-filling and filing applications, gathering medical and wage records, tracking deadlines and sending status updates. 

“Turnout is using AI to transform the lives of everyday Americans, helping them navigate their finances, secure the benefits they are entitled to,” said Mo Koyfman, founder and general partner of Shine Capital. 

GigaIO, a Carlsbad scalable infrastructure designed for AI inferencing, said in July that it raised $21 million in Series B financing.

The new funding allows the company to expand production of its flagship products: SuperNODE, a cost-effective and energy-efficient infrastructure designed for AI inferencing at scale, and Gryf, a carry-on suitcase-sized AI inferencing supercomputer. 

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“As enterprises and cloud providers race to deploy AI at scale, GigaIO delivers a uniquely flexible, cost-effective and energy-efficient solution that accelerates time to insight,” said Jack Crawford, founding general partner at Impact Venture Capital. 

In a PitchBook report, J.P. Morgan experts noted that while implications of investors’ love affair with AI “will take time to play out, history tells us significant market concentration carries risks.”  

Defense

In addition to artificial intelligence, Bobby Franklin, president and CEO at NVCA, said U.S. deal values are climbing across other key sectors, including robotics. “This momentum isn’t just encouraging; it’s essential. Startups are the engine of U.S. job creation and the cornerstone of long-term economic growth.”

J.P. Morgan experts added that investment activity in sectors such as defense tech and robotics reflects prevailing geopolitical considerations and national security priorities.

A local example is San Diego’s Firestorm Labs, which was founded in 2022. The expeditionary manufacturing company said in July that it secured $47 million in Series A funding. The investment will help Firestorm add engineers and open a larger production facility to meet the evolving needs of U.S. and allied defense organizations. 

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“Our military needs technology it can trust to be ready when the circumstances demand it,” said Chris Moran, vice president and general manager of Lockheed Martin Ventures. “Deployable, on-site 3D drone printing is a powerful tool that further extends the warfighter’s ability to secure the battlespace, while advancing U.S. leadership on the frontiers of defense technologies.” 

Retired U.S. Army Gen. Richard D. Clarke, who recently toured Firestorm’s San Diego facilities, said: “Firestorm’s innovation is really helping that logistics chain to operate more efficiently.”  

Exit deals

Carly Roddy, co-head of venture capital relationships for J.P. Morgan, said nationally, “Strong performance of the latest wave of tech IPOs is bolstering confidence for others in the pipeline, and M&A activity is also rebounding. While there is still a long way to go in some areas of the market, recent developments are encouraging to see.”

Locally, Carlsmed went public in July. The Carlsbad company has developed a patented, machine learning technology that taps a patient’s X-ray and CT scans to design a digital surgical plan to achieve the best spinal alignment and then 3-D print titanium implants.

Company revenue for the six months ended June 30 was $22.3 million, nearly double from the same period a year ago. The company has a market cap of about $315 million.

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Inmagene Biopharmaceuticals in July completed a reverse merger with Ikena Oncology and $75 million private placement with new and existing investors. The combined company in San Diego publicly trades under the name ImageneBio and has a market cap of about $82 million.  The clinical stage biotech business develops treatments for autoimmune and inflammatory diseases.

Also, AbbVie in August completed the purchase of San Diego-based Capstan Therapeutics for up to $2.1 billion.

Founded in 2021, Capstan develops therapies that modulate unhealthy cells inside the body — rather than editing the cells outside of the body — through RNA delivery methods. Capstan encodes mRNA and packages it in a lipid nanoparticle that is “decorated” with an antibody, which directs the body’s T-cells to attack problematic cells. 

“AbbVie and Capstan aim to transform the care of those living with autoimmune diseases by developing treatments that have the potential to reset the immune system,” said Dr.  Roopal Thakkar, executive vice president of research and development and chief scientific officer at AbbVie.    

In late October — after the close of the third quarter, Boston Scientific announced another local acquisition. The Massachusetts company said it will pay about $533 million for the portion it doesn’t already own of Nalu Medical, a Carlsbad company that develops a minimally invasive system to treat chronic nerve pain in areas such as the shoulder, lower back and knee. Boston Scientific has invested in Nalu since 2017. 

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Earlier this year, Boston Scientific said it bought another Carlsbad company called Bolt Medical, which develops intravascular lithotripsy that treats coronary and peripheral artery disease.

Nalu’s therapy uses mild electrical impulses to interrupt pain signals before they reach the brain. The system uses a miniaturized, battery-free implantable pulse generator powered wirelessly by a small externally worn therapy disc and controlled via a smartphone app. 

Boston Scientific expects Nalu to generate sales of more than $60 million this year and to post year-over-year growth of about 25% next year.

Jim Cassidy, Boston Scientific’s neuromodulation president, said: “Peripheral nerve stimulation is an exciting field with significant unmet patient need.”

Nguyen is a freelance writer for the U-T.

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San Diego, CA

Military bases in San Diego County increase security following Iran attacks

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Military bases in San Diego County increase security following Iran attacks


SAN DIEGO (CNS) – Military bases in San Diego County and nationwide have increased security measures due to last weekend’s U.S.-Israeli attacks on Iran, prompting traffic delays near base entrances, enhanced ID checks and access restrictions.

The Naval Air Station North Island on Coronado ports three aircraft carriers, including the San Diego-based USS Abraham Lincoln, which led some of the first-wave attacks on Saturday.

Naval Base Coronado warned motorists of possible traffic delays at all base entry points due to the increased security measures.

Targets included Islamic Revolutionary Guard Corps command and control facilities, Iranian air defense capabilities, missile and drone launch sites and military airfields.

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The U.S. operation, dubbed “Epic Fury,” and Israeli operation, “Raging Lion,” began striking targets at 1:15 a.m. Eastern Time Saturday.

As of Tuesday, at least six U.S. service members had been killed in action.

The strikes also killed Iranian Supreme Leader Ali Hosseini Khamenei, who had been Iran’s supreme leader since 1989, making him the longest-serving head of state in the Middle East.

Iran’s offensive forces claimed to have struck USS Abraham Lincoln with ballistic missiles, but according to an X post from U.S central Command, “The Lincoln was not hit. The missiles launched didn’t even come close. The Lincoln continues to launch aircraft in support of CENTCOM’s relentless campaign to defend the American people by eliminating threats from the Iranian regime.”

Those with concerns regarding the heightened security can contact San Diego County’s Office of Emergency Services at 858-565-3490 or oes@sdcounty.ca.gov.

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Copyright 2026, City News Service, Inc.





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SD Unified moves forward with layoffs of classified employees

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SD Unified moves forward with layoffs of classified employees


SAN DIEGO (KGTV) — Less than 3 weeks after the San Diego Unified School District finalized a new contract with teachers, the school board voted unanimously on Tuesday to move forward with layoff notices for other district employees.

The layoffs affect classified employees — workers who are employed by the district but are not teachers and are not certified. That includes bus drivers, custodians, special education and teacher aides, and cafeteria workers.

The district says it is eliminating 221 positions — 133 that are currently filled and 88 that are vacant — to save $19 million and help address a projected $47 million deficit for the next fiscal year.

Preliminary layoff notices will go out on March 15, with final notices by May 15.

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The district estimates about 200 classified employees will receive preliminary notices, but of them, about 70 are expected to lose their jobs based on union-negotiated bumping rules.

Bumping allows employees with more seniority to move into another position in the same classification, thereby “bumping” a less senior employee out of that role.

Lupe Murray, an early childhood special education parafacilitator with the district, said the news came as a shock after the teacher strike was called off.

“When the strike was called off, I’m like, ‘Yes!’ So then when I got the email from the Superintendent, I’m like, ‘Wait, what?’ So, I think everyone was shocked,” Murray said.

The district says it sends out annual layoff notices, as all districts in the state do.

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Before Tuesday’s board meeting, classified employees rallied outside, made up of CSEA (California School Employees Association) Chapters OTBS 788, Paraeducators 759, and OSS 724. They were joined by parents, students, and the San Diego & Imperial Counties Labor Council, AFL-CIO.

Miguel Arellano, a paraeducator independence facilitator with San Diego Unified and a representative of San Diego Paraeducators Cahpter 759.

“What do we want? No layoffs! When do we want it? Now!” the crowd chanted.

Arellano said he felt compelled to act when he learned about the potential layoffs.

“The first thing that went through my mind was that I need to speak up. I need to protect these people,” Arellano said.

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Inside the meeting, the board heard emotional, at times tearful testimony from classified employees before voting unanimously to move forward with the layoff schedule.

Superintendent Fabi Bagula said the district has tried to protect classrooms from the cuts.

“We have tried our best to only, I mean, to not touch the school. Or the classroom. But now it’s at the point where it’s getting a little bit harder,” Bagula said. “What I’m still hoping, or what I’m still working toward, because we’re still in negotiations, is that we’re able to actually come to a win-win, where there’s positions and availability and maybe even promotions for folks that are impacted.”

Arellano warned the layoffs could have a direct impact on students.

“We are already spread thin, so, with more of a case load, it’s going to be impossible to be able to service all the students that we need to have,” Arellano said.

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Follow ABC 10News Anchor Max Goldwasser on InstagramFacebook, and Twitter.

This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.





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Scripps Oceanography granted $15M for deep sea, glacier science

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Scripps Oceanography granted M for deep sea, glacier science


The Fund for Science and Technology, a new private foundation, granted Scripps Institution of Oceanography at UC San Diego $15 million for ocean science Tuesday.

FFST, funded by the estate of the late Microsoft co-founder Paul Allen, was started in 2025 with a commitment to invest at least $500 million over four years to “propel transformative science and technology for people and the planet.”

“Scripps Institution of Oceanography at UC San Diego is pushing boundaries for exploration and discovery across the global ocean,” Chancellor Pradeep Khosla said. “This visionary support from the Fund for Science and Technology will enable Scripps researchers to advance our understanding of our planet, which has meaningful implications for communities around the world.”

The grant, the largest of its kind since Scripps joined UCSD in 1960, will go toward research in three areas: monitoring of environmental DNA and other biomolecules in marine ecosystems, adding to the Argo network of ocean observing robots, and enhancing the study of ocean conditions beneath Antarctica’s Thwaites Glacier, often referred to as the “Doomsday Glacier.”

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Scripps Institution of Oceanography has used Argo floats for more than two decades to track climate impacts in our oceans. NBC 7 meteorologist Greg Bledsoe reports.

“The Fund for Science and Technology was created to support transformational science in the search of answers to some of the planet’s most complex questions,” said Dr. Lynda Stuart, president and CEO at the fund. “Scripps has a long tradition of leadership at the frontiers of ocean and climate science, and this work builds on that legacy — strengthening the tools and insights needed to understand our environment at a truly global and unprecedented scale.”

Scripps Director Emeritus Margaret Leinen will use a portion of the grant in her analysis of eDNA — free-floating fragments of DNA shed by organisms into the environment — in understudied parts of the ocean to collect crucial baseline data on marine organisms, according to a statement from Scripps.

“In many regions, we know very little about the microbial communities that form the base of the ocean food web or that make deep sea ecosystems so unique,” Leinen said. “Without data, we can’t predict how these communities are going to respond to climate change or what the consequences might be. That’s a vulnerability — and this funding will help us begin to address it.”

Using autonomous samplers that can collect ocean water for eDNA analysis, as well as conventional sampling, scientists will use tools to “reveal the biology of the open ocean and polar regions.”

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According to Scripps, the international Argo program has more than 4,000 floats that drift with currents and periodically dive to measure temperature, salinity and pressure. Standard floats can record data up to depths of 2,000 meters (6,560 feet), while newer Deep Argo floats can dive to 6,000 meters (19,685 feet).

The grant funding announced Tuesday will allow for Scripps to deploy around 50 Deep Argo floats along with Woods Hole Oceanographic Institution and NOAA’s Pacific Marine Environmental Laboratory.

Sarah Purkey, physical oceanographer at Scripps and Argo lead, said this leap forward in deep ocean monitoring comes at a crucial time because the deep sea has warmed faster than expected over the last two decades.

Thwaites Glacier is Antarctica’s largest collapsing glacier and contains enough ice to raise global sea level by roughly two feet if it were to collapse entirely. According to Scripps, prior expeditions led by scientist Jamin Greenbaum discovered anomalously warm water beneath the glacier’s ice shelf — contributing to melting from below. Greenbaum now seeks to collect water samples and other measurements from beneath Thwaites’ ice tongue to disentangle the drivers of its rapid melting.

This season’s Antarctic fieldwork will “test hypotheses about the drivers of Thwaites’ rapid melt with implications for sea-level rise projections,” the statement from Scripps said.

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“The ocean holds answers to some of the most pressing questions about our planet’s future, but only if we can observe it,” said Meenakshi Wadhwa, director of Scripps Institution of Oceanography and vice chancellor for marine sciences at UCSD. “This historic grant will help ocean scientists bring new tools and approaches to parts of the ocean we’ve barely begun to explore.”



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