When Bay Area software startup Groove decided to establish a satellite office in San Diego two years ago, it was primarily envisioned as a sales hub. However, the company has since experienced significant growth in the region, with about two-thirds of its 110 employees now based there, making it the largest outpost for Groove post-pandemic. The firm has recently announced plans to double its workforce in San Diego, fueled by a new $45 million venture capital funding round.
Growth and Expansion
Chief Executive Chris Rothstein and the majority of the executive team have relocated to San Diego, underscoring the company’s commitment to the region. With the new funding, Groove aims to mainly boost its software engineering and developer teams. This move signifies a strategic shift for the subscription software startup, which traditionally would have seen planting roots in San Diego as a risky venture due to the dominance of Silicon Valley in tech venture capital and executive talent. Yet, the changing landscape of capital markets and the distribution of venture capital across the country have made such expansions more feasible and attractive.
Partnerships and Funding
Groove’s Series B funding round was led by Viking Global Investors, with participation from existing investors such as Capital One Ventures and Uncork Capital, bringing the total funding to $57 million. This investment not only highlights Groove’s growth potential but also signals the increasing attractiveness of San Diego as a tech hub, home to other well-funded software firms like Seismic, Cloudbeds, and Clickup. Groove’s collaboration with San Diego’s Seismic enhances its presence and influence in the tech ecosystem, particularly in the sales software domain.
Implications for San Diego’s Tech Landscape
This expansion and investment in San Diego by Groove and other tech companies reflect a broader trend of diversification within the tech industry’s geographic concentration. It underscores the city’s emerging role as a burgeoning tech hub, capable of attracting and retaining high-caliber tech talent and investment. The presence of major venture funds like Viking Global Capital in the region is a testament to San Diego’s growing significance in the tech landscape, promising a future of continued growth and innovation.
