An unusually high percentage of this week’s New England tech and life sciences deals came from companies based in Boston proper. What’s up with that?

—Spark Capital of Boston led a $7 million Series B investment in Long Island, NY-based Aviary. Backed also by Bezos Expeditions, Aviary makes cloud-based software for graphic design, audio editing, and the like.

—Boston’s American Well, whose Web-based medical consultation system in used by several large health insurance plans, raised $10 million in new equity funding, according to a regulatory filing. Investors in the round were not named.

—Waltham, MA-based Axeda raised $5 million in a Series B funding round led by JMI Equity and $4 million in venture debt from MMV Financial. Axeda provides a cloud-based system for wireless tracking of company assets.

—Raytheon (NYSE:RTN), also of Waltham, completed its buyout of Cambridge, MA-based BBN Technologies. The purchase price, which wasn’t disclosed when the deal was announced, was about $350 million.

—E-commerce firm GSI Commerce (NASDAQ:GSIC) agreed to acquire Boston-based Retail Convergence Incorporated (RCI) for $180 million in cash and stock and as much as $170 million in performance-based payments. RCI owns Rue La La, an invitation-only website selling designer clothing and accessories at a discount, and Smart Bargains, a site selling more affordable clothing, jewelry, and home goods.

—SEC filings indicate that Burlington, MA-based coronary stent maker CorNova raised $2.5 million of a proposed $6 million in equity financing. Investors in the deal were not specified.

—Cambridge, MA-based Virdante Pharmaceuticals completed a second closing of its Series A financing round, bringing the total raised so far to $30 million. Investors have promised to boost that number to $47.75 million if the startup, which is developing new antibody-based drugs to combat autoimmune diseases, meets certain milestones. Ryan has a nice profile of Virdante and its technology.

—Boston’s ScanScout, an online video ad provider, completed its $8.5 million Series B round of venture capital. EDB Investments, which invests on behalf of the government of Singapore, provided the cash.

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Raytheon Company (NYSE:RTN) said yesterday that it has wrapped up its buyout of Cambridge, MA-based BBN Technologies for about $350 million. The amount of the purchase was not disclosed when the Waltham, MA-based provider of defense systems first announced the deal last month. Wade put the buyout in perspective and explained what BBN has meant to the development of the Internet and the Boston innovation scene over the past several decades.

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Back in August, Connect CEO Duane Roth outlined an initiative to address a dearth of venture capital investment by seeking to develop alternative funding sources for San Diego’s early-stage technology companies. A key part of the non-profit group’s initiative is to pursue additional federal support—and now that effort is facing its first major test as Congress takes up a bill that would provide funding through the Small Business Administration for equity investments in certain types of technology startups.

A House bill dubbed “The Small Business Early Stage Investment Act of 2009” would basically make the federal government a limited partner in qualified investment firms that make venture capital investments in early-stage companies in targeted industries. Roth tells me the bill, which was introduced by Democratic Rep. Glenn Nye of Virginia, fits his initiative “perfectly.”

Roth says he also helped recruit Martin Sabarsky, the San Diego-based chief operating officer for biofuels startup HR BioPetroleum, to testify yesterday before the House Small Business Committee in support of the bill. Roth describes HR BioPetroleum as an ideal case study that explains why federal funding is needed to boost venture investing. The company, which has offices in Hawaii and San Diego, saw its plans to build a commercial algae facility on Maui indefinitely postponed in September 2008, when financing for the project collapsed amid the free fall on Wall Street.

“Our subsequent attempts to attract additional venture capital/private equity investment to continue development in the midst of the continuing financial crisis have thus far failed,” Sabarsky said in his prepared testimony, which was submitted on behalf of BIO, the Biotechnology Industry Organization. BIO contends in a recent statement that venture investors have become especially risk averse when it comes to providing capital to small, early-stage biotechs and biofuels startups.

“Even in more ‘normal’ financial times, the private equity and capital markets have increasingly failed to fund promising, early stage scientific research beyond the basic research stage and before the revenue-generation stage,” Sabarsky said in his testimony.

The bill that Sabarsky, BIO, and Connect are supporting is H.R. 3738, which was introduced last week, and would amend the Small Business Investment Act of 1958 to provide funding for investments in technology startups in eight targeted industries: energy; environmental; life sciences, information technology; digital media; cleantech; and defense. The measure authorizes $250 million in federal funding for the first fiscal year after enactment, but Roth says sponsors want to provide $3 billion to $5 billion for venture investments over a five-year period.

To get federal funding, a participating investment firm must make all of its investments in small businesses, with at least half in early-stage small businesses in the eight targeted industries.

Connect’s Roth says the Early Stage Investment Act would also reinstate the federal government’s Small Business Investment Company (SBIC) program, which provided federal funding to certain venture funds.

Roth says firms that participated in the SBIC program in the 1990s incurred huge losses when the dot-com crash hit, and the federal government was forced to write off much of its funding. “The Bush Administration got nervous and stopped funding the program in 2004,” Roth says. “So now the Obama Administration is trying to revisit this with lots” of federal stimulus funding.

Roth, who was back in Washington, D.C., last week when the bill was marked up, says he’s “guardedly optimistic” about the measure’s prospects. So far, the bill seems to have bipartisan support, and Roth says there’s no indication that anyone intends to oppose the measure.

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The timing of my lunch yesterday with SAIC founder J. Robert Beyster was pretty close to impeccable, since it came just four days after the defense contractor formally announced the relocation of its corporate headquarters from San Diego to McLean, VA.

The departure of a Fortune 500 headquarters with a 40-year history in one city used to be the stuff of wounded civic pride—and great newspaper copy. I expected to hear at least some wailing and gnashing of teeth among San Diego’s economic development leaders, municipal elders, and other community kingpins. Big companies with established roots are often a crucial source of corporate philanthropy and financial support for symphonies, museums, and other cultural centers—so the loss of a Fortune 500 company headquarters is not just about bragging rights, either.

Yet San Diego heard barely a discouraging word about the announcement last week, while the governor of Virginia was crowing about SAIC’s arrival as the state’s fourth-largest company. So I was curious to hear what Beyster had to say.

“I felt it was inevitable that the move would occur because so much business is done in Washington,” Beyster tells me. He adds, “I’m not sure I would have done it if I was in charge,” and says the reason SAIC kept its headquarters in San Diego is because this is where he and his wife wanted to live. But he also notes matter-of-factly that he no longer has much say in the matter. “The important thing is that something stupid isn’t being done,” Beyster says. “It’s not at all a bad thing.”

Beyster, who is now 85, retired five years ago from the company also known as Science Applications International Corp. He was working as a nuclear physicist at San Diego’s General Atomics when he founded his own company in 1969 to provide government agencies with highly specialized services—such as calculating the yields of nuclear weapons. He’s told me previously the business was so specialized at first that he expected it to remain small. But he expanded SAIC by recruiting other prominent scientists, enticing them with offers of stock and leadership roles in an employee-owned company. Beyster went to extraordinary lengths to maintain SAIC’s culture of employee-ownership and entrepreneurship, creating a federation of high-tech business units that nuclear scientist Harold Agnew once described as “a farmer’s market with central heating.”

In many cases, the scientists Beyster recruited came with the government-funded projects they were already working on. So the company, which generated $250,000 in sales in its first year, has expanded over the past 40 years into a $10 billion-a-year juggernaut of government contracts.

Most of that business is conducted with government agencies in and around Washington, D.C., where SAIC now has …Next Page »

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Earlier this year, defense contractor SAIC celebrated the 40th anniversary of its founding near a ballet studio in La Jolla. Now the company, which has more than 45,000 employees, has moved its headquarters from San Diego to McLean, VA. Get that and the rest of the local technology innovation news here.

—Defense contractor SAIC, which made McLean, VA, its official headquarters last week, says that only about 20 corporate positions will move from its former headquarters in San Diego to Northern Virginia over the next year. But the company that was founded in La Jolla 40 years ago concedes that more of its 4,300 employees in San Diego could be relocated in future years.

—Santiago Becerra, the co-founder, chairman, and CEO of Del Mar, CA-based MeLLmo, said the startup company’s graphics and visualization software for business intelligence data represents “a whole new paradigm for how to visualize and analyze data.” Angel investors apparently feel that way, too. The company announced it has just raised $4 million from private investors, increasing its overall angel funding to $10 million since its founding 21 months ago.

—In the main event of the DEMOfall ‘09 conference that came to San Diego last week, company founders got 6 minutes to demonstrate their startup’s technology to the media, investors, and prospective corporate buyers. In addition to winning one of seven “DEMOgod” awards for its invisible speaker systems, Waltham, MA-based Emo Labs won the DEMO People’s Choice award for best consumer product. The award entitles Emo Labs to $500,000 in free advertising services from IDG, the media, events, and research company. Emo plans to strike licensing deals with consumer electronics manufacturers, and says products incorporating its technology should appear sometime next year.

—Before he made a presentation last week to San Diego’s MIT Enterprise Forum, MindTouch CEO Aaron Fulkerson told me his San Diego-based company has grown exponentially over the past few years partly because of an early decision to build its Web-based collaboration software around an open source wiki program. MindTouch, which was bootstrapped, competes with Microsoft Sharepoint, Oracle, and other collaborative software offerings.

—San Diego’s stealthy V-Vehicle car company has begun work on doubling the size of a former GM parts plant in Monroe, LA, where V-Vehicle plans to make its cleaner and greener cars—although the company has not disclosed what that means. With financial backing from Google Ventures, Kleiner Perkins, and T. Boone Pickens, V-Vehicle plans to complete construction of the 400,000-square-foot plant by mid-2010.

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SAIC’s plans to move its corporate headquarters from San Diego, where the company was founded in 1969, to McLean, VA, may rank as one of the defense contractor’s worst-kept secrets. Today the company also known as Science Applications International Corp. made it official. In a statement issued by the company, new CEO Walt Havenstein says, “This move will formally relocate the corporate executive leadership team closer to our federal government customers enabling us to better respond quickly and efficiently to their critical needs, while maintaining a significant presence in San Diego.”

SAIC spokeswoman Laura Luke tells me by email that the relocation only affects corporate functions, and that roughly 20 corporate positions are being considered for relocation to McLean. These moves would take place by next summer, and operational units directly supporting customers in San Diego will not be affected, Luke says.

Virginia Gov. Tim Kaine hailed the move, calling SAIC a “technology and defense powerhouse” and disclosing that the company plans to invest $25 million and add 1,200 new jobs in the Northern Virginia area over the next three years. About 17,500 of SAIC’s estimated 45,000-employee workforce already works in the metropolitan Washington, D.C., area.

SAIC ranks among a handful of Fortune 500 companies in San Diego. The company had annual revenues of $10.1 billion for its fiscal year that ended Jan. 31.

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Former BAE Systems executive Walt Havenstein takes over today as SAIC’s new CEO, but the big question is if the new boss will move the company’s headquarters from San Diego to McLean, VA. Get our roundup of San Diego’s biztech news here.

—San Diego defense contractor SAIC (NYSE: SAI), which has been shifting some key executives and corporate functions to Northern Virginia since 2006, appears poised to announce the relocation of its headquarters from San Diego to McLean, VA. If SAIC moves its HQ, San Diego’s roster of Fortune 500 companies would go from four to three. It only increased to four in August when CareFusion (NYSE: CFN), the Cardinal Health spinoff, established its HQ here. The other two are Qualcomm (NASDAQ: QCOM) and Sempra Energy (NYSE: SRE).

—How unique is your company’s culture? Xconomy asked the CEOs of startups in Seattle, Boston, and San Diego to use one word to describe their company’s corporate culture. We got 21 different answers. San Diego’s CEOs said Innovative, Love, Open, Entrepreneurial, and Speechless. Actually, “speechless” is my word. VMIX CEO Mike Glickenhaus was the only one who said, “I wish I could come up with one but I can’t.”

—At a time when rapid changes in technology are bringing Internet TV closer to reality, DivX CEO Kevin Hell says he is positioning the San Diego-based digital media company to be the friendly and agnostic technology provider. Hell says he wants the DivX format to be the “any-to-any-solution” that plays video content on any device from any manufacturer.

—Corporate buyout executives from Qualcomm and Google voiced cautious optimism about the economic climate for M&A deals involving venture-backed companies during a panel discussion organized last week by the San Diego Venture Group. Qualcomm’s Duane Nelles and Google’s Karim Faris also said it’s becoming more important for startups to secure an early corporate partner with a vested interest in developing the technology.

—San Diego Gas & Electric is leading a coalition of 28 companies, academic institutions, and other organizations to integrate emerging “smart grid” technologies in the regional power grid—and are bidding for $100 million in matching federal stimulus funds to help pay for it.

—Connect, the San Diego non-profit group that promotes technology and entrepreneurship, issued its second-quarter report on San Diego’s innovation economy. The study found 102 new technology companies were created during the three months that ended on June 30. That’s more than the 66 startups during the first three months of the year and better than the 76 companies launched during the same quarter in 2008.

—In its fifth edition of the “Venture Impact” report, the National Venture Capital Association found that venture-backed companies employed more than 12.1 million Americans in 2008. These companies generated $2.9 trillion in revenue in 2008, roughly one-fifth of U.S. gross domestic product. San Diego attracted $1.2 billion in venture investment across biotechnology, software, and information technology, among other areas, according to the NVCA report.

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[Updated 9/18/09 2:45 pm PT. See below.] SAIC, the secretive defense contractor that was founded in San Diego 40 years ago by nuclear physicist J. Robert Beyster, apparently plans to announce the relocation of its corporate headquarters to Tysons Corner, VA, sometime next week.

The looming announcement from Virginia Gov. Timothy M. Kaine was first reported by The Washington Post on its Virginia Politics blog, which cited unnamed “government and business leaders.” The SAIC employee who called it to my attention says “anybody affiliated with corporate [operations] in San Diego is hearing that giant sucking sound.” San Diego’s loss is Virginia’s gain. The Post’s Amy Gardner says the move is expected to bring more than 1,000 “high-paying jobs” to Northern Virginia.

For a company as large as SAIC, relocating the corporate headquarters would likely affect close to 1,000 San Diego employees working in finance, accounting, legal, and other high-level corporate and administrative functions. [Updates with comment from SAIC.] A spokeswoman for SAIC, also known as Science Applications International Corp., responded to my query by email, saying only, “SAIC has not made an announcement about its headquarters.”

The move appears most likely to be announced Monday, when Walt Havenstein takes over as SAIC’s new CEO. Halvenstein, the former head of North American operations for BAE Systems, was named in June to succeed Ken Dahlberg as CEO at the company. Dahlberg, a former General Dynamics executive who succeeded Beyster as CEO in 2003, plans to remain chairman of SAIC’s board of directors.

Dahlberg began shifting many of the company’s high-level functions to Virginia in 2006, when SAIC had about 5,000 employees in San Diego and more than 16,000 at its campus near McLean, VA.

The bulk of SAIC’s workforce has resided in Virginia for decades, because of the company’s focus on providing specialized research and engineering work under contracts for defense and intelligence agencies, as well as energy, health, environment, and other areas. (Because of SAIC’s deep expertise in IT integration and systems support, I think of the company as the systems administrator for the CIA and other intelligence agencies.)

Beyster founded SAIC with a small group of scientists in 1969 to provide contract research services for the government on nuclear weapons and in other fields. The company now has about 45,000 employees in 150 cities worldwide.

SAIC's Virginia Campus

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The Naval Undersea Warfare Center in Newport, RI, has awarded a contract worth up to $19 million to San Diego-based Science Applications International Corporation (SAIC) (NYSE: SAIC). Under the contract, which SAIC announced today, the company will perform training, modeling, simulation, and other support services for robot submarine research programs at the Navy’s Autonomous Undersea Vehicle Engineering Facility.

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It was another fairly quiet week for Northwest deals, as summer officially winds down. Activity in wireless, software, and biotech led the way.

—The Oregon Angel Fund, based in Portland, said it has closed a new $3 million fund this summer, raised from 60 individual investors and the Oregon Growth Account, a state-run fund dedicated to startups. The angel group has made three new investments with its fund, putting $500,000 into Vancouver, WA-based ClearAccess, committing to invest $500,000 in Portland-based Giftango, and investing $405,000 in Portland-based Wicked Quick.

—Kirkland, WA-based Clearwire (NASDAQ: CLWR) signed a collaborative agreement with UQ Communications of Japan and Yota of Russia to support international roaming between the three WiMax operators. Financial details weren’t given. Clearwire is rolling out WiMax, a next-generation wireless broadband service, in cities across the U.S.

—Mukilteo, WA-based CombiMatrix (NASDAQ: CBMX) received a $1.5 million contract from the U.S. Air Force Research Laboratory to develop automated tools that can detect biological, chemical, and environmental hazards, as Luke reported. CombiMatrix makes genetic analysis tools, and has developed other products for the military.

—Plum, a social media sharing and messaging service backed by Seattle’s Vulcan Capital and Levensohn Venture Partners in San Francisco, was acquired by Finnish mobile giant Nokia (NYSE: NOK). Financial details were not disclosed. Plum has about 10 employees in Boston and San Francisco.

—Seattle-based Uptake Medical raised $3.4 million out of a total equity offering worth $13.3 million, as Luke reported. The investors were not disclosed. Uptake Medical is developing a device that seals off access to diseased parts of the lung where air gets trapped, without leaving any implantable device behind.

—Redmond, WA-based Smilebox, a photo services startup, acquired Preclick, a Seattle and New Jersey-based maker of photo software for retailers like Walmart, Costco, and Walgreens, for an undisclosed price. Smilebox launched its service, which lets people create electronic greeting cards, photo albums, and slideshows, in 2006.

—Venture capitalists invested $25 million in four companies headquartered in Washington state last month, according to data from ChubbyBrain, a New York-based firm that develops tools for investors, startups, and entrepreneurs. Bellevue, WA-based Apptio led the way with its $14 million Series B financing from Madrona Venture Group, Greylock Partners, and new investors Shasta Ventures and Andreessen Horowitz Fund.

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San Diego is a major border city, tourism destination, and convention hotspot, so it should come as no surprise that the U.S. State Department recognizes 25 consular representatives of foreign governments in this area. But with a handful of exceptions, nearly all of them are honorary positions with no regular office hours.

Among the exceptions is the Canadian consulate, which operates with an unusually narrow focus on San Diego’s science and technology innovation scene, according to Sean Barr, who is Canada’s current consul here. Barr says that makes the consulate’s five-person staff in San Diego unusual even compared with Canada’s embassy in Washington D.C., and its consulates general, which provide full diplomatic and consular services in major U.S. cities, including Boston and Seattle.

Barr says the Canadian government made a commitment five years ago when it established the San Diego consulate, which does not provide diplomatic or full consular services. “We are the only full-time consulate presence in San Diego focused on science and technology,” Barr says. “So the Canadian government has sort of recognized that the opportunities here are significant enough to warrant a full-time presence that’s focused on the life sciences and biotechnology, cleantech, ITC (Information Technology and Communications), and defense and homeland security.”

Such opportunities have resulted in a number of cross-border collaborations between San Diego companies and Canadian firms, and Barr listed a number of examples:

—Gen-Probe, a San Diego medical diagnostics company, has been collaborating with Quebec-based DiagnoCure to develop a better method to screen for prostate cancer.

—San Diego’s Isis Pharmaceuticals, which has been developing drugs based on its RNA anti-sense technologies, has been working with OncoGenex Technologies of Vancouver, BC, on an experimental drug for prostate cancer. OncoGenex specializes in developing compounds that inhibit the production of proteins that promote resistance to drug treatments.

—San Diego-based Illumina is working with researchers at Montreal’s McGill University, Genome Quebec, and Genome Canada to create a special map of human genes. The map will serve as an important resource for researchers trying to identify genes that affect health and disease, and genetic responses to drugs and environmental factors.

—-Cubic Security Systems, a unit of San Diego-based Cubic Corp., intends to integrate radiological detection technology developed by Mobile Detect Inc. (MDI) of Ottawa, ON, under a purchasing, support and licensing agreement. Barr says MDI’s technology, which is capable of distinguishing between illicit radioactive agents and nuclear medicines, is intended for use in scanning systems Cubic has been developing for the transportation industry.

—ISE Corporation, a San Diego-based maker of hybrid electric drive systems and components for buses, trucks, and other heavy-duty vehicles, is working with New Flyer Industries, a bus manufacturer based in Winnipeg, Manitoba, and Ballard Power Systems of suburban Vancouver BC to deliver 20 fuel-efficient buses for use during the Winter Olympic Games that begin Feb. 12 in Vancouver.

Barr says the consulate cannot claim credit for all these collaborations, but he says, “It is our role to make those matches and to facilitate those relationships.”

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In financial results issued late yesterday, San Diego defense contractor SAIC attributed its increased second-quarter revenue and earnings to “recent wins in defense logistics, information technology, and cyber-security,” among other things.

That last part about cyber security may be an understatement, based on a conversation I had last night with Alan Paller.

As a founder and director of research at the SANS (SysAdmin, Audit, Network, Security) Institute, a cooperative computer security organization in the Washington, D.C. area, Paller has a front-row view of the relentless electronic attacks besieging the nation’s computer infrastructure. He gains much of his insights through his work with SANS, which conducts research and training for system administrators, and oversees the Internet Storm Center, a volunteer Internet security monitoring organization. In the 20 years since the institute was founded, Paller also has developed an extensive network of professional connections in network security both in and out of government.

Alan Paller

As Paller told me last night, Internet attacks on government computer networks have become a constant threat, an intense storm that’s not just rattling windows and doors, but also breaking into sensitive government computer systems that store data about U.S. technology. It is a warning he often makes. Yet one reason why SAIC is becoming so crucial stems from testimony he delivered just five months ago to the U.S. Senate Committee on Homeland Security and Government Affairs. In his presentation, Paller emphasizes two new realities about the nation’s cyber-infrastructure:

—Computer attacks by hackers, nation states (e.g. China), organized crime in Eastern Europe, and even terrorist groups have more deeply penetrated U.S. civilian government agencies and the critical national infrastructure computer networks (e.g. computers that control power grids) than has been publicly disclosed.

—The attackers are improving their techniques far faster than the U.S. government has been improving its defenses. In other words, the threat is increasing at an accelerating rate.

Paller contends that SAIC, with its institutional expertise in IT systems integration for U.S. intelligence and defense agencies, is way ahead of other defense contractors because “a lot of the guys with security clearances don’t have the necessary skills.” His insights helped give …Next Page »

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Hillsboro, OR-based TriQuint Semiconductor (NASDAQ: TQNT) announced today it has acquired TriAccess Technologies, based in Santa Rosa, CA. Terms of the deal were not disclosed. TriAccess makes integrated-circuit amplifiers for audio, video, and HDTV applications. TriQuint Semiconductor, founded in 1985, makes wireless communication technologies for mobile manufacturers, cellular base stations, and defense and aerospace contractors.

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If you had to pick a birthday for the Internet, September 2, 1969—40 years ago today—would be a good candidate. That’s the day a team of researchers at UCLA sent the first computer-to-computer transmissions using the Interface Message Processor (IMP), the grand-daddy of all packet-switching routers and the foundation of the military-university Arpanet, which paved the way, in later decades, for the Internet. The IMP was built at Cambridge, MA-based Bolt, Beranek and Newman, now BBN Technologies. So the timing of yesterday’s announcement that BBN will become part of Massachusetts-based defense giant Raytheon (NYSE: RTN) seems auspicious, since it seems to guarantee that the firm’s long tradition of innovation will continue under local management.

Originally founded by a pair of MIT professors as an acoustic consulting firm, BBN has had a hand in the development of an eclectic range of important digital technologies, including parallel processing, speech recognition, the Logo educational software language, genetic algorithms, satellite communications, and the @ sign in e-mail addresses. But the firm has traveled a twisty path over the last decade and a half.

GTE bought the company in 1997 and, as a condition of its 2000 merger with Bell Atlantic to create Verizon, spun off BBN’s Internet-related assets under the name Genuity. (Genuity’s 2000 IPO produced disappointing returns; the company went bankrupt and was acquired by Colorado-based Level 3 Communications in 2002.) The remaining parts of BBN were pried away from Verizon in a 2004 deal led by two venture firms, Cambridge, MA-based General Catalyst and Palo Alto, CA-based Accel Partners. Partners from the firms took four of BBN’s five board seats.

Since then, the 700-employee company has focused on bringing more products to market, with at least two notable successes: its Boomerang “shooter detection” system, used by U.S. forces in Iraq and Afghanistan to pinpoint the origin of small-arms fire, and EveryZing, a 2005 spinoff (originally known as Podzinger) that uses speech recognition technology developed at BBN to help media companies monetize their audio and video content by creating machine-readable transcripts that can be found by search engines and ad-placement algorithms.

But venture partners aren’t, as a rule, interested in being long-term corporate overseers, so it isn’t a huge surprise to see General Catalyst and Accel handing over their stake in BBN to Raytheon, a $23 billion defense contractor and electronics manufacturer whose history in Massachusetts goes back even farther than BBN’s. The terms of the acquisition, which is expected to close by the end of this year, haven’t been disclosed. But David Fialkow, managing director at General Catalyst, said in a statement that the sale was an “excellent result” for BBN’s investors and employees. BBN president and CEO Robert “Tad” Elmer said being part of Raytheon would act as “a multiplier on our proven ability to deliver advances to the market rapidly and profitably,” and Raytheon executives said the acquisition would strengthen the company’s capabilities in networking, video surveillance, and advanced sensing applications.

MIT physicist Richard Bolt and acoustics expert Leo Beranek founded the company in 1948, and brought in a former student of Bolt’s, an MIT architecture graduate student named Robert Newman, early enough to include him in the corporate moniker. The company’s first contract was for the acoustic design of the General Assembly Hall at the United Nations headquarters in New York. On the strength of that work, the firm went on to …Next Page »

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In a convergence of two legendary Boston-area technology concerns, Waltham, MA-based defense contracting giant Raytheon (NYSE: RTN) said today it will acquire Cambridge, MA-based BBN Technologies in a deal expected to close by the end of this year. Financial terms weren’t disclosed. BBN pioneered the development of the Arpanet, the predecessor to today’s Internet, and continues to have strengths in networking, speech recognition and translation technologies, quantum cryptography and communications, and related fields. The privately held firm was acquired by Cambridge, MA-based venture firm General Catalyst and Palo Alto, CA-based Accel Partners from Verizon Communications in 2004. Raytheon said BBN will become part of its Network Centric Systems division. We’ll have more details on the acquisition in a follow-up story.

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[Corrected 9/03/09, 7:20 am. See below.]

It felt almost anti-climactic when retired Vice Adm. Dennis McGinn arrived in San Diego last week to meet with some of San Diego’s leading algae biofuels scientists and tour a local biofuel research facility.

McGinn, a former commander of the Navy’s Third Fleet in San Diego, is a member of a blue-ribbon panel warning that continued U.S. reliance on fossil fuels (as well as the nation’s strained electric grid) pose significant threats to U.S. security. As a result, the retired admiral represents an unanticipated ally in efforts by San Diego’s emerging cleantech community to rapidly advance algae-to-biofuels technologies. The blue-ribbon panel, actually the military advisory board of CNA, a non-profit research group near Washington D.C., is urging the Pentagon to bolster its national-defense strategy by boosting energy conservation and by embracing alternative energy technologies as a way to end U.S. reliance on unfriendly foreign sources of crude oil.

McGinn’s support was welcomed, of course. But San Diego’s biofuels industry has gained so much momentum in such a short time, it’s not like McGinn was bringing badly needed reinforcements to a desperate struggle for survival.

Lisa Bicker, who heads the non-profit industry group Cleantech San Diego, marks the dawn of San Diego’s “green crude” revolution in mid-2008, when local scientists and industry officials first met to discuss their various efforts in algae biofuels research. The implications were obvious at the time, because U.S. gasoline prices were skyrocketing beyond $4 a gallon nationwide. Since then, news concerning San Diego’s advances in algae biofuels technology has been flying fast and furious.

One of the more significant developments occurred last September, when it was disclosed that San Diego’s Sapphire Energy had raised $100 million in venture capital to develop algae biofuels—and the investors included Bill Gates. Then there was a flurry of news in April surrounding the formation of SD-CAB, the San Diego Center for Algae Biotechnology, and the formulation of a $10 million Algae Fuel Prize competition organized by Del Mar, CA-based Prize Capital. All that, however, seemed to be eclipsed in July, when Exxon Mobile said it was investing $600 million to develop algae biofuels through a partnership with San Diego’s Synthetic Genomics, and the intense J. Craig Venter.

Even since July, much has happened. So what McGinn had to say to Bicker and local scientists wasn’t nearly as interesting to me as the update he got from the front lines of algae biofuels development in San Diego.

McGinn met with Bicker, Stephen Mayfield, an expert in algae genetics at The Scripps Research Institute (and who broke the news that he is moving to UC San Diego San Diego in November), Greg Mitchell, a marine biologist at UCSD’s Scripps Institution of Oceanography, and Robert Knox, the oceanographic institute’s deputy director for research. Here are some of the insights I gleaned from their briefing:

—Mayfield told McGinn that federal funding to …Next Page »

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“What are you trying to tell me? That I can dodge bullets?”
“No, Neo. I’m trying to tell you that when you’re ready, you won’t have to.”

It’s one of the many memorable exchanges from “The Matrix.” But next time, Keanu Reeves should just talk to Christina Lomasney about getting some Modumetal armor—so he truly won’t have to worry about dodging anything.

Lomasney is the co-founder and CEO of Seattle-based nanotech startup Modumetal, which has grand plans to reinvent the metals industry, not just body armor. Three months ago, Modumetal announced it had raised more than $1.5 million from the Alliance of Angels, Second Avenue Partners, and WRF Capital, to advance its development of nanolaminated structures—fundamentally new kinds of metals that are stronger and lighter than steel and can be used to make better armor, structural components, and corrosion- and heat-resistant coatings. The 17-person company has also raised just under $1 million in government contracts and grants.

But first, let’s flash back to 2007. In a formative meeting, Lomasney and her fellow co-founder (and former University of Washington physics labmate) John Whitaker were talking with Dan Rosen, chair of the Alliance of Angels, about the idea behind their company. “They looked like the cat that ate the canary,” Rosen recalls. “My comment was, ‘Do you guys really understand what you have there?’”

In what can be a telling exercise for any entrepreneur, Rosen asked them to write the Wall Street Journal article that would appear the day Modumetal was successful. They wrote two. The first said that all U.S. auto manufacturers had adopted Modumetal to make their cars, increasing their fuel efficiency by 50 percent. The second said the military had announced that new vehicles using Modumetal technology have saved 10,000 lives. “Both were very interesting glimpses of the future,” Rosen notes.

Fast forward to last week when I sat down with Lomasney (see photo, left), a Boeing alum, to discuss where things are going with Modumetal, hear more about its strategy, and get a tour of the facilities. Those ambitious Wall Street Journal milestones haven’t been met yet, but if anything, the vision for the company has grown.

Lomasney is not one to make speculative or unfounded claims. Her one-word summary of Modumetal’s culture is “competent.” Last summer, she said the company was transitioning from military to transportation applications. So when she now says, “We’re the next ArcelorMittal”—the world’s largest steel maker—you sit up and take notice. As she explains, the metals industry has not changed that …Next Page »

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The Association for Unmanned Vehicle Systems International says its conference and exhibition in Washington D.C. this week is the largest event of its kind, featuring the world’s biggest collection of robotic vehicles for use in the air, land, and sea. Judging by the news conference agenda, however, the four-day convention could almost be called the Northrop Grumman Robot Show.

The Southern California defense contractor, which operates a major unmanned systems business in San Diego, accounts for eight of the 15 news conferences the Virginia-based industry association has scheduled for today and tomorrow.

Gene Fraser

The scope of Northrop Grumman’s work in robotic vehicles seems to have grown so big that E.J. “Gene” Fraser, a vice president in the company’s strike and surveillance systems division, is giving an overview of the company’s unmanned systems—in the air, on the ground, and at sea. The company’s major programs include:

—The high-altitude Global Hawk UAV, or unmanned aerial vehicle, operated above Afghanistan and Iraq by the U.S. Air Force.

—The Broad Area Maritime Surveillance program, a $1.2 billion development effort that seeks to adapt Global Hawk technologies for specialized use by the U.S. Navy in monitoring vast tracts of ocean.

—The Fire Scout, an unmanned helicopter under development for the Navy. Northrop Grumman says the Fire Scout completed a series of flight tests aboard the USS McInerney last month as the warship cruised off the coast of Mayport, FL.

—The X-47B unmanned combat air system, a Navy strike aircraft capable of carrier landings and takeoffs. Northrop Grumman is completing final assembly of its first X-47B prototype, with a first flight tentatively set for November.

As unmanned, robotic vehicles become increasingly commonplace, Fraser tells me the pre-conference buzz is focused not so much on breakthrough …Next Page »

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The world’s largest collection of unmanned aircraft and other robotic systems is coming in for a landing this week in Washington, D.C., at a four-day conference that’s sponsored by AUVSI, the Association for Unmanned Vehicle Systems International. Today’s the big day for video capture, with live demonstrations of UAVs (Unmanned Aerial Vehicles) and UGVs (Unmanned Ground Vehicles) taking place at the Patuxent River Naval Air Station in St. Inigoes, MD. The rest of the conference returns tomorrow to the Washington Convention Center.

As it turns out, a lot of expertise in robotics and unmanned systems is concentrated in San Diego, Boston, and Seattle. Companies based in all three Xconomy cities have scheduled presentations and press conferences, although I could find just one, Insitu, from the greater Seattle area. Here’s my rundown:

—Aurora Flight Sciences (Manassas, VA). The government contractor has scheduled a press conference Wednesday afternoon that could be related to its Excaliber UAS (Unmanned Aerial System) or SunLight Eagle, a large, solar-powered UAV. Aurora, which maintains close ties with MIT and operates a major R&D lab in Cambridge, MA, successfully completed a first flight of the Excaliber last month, and describes the vertical takeoff and landing UAV as the first in a new class of unmanned combat systems. The company said in May it had completed a series of SunLight Eagle flights.

—Hydroid (Pocasset, MA). Hydroid, which was acquired by Norway’s Kongsberg family of companies in December 2007, has set a press conference Tuesday morning to discuss the capabilities of its line of torpedo-like autonomous underwater vehicles.

—Maxon Motor (Fall River, MA). Roger Hess of Swiss-owned Maxon is giving an oral presentation on “A Robot To Help The Environment” as part of a conference track on unmanned ground vehicles. Maxon makes precision electric motors and high-precision drive systems.

—Protonex (Southborough, MA). Paul Osenar and colleagues from fuel cell systems developer Protonex are giving a presentation on their development of fuel cells for long-duration electric UAVs and UGVs.

—Insitu (Bingen, WA). The Boeing subsidiary has scheduled a news conference Tuesday morning to discuss the Integrator, its next-generation UAV, and latest technological advances within its family of unmanned systems.

—Northrop Grumman’s Aerospace Systems and Information Systems divisions (San Diego). The Southern California defense contractor has arranged a number of media updates Tuesday afternoon and Wednesday morning—as well as conference presentations—to describe work that encompasses its high-altitude Global Hawk UAV, the unmanned Fire Scout helicopter, its Remotec Unmanned Ground Vehicle (UGV) for bomb disposal and other work, and its $1.2 billion Broad Area Maritime Surveillance UAV program intended to provide oceanic intelligence, surveillance, and reconnaissance for the Navy.

—SAIC (San Diego). The big defense contractor also known as Science Applications International Corp., the U.S. Coast Guard, and University of Alaska will discuss the use of unmanned aircraft systems in oceanic airspace over international waters.

—General Atomics Aeronautical Systems (San Diego). GA Aeronautical plans to give a presentation Thursday morning on the multi-mission capabilities of its Predator B UAV.

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Even when the Internet boom was happening—even during the incandescent gold rush years of the late 1990s—Network Solutions was not exactly a household corporate name. Not compared to the first wave of companies like America Online or Netscape Communications, whose Aug. 9, 1995, IPO seems to be the demarcation line between everything that existed before the Internet and everything that came after.

Even to those who had heard of Network Solutions, the little company in Herndon, VA, that held exclusive rights to register Internet domain names was something of a mystery. Just how did that government-issued monopoly come about, anyway? And then there was SAIC, the San Diego-based government contractor that had acquired Network Solutions in March 1995. SAIC was an even bigger enigma, because so much of its work involved specialized and classified research and engineering services for the Pentagon and U.S. intelligence agencies. Even on projects that don’t involve secret DoD programs, SAIC doesn’t go out of its way to attract attention.

So it’s not widely known, for example, that SAIC acquired Network Solutions for only $4.7 million, and operated the company during a five-year period of near-exponential growth. Network Solutions was managing only about 60,000 Internet domain names when SAIC took over, but during those crucial early years the company built out the infrastructure needed to manage millions of domain names. At the same time, SAIC sold off pieces of its stake in the Virginia company—eventually realizing billions of dollars in increased valuation.

I got a rare opportunity to gain new insight on this story from two key insiders: SAIC founder (and Xconomist) J. Robert Beyster, who was SAIC’s chairman and CEO during the Network Solutions years, and Mike Daniels, the SAIC executive who led the acquisition and served as chairman of Network Solution’s board during the years SAIC controlled the company. We’re publishing my exclusive Q&A with them tomorrow [now online here--Eds.].

They tell me they became friends in 1986, after SAIC acquired Daniels’ company, Computer Systems Management. It was a small government contractor in Northern Virginia that had worked on sensitive IT projects for the Reagan Administration, such as an upgrade in the National Security Council’s crisis management decision-making system.

Daniels says he had a front-row seat on the Internet from …Next Page »

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