Into the lair of beasts strode Adam Goldstein. Armed only with his wits and a mean set of slides, he descended on the Boston area on a warm, early winter day. He was no stranger to the premises. Goldstein had been an MIT undergrad before moving to San Francisco to participate in the Y Combinator startup program with his online travel company, Hipmunk.

Goldstein, the startup’s CEO and co-founder, spoke at Xconomy’s “6×6: Six Cities, Six Big Tech Ideas” conference earlier this month, representing the Bay Area. I say he was among beasts because Boston is the land of heavyweight travel firms such as ITA Software (now part of Google), Kayak, and TripAdvisor, and upstarts like Hopper, WaySavvy, and SilverRail (now based mostly in the U.K.). And Goldstein has been on record saying other travel sites “have really dropped the ball on flight search.” (On the other hand, Hipmunk formed a licensing partnership with ITA about a year ago.)

Indeed, the whole culture of Hipmunk is about coming “into an established industry with a focus on usability,” says Goldstein, in a polite-but-firm jab at the big players who don’t seem to care as much about being user-friendly. (As for the company’s name, let’s just say the cute-animal logo is its main justification.)

I must confess, I was skeptical at first. Since part of me still lives in the ’90s (the early to mid-‘90s, mind you), any bluster from new travel sites tends to fall on numb ears. Most travel sites seem pretty much the same, and even the worst ones are still more convenient than what people like me used to do, which is call up travel agents and individual airlines, get some options, and repeat until settling on a purchase. Hipmunk is about making the whole search process simpler, more intuitive, and more visually interactive.

But there’s only so far that can take you as a business, as my colleague Wade probed a few months ago. What stood out to me most about Hipmunk is its strategy of building a business by focusing first on getting lots of loyal customers—not trying to cash in on every eyeball.

“The entire world, especially in the world of travel, has become sort of addicted to the idea of making as much money as possible from each time someone visits their website,” Goldstein said. “What that’s led them to do over time is bombard their customers with advertisements and pop-up windows and all sorts of other things that just distract them.” Conclusion: Hipmunk won’t make money from ads, just referral fees when people book trips. But it does need to gain users—lots of users.

Here’s a short video interview with Goldstein, conducted by my colleague Lilly O’Flaherty. I like the part at the end where he references a talk by Northrop Grumman’s Bill Walker, also at 6×6, on high-altitude UAVs (unmanned aerial vehicles). Heck, maybe someday an entrepreneur will pitch an idea for a company that’s a “Hipmunk for UAVs.”

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If laser weapons and tools ever become mainstream, it might be because of a quiet little company called TeraDiode.

Sure, there are lots of more imminent (and perhaps more practical) applications for the Littleton, MA-based laser firm—welding, cutting metal, illuminating targets, and so forth—but blowing stuff up is what a laser was meant to do. At least if you grew up watching Star Trek phaser battles, Star Wars dogfights, and other forms of popular but admittedly dorky sci-fi entertainment.

TeraDiode, a two-year-old spinout from MIT Lincoln Laboratory, is commercializing a new kind of laser system, using what’s called a direct-diode laser, that it says is brighter, more powerful, and more focused than its predecessors. The technology is based on semiconductor lasers (which are electrically rather than chemically driven) plus a sophisticated optical system to manipulate individual beams to form a single output beam—a technique known as wavelength beam combining.

The 11-person company raised $4 million in a Series A round led by Stata Venture Partners in the fall of 2009, and is currently closing a second financing round from VCs and strategic investors, says founder and CEO David Sossen. The company has also landed some $3 million in U.S. defense contracts, he says.

Sossen, a veteran of Arthur D. Little and other firms, was a founding investor in TeraDiode, together with Fred Leonberger, a photonics expert from optical-tech firm JDSU. The startup’s laser technology, and its subsequent business development, is the handiwork of a couple of former Lincoln Lab scientists, Bien Chann and Robin Huang (no relation to the author), who both left to co-found the company in late 2009.

Lasers have been used in industrial applications for some 40 years. And the U.S. military has used lasers for decades, but in limited ways, because the devices tend to be bulky, inefficient (not enough power output), and prone to breakdown. To create a “directed energy weapon,” for example, a conventional chemical-based laser would need to be about the size of a building.

Until now, the limiting factors for laser diodes have been power output and beam quality. “We’ve broken through that barrier,” Sossen says, adding that his company’s relatively compact lasers (which for commercial uses are a bit bigger than a breadbox but smaller than competing devices) can output between several hundred and several thousand watts, and in principle up to 100 kilowatts (with a bigger laser)—enough power to do some real damage. And at different wavelengths, depending on the application.

TeraDiode envisions selling lasers “compact enough to be deployable on a tank or … Next Page »

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Who’s the $500 million tech company that nobody has heard of? That would be Bedford, MA-based Progress Software, one of the largest software makers in the state. Progress (NASDAQ: PRGS) has been on quite a run lately, with its stock rising steadily since September—from a low of $26.71 on Aug. 31 to around $41 for the past few weeks in December.

In advance of the company’s quarterly earning announcement later today, I spoke with CEO Richard Reidy to get an update on the firm’s, well, progress toward some pretty ambitious goals. I particularly wanted to know what’s new at Progress since March 2010, when Reidy (pronounced “reedy”) and chief technology officer John Bates sat down with my colleague Wade Roush for an extensive two-part interview (here and here). One comment Reidy made in that Q&A stood out to me—that Progress is like a $500 million startup in some ways.

Turns out he didn’t mean that in the usual sense that big companies talk about—that they can innovate, do lots of R&D, and be nimble like a startup. He meant that Progress is making a fresh start, given its 30-year history—it has been publicly traded for 20 years—and given its extensive experience in lots of distinct business software markets. “Now we’re in a major transition into a very focused company,” Reidy says.

“We’ve always been way too entrepreneurial, way too curious, and meandering all over the place,” Reidy adds. “The notion of the ‘$500 million startup’ is now we’ve got all those assets, customers, technologies—what do we do to double the size of the company going forward? We’re embarking on a whole new strategy.”

Progress’s focus in the past year has been on selling software that helps companies be much more “operationally responsive.” That means if you’re an airline or travel agent, and your customers are all grounded by the Eyjafjallajokull volcano, you figure out the logistics of trains, boats, and cars, and help them get on their way. If you’re a telecom company, you handle the day-to-day billing and services as mobile customers sign up across different devices. If you’re a bank, you need software to manage your computerized trading and react quickly to changes in the market.

In all these cases, what Progress provides is a sort of “control tower” that a business or operations person can use to track patterns and adjust to events as they occur. The interface goes beyond … Next Page »

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OK, a flying Humvee doesn’t sound like a very green vehicle—but the U.S. Defense Advanced Research Projects Agency isn’t interested in green.

DARPA is interested in improving the safety and lethality of U.S. troops in dangerous environments. And it is willing to pay handsomely for it—to the tune of a five-year, $65 million research program to develop what it calls a “Transformer” vehicle that works like a Humvee on land, but can also fly.

No, this isn’t an Onion article. The goal is to be able to carry four troops and their gear (1,000 pounds) over a distance of 280 miles on one tank of fuel, by any combination of air and land, the agency says. The vehicle must be able to take off and land vertically—meaning it will fly like a cross between a helicopter and a plane (see drawing above). And, oh yeah, it has to be piloted by an average Marine Corps soldier without any flight experience. In other words, it needs to fly mostly by itself.

If it works—a big if, indeed—such a vehicle could swoop over obstacles or tough terrain, and potentially could help troops avoid ambushes and improvised explosive devices in roads. It could also be used for evacuation or rescue missions where it would be very useful to scan the situation from the air and then drop in at the right spot—in urban combat operations, say—while maintaining some mobility on the ground after landing. (You can read more details and speculation in this Popular Mechanics article.)

A key participant in the DARPA program is Woburn, MA-based Terrafugia. You might know it as the “flying car” company, though the firm much prefers the drier term “roadable aircraft.” Terrafugia was founded in 2006 by five MIT-educated pilots, and has been developing a light sport plane, called the Transition, that can be driven on roads and is slated for testing and production next year. The company declined to comment on its involvement in the DARPA program beyond the information in its press release this week. But it’s clear that Terrafugia’s expertise in combining flying and driving vehicles is valuable here.

Indeed, Terrafugia is “one of the few companies that has experience blending the disparate ground vehicle and aircraft requirements into a single functional concept,” says Stephen Waller, the program manager for the DARPA project, in an e-mail. “This is the primary challenge to successfully develop the Transformer vehicle.”

Terrafugia is one of several companies participating in the program—and a few have connections to the Boston area. Virginia-based aerospace firm Aurora Flight Sciences, which has a research and development office in Cambridge, MA, and technical consulting firm Metis Design, based in Cambridge, both have received small-business research grants to work on the project. For its part, Terrafugia is the largest subcontractor to AAI, a Maryland-based aerospace and defense company owned by Textron, a multi-industry conglomerate headquartered in Rhode Island. AAI is one of the two main contractors on the DARPA project; defense tech giant Lockheed Martin is the other (see drawing on left for Lockheed’s competing design concept).

Meanwhile, Carnegie Mellon University in Pittsburgh has been awarded $988,000 to develop an autonomous control system for the vehicle. Sanjiv Singh, a professor in CMU’s Robotics Institute, is leading that effort. And rocket engine company Pratt & Whitney Rocketdyne is working on the engine and propulsion technology for the … Next Page »

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A couple of startup companies set a world aviation record last night.

But they were pretty low-key about it. As I walked into the Future of Flight Aviation Center in Mukilteo, WA, a half hour north of Seattle, I saw little activity. It was after hours, and the hangar-like building was nearly deserted except for the futuristic planes suspended from the ceiling—Burt Rutan’s “Quickie” and a Beechcraft Starship—and part of a Boeing 787 Dreamliner fuselage on the display floor. It was a bit like “Star Wars” meets “Night at the Museum.”

Tom Nugent, the co-founder and president of Kent, WA-based LaserMotive, greeted me and said they were almost ready for showtime. A small team of engineers divided its attention between the back of a command truck and the adjacent trailer that held the laser optics equipment that would make the show possible. Two German guys who hadn’t slept in days (and were still on Munich time) were sprawled out on deck chairs in front of computer monitors like they were playing a video game. One held a remote controller that he used to guide a “quadrocopter”—a small, 1-kilogram, square-shaped flying contraption with blinking lights and four spinning rotors—made by their company, Ascending Technologies.

Jan Stumpf and Michael Achtelik, the co-CEOs of Ascending Technologies, partnered with LaserMotive to perform this feat last night. The goal: to use a laser to power an aircraft in continuous flight for about 12 hours (far longer than its battery would last without recharging, which is only about five minutes). That would be a world record, by a long shot, for the longest free flight of an electric vehicle.

Indeed, this demonstration is a big deal for the future of electric planes, said Barry Smith, the executive director of the Future of Flight facility. Imagine putting a laser on top of every cellular tower, he said, so that certain types of unmanned aerial vehicles (UAVs) would never need to land to recharge or refuel. That could potentially revolutionize communications, surveillance, and security and defense applications. Longer term, it could even impact the long-held dream of powering manned aircraft with electricity instead of jet fuel—though that is very far off.

For now, Nugent says, “The significance is we’re going to show this quadrocopter, and any aerial vehicle [of this size], will be able to fly effectively forever. It’s no longer limited by battery capacity.”

LaserMotive has done smaller flight tests before, but not on a free-flying vehicle like this. The company is best known for winning the $900,000 NASA Power Beaming Challenge last year, in one of the levels of the “Space Elevator Games.” That involved using a laser to power a climbing robot up a cable to a certain height (1 kilometer) at a certain speed (about 9 mph). But lately the company has been targeting UAVs as a big commercial application of its wireless power technology. (The next level of the NASA challenge, which was supposed to happen later this year, is still up in the air, so to speak.)

“Goggles on!” someone shouted, and we all complied. That meant the infrared laser, which puts out about 200 watts of light power, was switching on. The beam was directed using a series of mirrors and optics and shot out the top of the trailer. You couldn’t see it with the naked eye except for a reddish halo on the 50-foot ceiling. At the same time, the quadrocopter lifted off (under its own battery power), guided by Stumpf, and floated up to meet the beam, about 30 feet off the ground (see left).

“Not centered,” Nugent said. Then the computer vision system of LaserMotive’s setup kicked in. Software and cameras aligned with the path of the laser beam tracked the vehicle’s position, and positioned the beam so it hit the photovoltaic cells on the underside of the craft; those solar cells transformed the laser’s energy into electricity to continuously charge the quadrocopter’s battery.

With that, all human corrections fell away, and it was just a drone hovering eerily in space, rotors humming quietly. It swayed a few feet from side to side, and the laser tracked it. It was about 7:40 pm.

This is the boring part, Nugent said. And boring is good. Exciting is bad. For the next 12 hours, if all went well, nothing more would happen. The craft would stay up all night (as would the crew), … Next Page »

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At Northrop Grumman’s unmanned systems development center in suburban San Diego, some folks are describing a $33 million contract that was announced today as “DARPA hard.”

DARPA is an acronym for the Pentagon’s Defense Advanced Research Projects Agency, and the two-year contract awarded to Northrop Grumman calls for demonstrating the feasibility of using one high-altitude unmanned Global Hawk aircraft to refuel another. The UAV-to-UAV in-flight refueling is to be completely autonomous, with the robotic aircraft using GPS navigation and optical tracking systems to approach, link up, and complete the refueling procedure. If successful, the first unmanned aerial vehicle (UAV) air-to-air refueling will mark a historic milestone—for both aviation and robotics.

UAV-UAV aerial refueling (photo illustration)

While mid-air refueling has been done with piloted aircraft since 1923, it remains a tricky and hazardous maneuver that requires extensive pilot training. In the case of two robotic aircraft, both UAVs must automatically adjust to turbulence and other environmental uncertainties while maneuvering in the thin air of high altitude (the Global Hawk’s cruising altitude is 65,000 feet).

“So this one definitely fits” the category of DARPA hard, says Mark Gamache, the San Diego-based director of advanced concepts for Northrop Grumman Aerospace Systems. In a telephone interview, Gamache tells me DARPA hard “means they only like to work on projects that nobody else would do.”

The Global Hawk was itself the product of DARPA-funded development during the 1990s, with the first seven aircraft built in … Next Page »

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Think about the last time you flew anywhere. How would you rate the overall experience? Unless you’re a bird, there were probably things that could have been a lot better—legroom, connection time, delays, quality of service, and so on. In fact, the general level of misery in air travel feels like it’s always going up.

But when you made your last travel reservation, your decision was probably based on price more than any other factor, with connections and seat assignments as secondary considerations. The question is, would you want more information about the flights themselves before you book them, if it were available?

That’s what entrepreneur Dave Pelter is currently exploring with his Seattle-based online travel startup, InsideTrip. The company rates each flight based on 12 metrics, such as the age and type of plane, baggage handling record, on-time record, and how crowded it is. For Pelter, it all boils down to one thing: “Do people care about quality?” he asks.

InsideTrip is part of a new wave of technologies and business models in online travel. It’s not too surprising that Seattle would be a leader in the sector, since this is the backyard of Expedia (which includes TripAdvisor and SeatGuru), Farecast (now part of Microsoft’s Bing Travel), and numerous smaller companies like Yapta and Raveable. Maybe it’s because of the combination of a strong tech community and lousy weather.

Indeed, several travel startups have been bubbling up around town lately. The newest ones aren’t talking publicly yet about what they’re up to. But they have attracted some interesting players. One of them, TravelPost, was founded by former Expedia execs and backed by Ignition Partners and General Catalyst. Another, Off & Away, is being incubated by Madrona Venture Group.

Unlike those startups, InsideTrip is ready to talk about what it’s doing. Pelter, a former airline executive and Farecast vice president, sat down with me recently to chat about his company, where it’s headed, and how it fits into the broader story of online travel businesses. As of today, InsideTrip has officially emerged from beta testing mode and is opening its consumer website to the general public. It is also in the process of raising money and signing up new partners and customers for other parts of its business.

This isn’t the first we’ve heard of InsideTrip. Pelter rolled out the beta version of his website back in March 2008 and got a fair amount of national press. And just last month, he pitched InsideTrip to investors at the “First Look Forum” organized by the Northwest Entrepreneur Network in Seattle—and won as the audience favorite.

But to fully appreciate what InsideTrip is doing, you need to know Pelter’s background. … Next Page »

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Thomas Thurston usually charges big bucks for a consultation like the one he gave me this week. But you’re getting it for free here. Of course, maybe it’s a freebie that will make you seek him out for more information. Either way, consider yourself lucky. I do.

Thurston is the founder of Growth Science International, a research and consultancy firm in Portland, OR. If you’re an entrepreneur, startup investor, or just like to play the stock market, you’ll want to know about his work. Thurston has developed a sophisticated mathematical model of “disruptive innovation,” based on principles put forth by Clayton Christensen of Harvard Business School (who spoke in Seattle earlier this week). Using his model, Thurston claims to be able to predict, with 85 percent accuracy, the fates of companies.

Whether or not you believe his model, you might want to listen to his advice. Most of it hinges on the key idea of “disruption” coming from cheaper, lower-performing products that work their way up-market.

“The biggest mistake startups make is assuming the competition will leave them alone when they’re better-performing,” says Thurston, who previously worked at Intel Capital. “Startups always want to be better than their competitors. It’s so ingrained in their fiber. They’re with disruption theory until they have to be worse—but you can’t just be cheaper. Cheaper and better is ‘sustaining,’ not disruptive. Startups want to raise capital, so they want to talk about why they’re better.”

Without further ado, here are a few tips from the startup predictor. Ignore them at your peril:

1. Go non-mainstream.

Of course, there’s an art to pitching a “disruptive” startup to customers and investors. “You don’t go out and say, ‘I’m worse.’ You find non-mainstream customers who value what you’re good at, even though you’re worse at what the mainstream customers want,” Thurston says. “But if you’re making better margins in your competitors’ market, they’re going to want to take your business.” (What’s interesting here is that venture-backed startups usually target the biggest possible market; not so, disruptive startups.)

2. Study failures.

Thurston built his predictive model in part by studying which companies failed and why. “Most people look at companies who survived and try to learn why. Usually it’s random, it’s hard to see. What people don’t do enough is look at failures, because the data is harder to get,” he says. “When you study a lot of failures, you see patterns much more strongly. Startups aren’t spending enough time studying failures.” (This also ties into an interesting cultural discussion about the tolerance for failure in the Seattle innovation community.)

3. Pay attention to narrative—especially when it comes to your competitors.

Surprisingly, Thurston’s research suggests the valuation companies get from investors can vary by about a factor of three based solely on how they tell their story. Assuming a company has real … Next Page »

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General Electric says it will add 220 jobs to the 1,100 new technology, software, manufacturing, and sourcing positions it plans to create in Michigan over the next five years. The announcement was made Monday at a ribbon-cutting ceremony for a new GE Aviation facility in Van Buren Township, MI. GE Vice Chairman John Rice called the decision to create 1,300 new jobs an easy one, given the “exceptional number of talented, experienced professionals” in Michigan and the state’s “strong advanced technology manufacturing capabilities.”

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We had an interesting mix of high-tech news last week, as several efforts to raise capital took shape, and famed aviator Charles Lindbergh’s grandson announced an electrifying new incentive prize. Read on to learn what it’s all about.

—Carlsbad, CA-based chipmaker MaxLinear is expected to go public this week. The company, which specializes in designing wireless chips used to receive and process TV and Internet video signals, is expected to raise between $43 million and $50 million. MaxLinear plans to use the capital for general corporate purposes and acquisitions. The company’s shares will trade on the New York Stock Exchange under the ticker symbol MXL.

—Seattle-area resident Erik Lindbergh came to the Torrey Pines Glider Port Friday to announce the creation of the Lindbergh Electric Aircraft Prize, or LEAP, which is intended to help launch the fledgling electric aircraft industry. Four LEAP awards, which have yet to be funded, will be awarded annually at the Experimental Aircraft Association’s annual AirVenture, the air show held each July in Oshkosh, WI.

—San Diego’s EMN8, a maker of self-service kiosk technology, is raising more than $14.4 million in venture funding. EMN8 sells its touch screens for use in fast-food restaurants, theaters, theme parks, and other retailers.

—Ventana Capital founder Tom Gephart wants to rally support for a proposal to win $5 billion (with a ‘b’) in federal economic stimulus funding, which would be invested in startup companies throughout the U.S. Gephart’s plan calls for dividing the billions among a family of 20 venture capital firms, and which would provide $250 million for each firm to invest and manage.

—Tom Cassidy, the retired rear admiral hired to lead a DARPA-funded effort to develop a robotic spy plane in 1987, has retired from the company he helped create—General Atomics Aeronautical Systems of Poway, CA. The company has made more than 380 Predator and Reaper aircraft, according to The San Diego Union-Tribune. Cassidy, 77, will remain as nonexecutive chairman of the company that Neal and Linden Blue created as an affiliate of San Diego’s privately held General Atomics.

—Organizers said there was a record turnout for Roth Capital Partners’ 22nd Annual OC Growth Conference, which was held last week at Laguna Niguel, CA. More than 370 companies and 3,000 investors and analysts attended the event. There were 21 presenting companies from San Diego, including Qualcomm, Overland Storage, DivX, and Maxwell Technologies.

—Fallbrook Technologies spokesman Emile Barrios told me the San Diego cleantech company has partnered with China’s Tri-Star Group to manufacture Fallbrook’s proprietary design for a more energy-efficient continuously variable transmission bicycles and light electric vehicles. Tri-Star will make Fallbrook’s transmission at its plant near Shanghai, China.

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As paragliders and hang gliders swooped overhead, the grandson of famed aviator Charles “Lucky Lindy” Lindbergh chose a stunning panoramic San Diego clifftop to announce the formation of a new incentive prize to recognize advancements in electric aircraft technology.

Seattle-area resident Erik Lindbergh says the Lindbergh Electric Aircraft Prize, or LEAP, is intended to stimulate the development of more environmentally friendly aviation technologies, and help the fledgling electric aircraft industry take off. Lindbergh created the prize, which actually consists of awards in four categories, through a nonprofit organization he founded, the Creative Solutions Alliance (CSA), which has partnered with the Experimental Aircraft Association (EAA). The four LEAP awards, which have yet to be funded, will be awarded annually at the EAA’s annual AirVenture “fly-in,” the popular air show held each July in Oshkosh, WI.

Organizers also have arranged for students and teachers from a Seattle-area high school to participate in the process and attend the awards ceremony in Oshkosh this summer. Lindbergh says six students and six teachers from Aviation High School, a project-based magnet school in Des Moines, WA, just south of Seattle-Tacoma International Airport, will attend in a bid to develop curriculum and stimulate student interest in science, technology, engineering, and mathematics. Lindbergh is a founding board member of the high school, which was started in 2004.

In introducing the prize, Lindbergh says it … Next Page »

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Terrafugia, the Woburn, MA-based company out to produce the first practical flying car—or street legal airplane, to use the company’s term— said today it plans to build its first commercial vehicle next year in the Bay State. But CEO Carl Dietrich also said that while the company hopes to stay in Massachusetts and create hundreds of new jobs, it is considering moving production to other states like Ohio, Kentucky, or Michigan.

The skies were mostly clear, the weather unseasonably warm, and the crowd upbeat as the MIT spinoff, which was a runner-up in the school’s $100K business plan competition in 2006, hosted about 20 politicians, press, and other guests at its headquarters for a much-sought-after update on its plans. Dietrich used the occasion to deliver an optimistic picture of Terrafugia’s future, while also issuing what sounded like part warning, part plea to the politicians present, who included state Senators Steven Baddour (D-Methuen) and Ken Donnelly (D-Arlington).

Here are some highlights from the afternoon:

—Terrafugia will deliver its first commercial car, called Transition, by the end of 2011.

—About 70 customers, mostly private persons, have already reserved Transitions.

—The vehicles will sell for a base price of $194,000.

—Dietrich told the crowd that Terrafugia plans to ramp up production gradually over the next five years, with plans to eventually churn out between 300 and 400 craft annually.

—That level of output has the potential to support in excess of 400 skilled manufacturing jobs and high-tech engineering positions while passing approximately $150 million through to its workforce and suppliers each year, Dietrich said.

Richard Gersh, vice president of business development for Terrafugia, told Xconomy after the event that the whole point of the gathering was to raise the company’s visibility among local stakeholders who could help the startup find ways to keep its manufacturing operations in Massachusetts. (Whether Terrafugia is pursuing tax breaks, grants, loans, or other incentives, the company isn’t saying yet.)

“We understand that the economy is a challenge for everybody, but these are opportunities that we don’t want to slip by, and we just wanted to make sure that we have covered all the bases,” Gersh says. “I think we met with the right people today.”

Gersh says that Senator Baddour is a relative of one of Terrafugia’s investors; the North Andover airport where Terrafugia conducts test flights also happens to be in Baddour’s district. Senator Donnelly’s district, meanwhile, includes Terrafugia’s Woburn headquarters.

“Senator Donnelly is from our district, so he is certainly looking not to lose jobs in our state but to grow the work base,” says Gersh. “Without reaching out to them, they may not have known about the opportunity that exists.”

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It was another pretty busy week for deals in the Northwest, as everyone scrambled to beat the holiday rush. Lots of action in biotech, Internet, and mobile.

—Seattle-based ZymoGenetics (NASDAQ: ZGEN) is getting back the full rights to its drug for surgical bleeding in the U.S. and every other country except Canada, under a restructured partnership with German giant Bayer, as Luke reported. Bayer will no longer have to pay ZymoGenetics as much as $16 million in milestone payments for regulatory approvals around the world, while ZymoGenetics will have to pay Bayer as much as $12 million in commissions over the next two years, about half of what it could have owed Bayer under the old agreement, which was made in June 2007.

—Bothell, WA-based OncoGenex Pharmaceuticals (NASDAQ: OGXI) has clinched $60 million in upfront payments from Israel-based Teva Pharmaceutical for the right to co-develop an experimental prostate cancer drug, as Luke reported. Teva will pay $10 million to buy stock in OncoGenex, provide $20 million in upfront cash, and make a $30 million prepayment on development costs for OncoGenex’s drug, OGX-011, in addition to future milestone payments and royalties on product sales. But OncoGenex’s stock took a dive as investors saw how much of the future royalties will end up going to Carlsbad, CA-based Isis Pharmaceuticals.

—Seattle-based Zulily emerged from stealth mode, having raised a $4.6 million Series A round led by Maveron, the venture firm founded by Howard Schultz and Dan Levitan. Zulily, which is led by ex-Blue Nilers Darrell Cavens (CEO) and Mark Vadon (chairman), is building a “private sale,” members-only shopping website focused on kids and baby products.

—Bothell, WA-based Seattle Genetics (NASDAQ: SGEN) secured $12 million in upfront payments from GlaxoSmithKline in exchange for its technology that links antibodies to toxins that make them more potent, as Luke reported. Seattle Genetics is also in line for up to $390 million in milestone payments, plus royalties on worldwide product sales.

—Seattle-based Ontela, a mobile-imaging startup focused on helping consumers get pictures off their camera phones, merged with Denver, CO-based Photobucket, the photo-sharing website. Financial details weren’t given. The new entity goes by Photobucket, and Ontela’s venture backers—including Voyager Capital, Steamboat Ventures, Oak Investment Partners, and Covera Ventures—are putting new cash into it. Photobucket was previously owned by News Corporation (Fox).

—Seattle-based AltAir Fuels inked agreements with 14 major airlines to negotiate the purchase of up to 750 million gallons of camelina-based jet fuel and diesel. AltAir was formed in 2008 and plans to produce biofuels at a new facility in Anacortes, WA, slated to open in 2012.

—Lastly, the seed-stage investment fund and startup boot camp TechStars is coming to Seattle next fall, with the weight (and resources) of virtually every local tech investment firm behind it. I talked with entrepreneur and investor Andy Sack, who will head the Seattle effort, and Madrona Venture Group’s Greg Gottesman, who helped bring the program here, about the significance to the local tech startup scene.

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Seattle-based AltAir Fuels announced yesterday it has signed agreements with 14 airlines to negotiate the purchase of up to 750 million gallons of camelina-based jet fuel and diesel. AltAir plans to produce the biofuels at a new facility in Anacortes, WA, which is slated to open in 2012. The participating airlines (which entered into a memorandum of understanding) are American Airlines, Air Canada, Alaska Airlines, Atlas Air, Delta Air Lines, FedEx Express, Hawaiian Airlines, Jet Blue Airways, Lufthansa German Airlines, Mexicana Airlines, Polar Air Cargo, United Airlines, UPS Airlines, and US Airways. AltAir Fuels was formed in 2008 to produce jet fuel from renewable and sustainable oils.

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It was a fairly busy week for deals heading into the Thanksgiving holiday. The Northwest saw some action across aviation, alternative fuels, wireless, software, and biotech.

—Kent, WA-based Naverus was acquired by GE Aviation, an operating unit of General Electric (NYSE: GE). Terms of the deal weren’t disclosed. Naverus, founded in 2003, makes aviation navigation technologies that help make airline flight paths faster, safer, and more fuel-efficient.

—Seattle-based Bio Architecture Lab, a startup using synthetic biology to make alternative fuels and chemicals, has raised $8 million in its first round of venture financing, as Luke reported. The investors include Energy Capital Management, the venture arm of Norway-based Statoil; Chile-based Austral Capital; and X/Seed Capital of Menlo Park, CA. Bio Architecture Lab has also scored a partnership with DuPont to make biofuels from ocean seaweed.

—Bellevue, WA-based Root Wireless closed a $3.25 million Series B funding round, co-led by investors Fred Warren and Oliver Grace, Jr. Existing investors in the company include Scott Anderson, Jack Roberts, and John Stanton, all of whom participated in the latest round. Root Wireless makes technologies that analyze and map the performance of cellular networks and devices in eight metro areas around the country, with 12 more in the works.

—Infinia, the Kennewick, WA-based developer of solar power technology, raised $2.6 million in new financing from equity and options, as Luke reported. This means Infinia has raised about $13 million this month in debt and equity (including $10 million in short term debt), largely from existing investors, according to CEO J.D. Sitton. Infinia is generating electricity by collecting and focusing heat from sunlight and using it to drive a Stirling engine.

—Seattle Genetics, the Bothell, WA-based cancer drug developer, will receive a $12 million upfront payment from Agensys, an affiliate of Japan-based Astellas Pharma, under a renegotiated partnership to make targeted and more potent antibody treatments, as Luke reported. Seattle Genetics (NASDAQ: SGEN) formed its first partnership with Agensys in January 2007. The new deal allows the companies to collaborate on new targets of cancer drugs.

—In our second monthly installment of “under the radar” deals, I detailed 12 Northwest company financings under $1 million from October. The data comes from ChubbyBrain, a New York-based company building data-driven tools for investors and entrepreneurs. Some of the companies highlighted were Portland, OR-based Zapproved, and Bellevue, WA-based Intellisist and 1000Museums.

—Seattle software company Cozi has formed a strategic partnership with MeadWestvaco (NYSE: MWV), a Sidney, NY-based maker of school and office supplies and planning tools. Financial details weren’t given, but the deal gives MWV consumers access to Cozi’s Web-based tools for helping families manage their schedules. The tools include a family calendar, customized to-do lists, and messaging systems.

—Voyager Capital, the Seattle-based venture firm, participated in a $5 million investment in 1020, the San Francisco developer of Placecast, a location-based advertising and marketing platform. Quatrex Capital and Onset Ventures also joined the Series B round. Voyager is a returning investor in the company.

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Kent, WA-based Naverus, which develops navigation technologies for airplanes, has been acquired by GE Aviation, a Cincinnati-based division of General Electric. Financial terms weren’t disclosed today in GE’s official announcement of the deal.

Naverus was founded in 2003 and focuses on “required navigation performance,” a technique that uses advanced avionics and GPS technology to guide airplanes on approach and departure, making their flight paths faster and greener (more fuel-efficient). It’s part of a broader shift in aviation practices called Performance-based Navigation, which uses sensors, communications equipment, and flight computers to precisely work out flight paths and make more efficient use of airspace and resources.

I profiled Naverus back in April, after the company raised $4 million in venture financing from Foundation Capital and East Peak Partners. And two months ago, Naverus said it received approval from the Federal Aviation Administration to design and test its flight paths for public use in the U.S. Its customers include manufacturers like Boeing and Airbus, as well as commercial airlines like Southwest and several airlines in China, Australia, and Canada.

“This is great news for Naverus and our customers,” said Naverus CEO Steve Forte, in a statement. “Customers will continue to benefit from the same expertise and service for which Naverus is known, while the strength of GE provides a platform for future innovation and growth.”

I talked with a Naverus spokesman about the deal. He sounded excited, but said all media communications are being handled by GE at this time. It sounds to me like Naverus, which has about 60 employees, will remain in Kent, at least through the integration process.

The acquisition “brings some of the best [Performance-based Navigation] technology to GE Aviation’s Systems business, further expanding our commitment to deliver environmental results for our customers,” said GE Aviation’s president and CEO Lorraine Bolsinger, in a statement.

GE Aviation is an operating unit of General Electric (NYSE: GE). It makes jet engines and other technologies and components for commercial and military aircraft.

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Kent, WA-based Naverus announced today it has received approval from the Federal Aviation Administration to design and test “required navigation performance” flight paths for public use in the U.S. That means Naverus’s navigation software and flight patch design can now be used widely by U.S. airports and airlines to help make flights faster, safer, and more fuel-efficient. Back in April, Naverus raised $4 million in follow-on venture funding led by Foundation Capital and East Peak Partners.

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Clear, a five-year-old biometric passenger identification service intended to speed air travelers’ passage through security checkpoints, shut down last night. According to the service’s website, parent company Verified Identity Pass of New York, NY, was unable to obtain credit to continue operations. Boston’s Spark Capital led a $44.4 million Series C venture funding round for Verified Identity Pass last August. Syncom Venture Partners, Lockheed Martin, Baker Capital, GE Security, and Lehman Brothers also joined that round, which brought the company’s total funding at the time to $116.4 million.

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Terrafugia, the Woburn, MA, startup whose project to commercialize a “roadable aircraft” has attracted a worldwide following, said today that it’s completed flight testing of its initial proof-of-concept vehicle and is ready to build a second, “beta” aircraft.

The company also released extensive new video footage from test flights of the proof-of-concept plane by its test pilot, retired Air Force Colonel Phil Meteer. (We’ve embedded a couple of these videos below.)

The proof-of-concept vehicle, which Terrafugia has displayed at museums and air shows and flown 28 times from an airport in Plattsburgh, NY, is the only aircraft the company has built to date. In an announcement today, Terrafugia said it’s gotten all the data it can out of the prototype—not only demonstrating that a folding-wing aircraft fit for roadway driving can also fly, but testing its basic handling, performance, and stability on the road and during take-off and landing.

These tests constituted the first stage in a four-stage process of getting the Transition to market, the company said. It has already started work on stage 2, the beta prototype, which will incorporate modifications based on information collected during the stage 1 tests.

Terrafugia CEO Carl Dietrich—who will give a special presentation about the company at the Xconomy Summit on Innovation, Technology, and Entrepreneurship (XSITE), coming up June 24—told me in March that the craft’s maiden flight on March 5 and its subsequent test flights bring “a new level of credibility” to an effort that many observers have dismissed as quixotic.

Two of Terrafugia’s newest videos follow below.

Test 1146, May 6, 2009

Test 1151, May 6, 2009

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After a flurry of Northwest deals the previous week, the past seven days have been fairly quiet, with some activity in security software, aviation, and biotech.

—Kent, WA-based Naverus, a company that makes advanced navigation systems for airlines and air traffic managers, raised $4 million from existing investors Foundation Capital and East Peak Partners. I got the story behind the company and its efforts to make flight paths greener and more efficient, from chief marketing officer Dottie Hall (a very early Microsoft employee from the late 1970s).

—Washington state’s venture capital numbers for the first quarter of 2009 came in, and not surprisingly, they’re pretty grim. But they’re certainly not without hope, as VCs from OVP Venture Partners, Madrona Venture Group, and Buerk Dale Victor told me in an interview. We also tallied the state’s top five venture deals of the first quarter, which span the areas of biotech, lasers, user interfaces, and cloud computing software.

—Seattle-based Haute Secure, a maker of anti-malware security software, has been acquired by TRUSTe, an online privacy firm in San Francisco. Financial terms were not disclosed. Haute Secure was funded by Baseline Ventures and Sherpalo Ventures.

—GridNetworks, an online video startup in Seattle, is merging with Global Media Services, a New York firm. No financial terms were given. The combined company will provide streaming video and other media services for personal computers, mobile devices, and TV. GridNetworks was founded in 2005, and was backed by Comcast, Cisco, and Panorama Capital.

—Portland, OR-based SignaCert, an IT security and management software startup, raised $8.8 million in Series B funding. The round was led by existing investors including DCM, Intel Capital, and SmartForest Ventures. In-Q-Tel and other strategic investors also participated.

—Luke reported that BiPar Sciences, a Brisbane, CA-based developer of cancer drugs, is being acquired by Paris, France-based Sanofi-Aventis in a deal that could be worth up to $500 million if the company’s lead drug candidate reaches certain milestones. Paul Allen’s Vulcan Capital led a $13 million Series A funding round in BiPar in 2004.

—Lastly, we ran a two-part feature story on how some of Seattle’s most prominent venture dealmakers are approaching the University of Washington’s tech transfer office, and its researchers, in search of the next great UW spinout. The consensus seems to be that the UW has long been a world leader in commercializing technologies, and now the intensity has been jacked up an extra notch.

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