>>> This is the midday edition of KPBS. I am Maureen Cavanaugh. Today is the day of the demo in Senegal. This is the annual competition for people with promising ideas to take the big step to the start of the committee. High-tech startups have a big impact on San Diego’s economy. Connect finds that a quarter of economic activity comes from it. Over the next few weeks, we’ll bring you the real-world experiences, successes and failures of startups. We will explore what makes a city a good home for these economic drivers. Today, Michael Lipkin speaks with Mike, the founder of the venture capital group that oversees startups in San Diego. >> How do you compare to other cities? We feel like everyone is behind this in Silicon Valley. Choose >> Lots of areas like Seattle and Denver and Boulder, they get publicity. This is despite the fact that San Diego actually overtakes these communities. Typically we are fifth or sixth in the country. We are doing very well and getting a significant portion late. >> What is your background? >> I’ve been helping startups raise funds for 15 or 20 years. I was one of the founders of the Angels. And also a venture capital platform that helps people raise funds. Specifically, they come to you and your group with the idea of a business and you help them connect with people who will pay them to do it in return >> Not necessarily, but we work with businesses, startups from all walks of life and give them advice and if they could make any introductions to funding sources that are appropriate for that particular business. >> What does the life cycle of a start-up look like? Is it very different even though they are both in the tech field? Back it will start with a person and an idea. They will work on the initial concept choice, they could boost the business with funding, or they will raise money from friends and family. When they go further, they will try to raise funds from wealthy people. >> Thread they called angels? Back theoretically because they get into a business early, often before the traditional capitalist will, and they will believe in the vision and moxia of the founders and help them reach that level where they are ready for institutional capital. Spec they have and idea and they are looking for the money to take off. Maybe build it with wealthy investors. Then they try to grow taller quickly. >> There are different ways. People don’t take institutional capital. They keep taking steps and can sell the business, but if you need to raise some significant capital, they will go into the venture capital world. >> Is it fair to say that they are looking for startups that will eventually sell and maybe go public? >> Absolutely. There still looking for that. Typically, in the process of being acquired. Often times companies like to go public and more and more companies are doing it these days with high visibility and a longer path to it. >> There is a startup called equity. They claim they have a new way of testing the line with a little blood. People were falling on themselves. They raised $ 700 million. The federal government said it was massive fraud. Here is what I call Lewis wrote about the quote they fake until you do. Should they be given further consideration? Back, they do. It is very difficult to raise institutional capital. Every now and then, complaints come with a scandal. It happens with startups and non-startups. I like to think that see go companies are more ethical. I think they are well established. There is a case where you introduce yourself and your business, you are in sales mode. You should certainly not falsify information. Investors, what Jill Dylan needs to do is make sure they can achieve what they say they are going to achieve. For the most part, investors are good at it. I saw him slip through the cracks. Most that we see are not pretending. They are really trying to build a sustainable business. They should want to build a good quality business and not build a business that they are willing to watch and flip. >> San Diego doesn’t have as many funds as Cisco, but it’s not like they need to visit the offices. Why is this a stumbling block for our local businesses because there aren’t that many businesses here? Why is San Francisco reluctant to invest here? >> It’s interesting. Most like to have various employees or partners meet every Monday morning. They like to meet and have a particular office. It feels like San Diego is close enough that you can manage it from LA or San Francisco. The reality is that we are quite far away. We’ve arrived and we spend a lot of time in Los Angeles talking and selling San Diego. There are good deals and engineers don’t move from job to job and they find more offers. >> You’ve opened an office in Silicon Valley called Beach Head where local startups are using it to help make deals with Silicon Valley investors. Does it help? Back yes. It was fun. We are the first city to have done something like this. It made a good impression on the investment community and it’s good for entrepreneurs to see how dynamic it is and what it’s like to be in Silicon Valley. >> Are you worried that the local founders will go out there and see that dynamism and have access to that capital and say, I’m not going back? Back I think it’s leave it. They spend time there. It is good to have a toe and water. There are distribution channels that you can access. It’s good to be there, but if you were to build the business and the employee transition, that’s insane. The cost of living is insane. Our timing was good for the office to open, but Silicon Valley is struggling to keep people in town and businesses there. It is no longer possible to open a business in a satellite city of San Diego. We have good talent and good universities. It is linked well. >> It was Mike speaking with Michael Lipkin. Next week we’ll hear from a local founder who crashed the company, losing $ 30 million in investment.