San Diego
From Buy-Outs to Build-Outs
Can San Diego Turn Its Intellectual Capital into Competitive Durability?
I spent a full day this week in a room where people who work across San Diego's most innovative sectors took stock of the region's competitiveness. By the end the agreement was close to total: on the strengths, on the gaps, and on the one word that came up most when the room described what makes this place work.
Collaboration.
The assets are real, intentional, and no one contested them. The density of intellectual capital is perhaps the region's greatest asset. Just within the UC system, UCSD accounts for 40% of the invention licenses granted across the University of California system, and UCSD alone has spun out roughly 1,000 companies since 1990, 440 of them still operating.
That intellectual capital compounds into industry: life sciences directly employs nearly 62,000 people in the region and generates $55.2 billion in annual economic output, and the military accounts for $61.3 billion, more than a fifth of the regional economy and some 357,000 jobs.
The region can test what it invents, with university, port, utilities, and the Navy within reach of one another and a dual-use industrial base sitting next to its largest customers. The connective tissue that the room named as its superpower was not a building or a balance sheet. It was the habit of working together on hard problems, and a system that was built on purpose, decades ago, not handed down by the luck of density.
That last point is the one I held onto, because in a competitive landscape collaboration can land as a soft virtue. San Diego's proving that it is actually the hard relational infrastructure underneath the work. A region's willingness to collaborate is trust, made operational. San Diego did not stumble into it. It was built intentionally over decades by smart people tackling hard problems.
Now the gap, which the room named just as plainly and which I will not soften. The capital does not capture the intellectual capital the region produces. The financing available thins at the late stage, companies import out-of-region money to finish their largest rounds, and even a strong year, north of $5 billion in regional venture funding, does not close it. The intellectual assets outrun the capital that would keep them here.
Put the asset and the gap in one sentence and compelling questions begin to emerge. Right now the region's economic return on its own genius comes mostly through buy-outs: a company is spun out, proven, and sold, and the upside leaves with it. Selling is a fair outcome and often a good one. But a region that regularly spins out and sells is renting its intellectual capital to others.
The real prize is the build-out, the company that stays, scales, and becomes a pillar, one that both draws on the ecosystem and reinvests in it. San Diego has done this before. Qualcomm was founded here in 1985 and employs more than 10,000 people in San Diego, one of the region's largest private employers; General Atomics has built here since 1955; and Viasat chose to anchor and build in Carlsbad, focusing on what it does best and partnering with others as it grew. Naming only the winners hides the many that sold or died, but they are strong examples of what is possible here, how anchoring the right strategic build-outs can expand the economic and social returns on the region's intellectual capital.
What if the ingredients are already there? The region owns the exact instrument these questions require, and it is an asset it built on purpose: its capacity for intentional, trust-based collaboration. Capital follows conviction, and conviction among the people who fund, build, permit, and buy is trust by another name. San Diego has already shown it can manufacture that trust as a system rather than wait for it to accrue. The open question is whether it can point that same reflex at the anchoring problem.
The ability of the actors in the room to leverage the city's many competitive strengths and harness the superpower of collaboration to amplify its position as a global leader will depend on the questions that walked out of the room.
What coalition, vehicle, or incentive closes the late-stage capital gap without exporting the company: the standing presence of larger funds, a consortium for the highest-stakes sectors, a blended public, private, and/or philanthropic capital mechanism as its own lane?
How does the cross-border manufacturing capacity that already supports more than 95,000 San Diego jobs and moves at binational scale every day become an anchor and an asset used on purpose, rather than a flow that runs without one?
And what would it take to tell this story in one voice, to Sacramento, to Washington, and to the world, so the region is understood as a place where researchers, builders, capital, and communities build the partnerships and companies that expand the economic returns and anchor the intellectual capital that will shape San Diego's future?
San Diego does not need to convene the right people. It has been doing that deliberately for decades. It needs to decide whether to point its oldest strength at its newest opportunity.