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Economy

Where San Diego Startups Are Strongest, According To Science

This chart published in Science shows the quality of new businesses by region in California, Feb. 5, 2015.
RJ Andrews
This chart published in Science shows the quality of new businesses by region in California, Feb. 5, 2015.

Scientists have ranked the best regions in California for entrepreneurship, and their results suggest San Diego startups remain strongest in the suburbs.

A report published in Science Thursday aimed to measure the growth of new businesses in California, not just the sheer number of startups in any given area.

"What we tried to do is shift the focus not to the quantity of entrepreneurship, but the quality of entrepreneurship," said co-author Scott Stern, a management professor at MIT.

Stern started with a database of new businesses registered in California. The researchers identified companies in that group with high growth potential by looking at their name, patent activity and whether or not they incorporated in finance-friendly Delaware.

These clues filtered out pizza shops, yoga studios and other small local businesses that might achieve success in their own right, but aren't aiming to become the next Google or Qualcomm.

The researchers pegged entrepreneurial quality to two measurable signs of growth: initial public offerings and acquisitions. Regions where these outcomes were more likely for new businesses got higher scores in their model.

Unsurprisingly, parts of Silicon Valley and San Francisco ranked highest in the state. But Stern says the city of San Diego still outperformed the statewide average.

"San Diego as a city is sort of equivalent in average entrepreneurial quality to a city like San Jose," he said.

But other cities in San Diego county beyond the urban core did better. Solana Beach and Carlsbad both ranked higher in terms of startup growth, as did areas adjacent to UC San Diego.

Stern says that might be due to the unique needs of startups in San Diego. Unlike software firms that can set up shop in small downtown incubators, biotech companies need a bit more space.

"While you can do that close to an urban core, you do need dedicated lab space to undertake important research," he said.

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