SAN DIEGO—Venture-capital funding for biotech firms slowed in San Diego during the second quarter, according to a report on the sector from JLL. San Diego had eight VC deals completed in Q2, totaling only $55 million in capital raised and accounting for a 63% decrease in dollars invested from Q1. We spoke exclusively with JLL broker and author of the report Grant Schoneman about the reasons for the slowdown and if it's cause for concern in the biotech sector here.

GlobeSt.com: Why has VC funding for biotechs slowed in San Diego recently?

Schoneman: I think one of the main reasons for the slowdown during the second quarter is that out of the eight biotech deals during the quarter, six of those deals were “seed-stage” investments. Seed investments are commonly made into younger companies that are generally early-on in product development and have a longer path toward an initial public stock offering or M&A. Conversely, “later-stage” investments are typically larger investment tranches into more mature companies with a developed pipeline, sustained revenues or an IPO on the horizon. Overall, I wouldn't read too much into the second quarter dip in VC investments. The local biotech market has seen slow quarters in the past, like the second quarter, and has historically bounced back rather quickly. Worth noting is that San Diego biotech industry had a stronger than average first quarter of 2015, where it raised $149 million.

GlobeSt.com: How does the San Diego biotech market compare to other Southern California regions such as OC and L.A.?

Schoneman: The San Diego biotech market, although dollars invested were down during the second quarter, secured $21 million more VC investments than L.A. and Orange counties' combined did. San Diego recorded a total of eight transactions compared to the three deals completed in L.A. and Orange County combined. Historically, San Diego has secured more VC funding on a quarterly basis—both in terms of dollars raised and deals completed—than the L.A. and Orange County markets do.  

GlobeSt.com: What else should our readers know about VC funding for biotechs?

Schoneman: While the San Diego market experienced a dip in VC funding during the second quarter, national VC activity within the biotech sector remained on a blistering pace, securing $2.3 billion among 126 deals during the second quarter. The national biotech industry has secured $3.8 billion of investments during the first half of 2015, putting it on pace to outperform 2014's total investments of $6 billion.