A Panel on Biotech’s Tough Year

On August 13, the San Diego Entrepreneurs Exchange (SDEE) gathered more than 80 founders, investors, and life science professionals at BDO’s Carmel Valley offices for a timely discussion: how biotech startups can survive — and thrive — during 2025’s funding slowdown.

The event, co-hosted with BDO and Morrison Foerster, brought together voices from across the ecosystem, including Aiden Aceves (Insight Partners), Taryn Goode (Connect), Jim Krenn (Morrison Foerster), and Fred Grier (JLL). Their panel, “Weathering the Storm,” tackled everything from navigating venture capital to cost-cutting strategies and scaling in uncertain times.

Funding in 2025: Fewer Deals, Stricter Terms

The panelists agreed: raising money has become harder, slower, and less forgiving.

• In the first quarter of 2025, local biotech companies raised about $1 billion. By Q2, that dropped to just $500 million (PitchBook data).

• Only two San Diego-based firms have gone public this year: Aardvark Therapeutics and Carlsmed.

• Investors are increasingly conservative, forcing startups to accept stricter deal terms and lower valuations.

“It’s hard out there right now,” said Aceves. “I have portfolio companies who are going through it — just like everyone else. It’s a more difficult time to run a company today than in the past, but no one starts a company because they think it’s going to be easy.”

Bright Spots and Notable Wins

Despite the slowdown, San Diego continues to produce success stories:

• Carlsmed went public in summer 2025, raising $100 million.

• Major venture rounds included RayThera ($110M), Biolinq ($100M), and Actio Biosciences ($66M).

• M&A, while less frequent, included Scale Bioscience’s acquisition by 10X Genomics and Illumina’s $350M purchase of SomaLogic.

Krenn of Morrison Foerster noted that while startups may hold less negotiating power, the ecosystem still produces strong exits and meaningful innovation.

“Success looks different for every company,” added Goode. “For some, it’s getting acquired. For others, it’s about whether the medicine reaches patients or the technology changes lives.”

Implications for Lab Space in San Diego

The funding crunch doesn’t just affect balance sheets — it has ripple effects across the lab space market:

For Tenants

• Cautious Expansion: Many early-stage companies are delaying lab moves or taking smaller footprints to conserve capital.

• Opportunity to Upgrade: With vacancies up, startups may find premium lab space more affordable than in past years.

• Shared Labs on the Rise: Co-lab and modular facilities are gaining traction as founders avoid long-term commitments.

For Landlords & Developers

• Slower Lease-Ups: New projects may face longer timelines as startups scale cautiously.

• Incentives Matter: Tenant improvement allowances, shorter lease terms, and turnkey options are becoming more important.

• Focus on Flexibility: Landlords that adapt space for plug-and-play or shared use will appeal to cash-conscious companies.

Why Optimism Remains

Even with venture capital cooling, San Diego’s biotech community retains its reputation for collaboration and resilience. The panelists highlighted:

• Big pharma’s dependence on startups for innovation ensures a continued role for local companies.

• Talent density and institutional strength (UCSD, Scripps, Salk) keep San Diego highly competitive.

• Patient-centered innovation remains at the heart of success stories, regardless of exit path.

Key Takeaway

San Diego biotech may be weathering a storm in 2025, but storms also reshape the landscape — creating new opportunities for agile startups and forward-looking landlords. For tenants, it’s a chance to secure better lab space deals. For landlords, it’s a reminder to stay flexible and adapt to a shifting demand environment.

At SanDiegoLabSpaces.com, we’ll continue tracking how funding, hiring, and deal-making shape the future of San Diego’s lab space market.