First great city of the 21 century

January 22, 1999

Through its Connect initiative, San Diego is striving to usurp Silicon Valley as the byword in high-tech, Elliot Parks tells Martin Ince.

Meeting this year in California, it is no surprise that the American Association for the Advancement of Science is paying special attention to the relationship between cutting-edge research and economic success. The two are most closely intertwined near San Jose in northern California, where experts from all over the world come to see how it is done in Silicon Valley, home to a vast array of high-technology, mainly computer-based firms.

But in southern California, where this year's event is taking place, something very similar has developed in and around San Diego, a naval town whose need of new industries became clear toward the end of the Vietnam war. The United States navy and the town's long-established aerospace employers still have a presence in San Diego, but the number of well-paid jobs supported by it and other defence employers has shrunk dramatically. Aerospace, for example, used to employ more than 40,000 people locally: that figure has dropped to about 10,000. The cold war was also a distinctive "driver of technology businesses". When the Pentagon contracts dried up, high-technology had to seek alternate sources of funding.

A new campus of the University of California was part of the answer. It is now a major local employer in its own right, with a mission to create jobs. As part of this quest, the Connect programme was launched in the 1980s to link the university with entrepreneurs and the "service providers" who help them to create new businesses.

Elliot Parks, a former academic biotechnologist with QED, a Californian firm that specialises in launching biotechnology companies, says the scheme is not just about encouraging academics. Representatives from comparable schemes elsewhere advised Connect's founders that success would require "capital, personnel and mentoring".

Founded in 1985, Connect was funded initially through the local business community. There was an advisory committee whose first step was to hire a successful entrepreneur with a long list of local contacts, and who was "personable and experienced". Twelve years on, the Connect programme is self-funded to the tune of $1.5 million.

The aim, Dr Parks says, was to build an organisation concerned with wealth creation, not with the number of start-ups chalked up. By contrast, Britain's new white paper on competitiveness calls specifically for a 50 per cent increase in university business start-ups.

While the Connect programme involved a specific affiliation with the university, its style was set by funding and priorities of the private sector. A key element of Connect is its financial forum, which reads business plans for potential businesses and coaches the principals in the approaches they should take. There is a partnership forum, which strives to interest major national firms in San Diego-based technology and to help local firms build links with members of the Fortune 100. There is also an award for the most innovative San Diego product. As well as backroom ingenuity, the winner has to show "successful business execution" - the award is primarily a showcase for the city's technology.

Another Connect objective has been to link would-be businessmen with the professionals they need to get them started. Connect will identify legal, accounting, marketing and public relations services, as well as venture capitalists and investment bankers, including the rare and hard-to-find species that are willing to provide small-scale seed capital. Connect "provides evaluation of business planning", Dr Parks explains, at which stage many apparently world-beating ideas have come unstuck - before millions have been lost.

Connect's success can be measured by the kinds of figures reported by firms making presentations at the scheme's various forums - between 1995 and 1997 more than $500 million in capital was raised. There have also been eight biotechnology corporate partnership forums. Participants in these have raised $4.5 billion over the past decade.

From the point of view of the University of California at San Diego, Connect is only one of a clutch of activities designed to link the campus with the world around it.

But Connect has more commercial and industrial sponsors than any other UCSD project, and its events are the most successful at securing industrial underwriting.

The programme has been successful enough to be emulated outside California, elsewhere in the US, and also in Sweden and in Edinburgh, Scotland. And it may be part of the reason why The Economist has billed San Diego as "the first great city of the 21st century".

In 1997, technology firms in the San Diego area raised almost $400 million out of $1.1 billion raised for the whole of California. The next most successful US state, Massachusetts, raised less in total than did San Diego alone.

Register to continue

Why register?

  • Registration is free and only takes a moment
  • Once registered, you can read 3 articles a month
  • Sign up for our newsletter
Please Login or Register to read this article.