Scott Wetzel, senior vice president at the Irvine office of commercial real estate brokerage firm JLL, sees a continuation of the investments that brought in almost $1 billion of funding for tech, medical sciences and other innovative companies in Orange County since late 2018.
“The natural trend is more, for lack of a better term, more in 2020. We’ll see continued investment that’s likely on par with what we saw in 2019,” said Wetzel, whose firm works with numerous area tech and medical firms to find office, manufacturing and distribution space for their operations.
The full impact of the coronavirus crisis started to hit after Wetzel’s initial talk with the Business Journal last month, but in a follow-up note, he said he still sees plenty of investment this year in OC.
“There’s no doubt Covid-19 has affected global markets—underscored by the Dow Jones dropping 4,000 points in the last several days—but its long-term impact is unknown,” Wetzel wrote on Feb. 28 in response to follow-up questions.
“In the immediate future, certain industries e.g. shipping, tourism and manufacturing will suffer. And while those ripples will reach Orange County, I don’t think Covid-19 will prevent investors from investing in innovative companies.”
Medical Ahead
Here are the investment highlights for 2019 that JLL compiled:
• The medical device sector led all funding, thanks in large part to a follow-on offering for Axonics Modulation Technologies Inc. (Nasdaq: AXNX) ($127 million), plus investments in Laboratory for Advanced Medicine ($86 million) and Swift Health Systems Inc. ($45 million).
• Additional significant investment rounds include Anduril Industries (AI, $127 million), Acorns (fintech, $105 million), and Restaurant365 (software, $88 million).
Palmer Luckey, the founder of unicorn-status startup Anduril, recently said on his Twitter feed that his closely watched Irvine company “is building an unannounced long-range VTOL (vertical take-off and landing) aircraft with a very novel payload and mission.” The company declined to provide more information about the project.
JLL’s Wetzel said he sees “just a continuation of the trend that we’ve seen in Orange County, which is medical devices, life sciences, and various forms of tech, whether that’s fintech or software or gaming—they’re alive and well,” he said.
Clients haven’t verbalized much concern about the effect from this year’s elections, he added.
“Big-name investors such as Andreesen Horowitz and Goldman Sachs are keen on Orange County companies, but so are smaller investment firms like Iconiq Capital and Longitude Capital,” Wetzel said. “It’s worth noting that innovation is not limited to the Silicon Valley and that it is, in fact, very much alive in Orange County and Southern California.”
Innovation, Vibrancy
Separately, leadership and organizational expert Tony Uphoff says a positive way to look at things in Orange County is to broaden the definition of what qualifies as tech, citing for example local medical device companies, nutraceuticals, plastic injection molding and aerospace.
With a broader definition “it’s harder to formulate an argument that the high-tech economy is declining in Orange County,” he told the Business Journal.
“The stats would actually show something different, but you have to have a more nuanced view of what tech is. There may be more going on here than people think.”
Uphoff is president and chief executive of New York City-based Thomas, which highlights sourcing trends and maintains a database of more than 500,000 North American suppliers, and focuses on the industrial and manufacturing marketplaces.
He continued: “The manufacturing economy here has been incredibly healthy for a long time. There’s a couple reasons why. Most of it has to do with technology.”
“If you look at what creates innovation and vibrancy, Orange County’s got all of the pieces. Extraordinary university system,” he said. “High cost of living, low cost of living and everything in-between. Extraordinary lifestyle components to it. Great healthcare system. There’s a lot of benefits to it.”
Orange County with a jobless rate of about 2.4%, he said, is fighting “a battle for talent” just like most other parts of the country.
As for local issues needing fixing:
“I’d probably recommend that you tackle transportation first because I think the movement of people still restricts this area,” Uphoff said. “It’s a huge problem. You have a lot of business people that just get so frustrated with having to deal with driving in LA and Orange County. It holds back.”
