We’re starting to see fresh signs of life among the Internet software startups in San Diego. Check out this news.

—During a visit last week, TechStars CEO David Cohen talked with the leaders of San Diego’s grassroots Web startup community about the factors that help to create and sustain entrepreneurial communities. One crucial issue confronting San Diego is a crying need for savvy and experienced Internet entrepreneurs who are willing to “pay it forward” by mentoring a new generation of startups.

—A dozen seed-stage companies moved into the new EvoNexus incubator in downtown San Diego. EvoNexus, which was founded by the CommNexus non-profit industry group, will continue to operate its original incubator in University City, where eight startups are taking root. In both locations, EvoNexus provides office space, utilities, and other services free of charge and with no strings attached.

—Sigma Partners led a $10 million round in venture funding for San Diego-based MOGL, a Web startup that has developed a comprehensive customer loyalty program for restaurants and bars, to fuel its expansion into San Francisco and New York. San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures joined in the round.

—San Diego’s MicroPower Technologies named two new board members after raising $6.5 million in Series C funding in a deal that was led by Motorola Solutions Venture Capital and joined by an undisclosed private fund. MicroPower Technologies, which uses wireless networking technologies to create low-cost surveillance capabilities, named PacketVideo CEO Jim Brailean and former DivX CEO Kevin Hell to its board. Hell, who is now chairman of San Diego’s EvoNexus incubator, will join as MicroPower chairman.

—San Diego’s StockTwits said it has established a partnership with Toronto’s Q4 Web Systems, which provides … Next Page »

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Citizen Effect, the Washington, D.C.-based microphilanthropy organization that is perhaps best known for its work in India, has just launched a new initiative called Detroit4Detroit, which aims to fund 150 community-improvement projects using a strategy that’s heavy on social networking and other digital tools.

“Detroit4Detroit is based around the idea that anyone can be a philanthropist,” says Eric Moss, Detroit4Detroit’s project manager. “It’s about actualizing our power and actualizing our social networks.”

Citizen Effect organizers work with its partners—ACCESS, Brightmoor Alliance, COTS, Detroit Area Pre-College Engineering Program (DAPCEP), SER Metro Detroit, Wellspring, and Vanguard—to curate a list of viable projects, with each submitting five to ten projects for consideration. Once a project has been vetted, it’s posted to the Detroit4Detroit website for a citizen philanthropist, or CP, to adopt. Once a project has been claimed, Citizen Effect gives the CPs a digital toolkit that enables them to promote the project on sites like Facebook and Twitter, reach out to potential supporters through fundraising emails, and have an online platform to post blogs, videos, and photos related to the project.

The goal of Detroit4Detroit is to have 150 people raising $250,000 across 150 projects, though Moss says this initial target is a starting point for what he hopes will be “limitless” community philanthropy.

“I’m blown away by the enthusiasm and how many people want to sign up,” says Matt Bailey, who manages the tech and data side of Detroit4Detroit’s operations. Though the initiative just held its formal launch last month, 15 people have already signed on to be CPs and are in the process of being matched with the project that best suits their talents, interests, and networks. (One project has officially started fundraising.)

The Detroit4Detroit model was developed with the help of the Knight Foundation, and represents the first time Citizen Effect has launched a microphilanthropy initiative of this kind in an American city.

“This is a special moment in Detroit,” Moss says, noting that the city is alive with grassroots energy. “We want to fit into the revitalization and renewal efforts in a way where we engage each other about the idea of philanthropy. We all can make a difference, especially if we’re provided with the tools that level the playing field.”

Moss is himself representative of the kind of change that is rapidly taking root in the city, where people who grew up in greater Detroit but left to attend college or seek work are returning to the area with a sense of purpose. Moss grew up in suburban Detroit, went to college in D.C., and lived in New York and Los Angeles before making his way back home.

“I moved back two years ago and I came back willingly,” Moss says. “What brought me back was the soul of the city, which was missing in the other places I lived. There’s an electric energy going on here that none of us can deny. It’s a great opportunity to experience this very positive transition of order out of chaos.”

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When it comes to tech startups—especially in Internet software and app development—San Diego has been adrift in the horse latitudes. That’s the term Spanish mariners had for the waters where the trade winds died out for days and even weeks at a time. Becalmed sailors desperate to gain some headway would heave their horses overboard to reach the New World.

It hasn’t reached that point yet in San Diego, but you would never know that software was once a thriving entrepreneurial community here. Even now, the software sector accounts for more than a third of San Diego’s private technology companies. But as I’ve written previously, it feels as if the local software companies speak different languages. In contrast to the flourishing tech hubs in Seattle, Boston, and New York—not to mention Silicon Valley—San Diego’s software scene is sleepy and indifferent.

Still, there are signs of a freshening breeze.

David Cohen last week at UC San Diego

Scores of new seed-stage startups have begun to emerge throughout the region, including a dozen that just moved into the new EvoNexus incubator in downtown San Diego. These emerging companies are led by young entrepreneurs who view San Diego’s innovation establishment as old-school and irrelevant. They are turning out instead for informal “hackathons” and “meetups.” They tell me they’re yearning for real mentoring by real tech entrepreneurs, and for access to real tech investors who are really investing.

Last week, more than 200 people turned out to hear David Cohen talk at U.C. San Diego about TechStars, the early stage fund and accelerator program for Internet startups that he co-founded with three partners in Boulder, CO, six years ago. Cohen is the CEO, and by any measure, the startup program has been wildly successful.

TechStars enrolled its first 10 Internet startups in 2007, providing as much as $18,000 in seed funding and an intense, three-month mentorship program for each company in exchange for a 6 percent stake. Since then, TechStars has expanded to … Next Page »

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Employment in San Diego’s life sciences sector grew by 15 percent over the past two years, as biopharmas, medical device companies, and other employers added roughly 5,550 jobs here—raising employment in the sector to 41,937 in 2011, according to a report released today by Biocom. The report says overall employment in San Diego increased by 1.1 percent over the same period, gaining about 20,600 jobs to reach 1.83 million in 2011.

The 40-page economic study says San Diego’s life sciences cluster also is expected to outpace the nation in terms of job growth and economic impact over the next two years, as another 2,770 jobs are added by 2013. A broader snapshot that includes life sciences companies in neighboring Orange, Riverside, and Imperial Counties projects the region will add more than 6,000 workers over the next two years.

Despite a significant decline in venture capital funding, the report says the four-county region of Southern California will continue to retain its high standing and competitive advantage in the life sciences. By 2013, there will be 70 percent more jobs in the life sciences in these four counties than the national average.

While venture capital funding is a key indicator of entrepreneurial activity and business formation, the report says the sharp decline in Southern California VC investments, from $1.1 billion in 2007 to $553 million in 2010, reflects the severe economic downturn and other industry trends underway nationwide.

San Diego’s strength was especially apparent in federal funding for biomedical research. Of the top 10 research institutions receiving National Institutes of Health grants in 2011, nine are in San Diego. The $835 million in grants awarded last year to San Diego scientists accounted for more than 85 percent of the grants allocated in the four-county region.

The report says the four-county life sciences cluster comprises more than 3,500 companies and employs over 97,000 people. On average, salaries range between $54,141 and $116,462, well above the national and regional averages. Including direct, indirect, and induced employment, the report says this region supports a total of 248,800 jobs that pay over $17.7 billion in wages and generate $57 billion in economic activity.

San Diego County alone accounts for 1,700 companies that employ 41,937 people. Including direct, indirect, and induced job, San Diego’s industry supports more than 106,000 jobs that pay $7.5 billion in wages and generate roughly $22 billion in overall economic activity. A .pdf file of the full report can be downloaded here.

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Serial entrepreneur Angel Gambino has every right to be arrogant—as people with resumes like hers often are—but she’s as down-to-earth and polite as they come.

Sure, a casual question about which local gym she prefers reveals that she’s currently training to be an Olympic soccer-team liaison, the Olympics’ most senior volunteer role and one which oversees every aspect of the team’s participation in the international games, but the answer is delivered in such a gradual, casual manner that it’s hardly bragging. (She’s awaiting confirmation from the Olympic Committee whether she’ll be overseeing the American, English, Italian, Australian, Brazilian, or Argentine men’s team.)

Trust me when I say Gambino’s life is way more interesting than mine and probably yours. She helped develop Gameplay.com, an early gaming site that eventually had 900 employees in nine countries; was instrumental in helping to popularize the social network Bebo, which was sold to AOL Time Warner in 2008 for $850 million; helped oversee the BBC’s expansion into mobile, broadband, and on-demand platforms; and helped launch social and video-on-demand platforms for Viacom channels such as MTV, VH1, and Comedy Central.

Gambino is still a co-owner of Sonico, the third largest social network in Latin America—Gambino describes it as “the Facebook of Latin America before Facebook became the Facebook of Latin America”—as well as Spoonfed Media, a popular website that directs Londoners to upcoming arts and entertainment events.

So what the heck is she doing in Detroit?

Gambino and her partner, Scott Griffin (more on his story later), purchased a massive building on Rosa Parks Blvd. for $270,000 in September, which they plan to turn into retail, restaurants, and space for local startups, the first step in a plan to further revitalize the Corktown area so it attracts not only the suburban visitors that are already coming in droves to eat at the neighboring Slow’s Bar-B-Q, but also to send the message to entrepreneurs around the globe that Detroit is the place to be.

“Detroit is a city of tremendous opportunity—I don’t know any other cities like it in the world,” Griffin says. Responding to the question of why two people as worldly as he and Gambino would choose Detroit as their base of operations, Griffin says, “I wonder why there aren’t more of us here already. I don’t understand why there aren’t a thousand of us here competing for these deals.”

Gambino was actually born in Detroit, though she spent her formative years in the suburbs outside of the city. Even in her youth, she says it was obvious to her that there were a lot of things lacking in Detroit.

“I knew Detroit was famous for sports and music, but not much else,” Gambino says. … Next Page »

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—Peter Clarke of EE Times reported that San Diego’s Qualcomm (NASDAQ: QCOM) has acquired Andover, MA-based Pixtronix, a startup founded in 2005 to develop Microelectromechanical systems (MEMS) display technology. Qualcomm, which confirmed the deal with EE Times but provided no details or press release about the deal, reportedly spent between $175 million and $200 million for Pixtronix. The Massachusetts company founded by Nesbitt Hagood raised more than $53 million in venture funding, athough the Pixtronix technology has not yet been introduced to the market. Qualcomm has spent years working to refine its own MEMS-based display technology—known as Mirasol.

—More than 200 entrepreneurs turned out to hear TechStars founder and CEO David Cohen talk about the startup accelerator program he helped to launch in Boulder, CO, in 2007. Cohen told the rapt audience during a San Diego Tech Founders meetup that the Internet software community in Boulder “is just totally on fire” compared to five years ago. This was the night after Cohen met with local tech leaders to discuss the steps that helped boost the entrepreneurial ecosystem in the Colorado college town. Xconomy San Diego arranged the dinner discussion, and I plan to have more about our conversation later this week.

—Meteorologist Stephen Bennett and investor John Plavan founded San Diego’s EarthRisk Technologies in mid-2010 with the idea of creating predictive analytics technology that could extend the range of weather long-term forecasts from two weeks to 30 or 40 days. They are now providing their Web-based technology to commodities and energy-trading firms on a subscription-basis. Bennett told me the core business at EarthRisk Technologies is focusing on extreme weather events—heat waves, frigid cold snaps, and storms because extreme events are the ones with the highest impact.

—Mark Heesen of the National Venture Capital Association gave a good-news, bad-news presentation to the San Diego Venture Group last week. Among the interesting bright spots: Corporate venture capital is growing and San Diego-based Qualcomm now ranks as the nation’s second-largest corporate venture outfit. The bad news? U.S. VC firms invested $28 billion in startups last year, but only … Next Page »

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Money pumped into San Diego’s regional economy by venture capital firms hit an eight-year low in 2011, with a total of $829 million invested in 104 startups throughout the year, according to the MoneyTree VC survey being released today. The 2011 deal count was the lowest seen in San Diego since 1997.

The 2011 numbers represent a 5 percent decline in dollars and a 17 percent decline in deals in comparison with the previous year, when VCs put a total of $871.7 million in 126 startups, according to the MoneyTree Report from PricewaterhouseCoopers, the National Venture Capital Association (NVCA) and Thomson Reuters.

The decline in San Diego’s venture activity ran counter to the nationwide trend in 2011, in which $28.5 billion was invested in 3,673 deals—and ranks as the third-highest total in the past decade. The U.S. numbers represent a 22 percent increase over the $23.6 billion in 2010 VC funding and a 4 percent rise over the previous year’s deal count, according to the MoneyTree analysis.

The overall U.S. trend depicted in the MoneyTree Report generally agrees with the rise in venture activity nationwide that CB Insights charted last week in its 2011 findings. CB Insights, the New York financial analysis firm, said the $30.6 billion VCs invested in 3,051 deals throughout 2011 was a 10-year high in terms of both dollars and deals. (The two sets of numbers don’t line up exactly because the firms use different methods to collect their venture data, and count dollars and deals in different ways.)

In the fourth quarter of 2011, the MoneyTree Report shows that venture capitalists invested $269 million in 23 deals in the San Diego area, with life sciences startups in diagnostics, drugs, and devices accounting for roughly two-thirds of the transactions. It represented a … Next Page »

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As a father of two girls, I have actually been thinking about this quite a bit. In general, I want my kids to be prepared for a world that is going to be very, very different from the world I grew up in, largely due to the travel, communications, and the Internet. I would recommend students to be focused on the following areas:

—Language and Culture: we are living in a global economy where America is going to only be one of the dominant economic forces. It will be really important for students to be able to communicate sensitively across the globe and be sensitive to other cultural norms. The American way of doing things is not necessarily the only or the right way to do things.

—The Scientific Method: I was lucky to be a scientist in college and learn the scientific method. You know: set up your controls, test, review, repeat. Actually most software development and Internet advertising is just large version of applying the scientific method to technology. The scientific method is really a core philosophy that is very applicable to almost anything a technologist or manager does these days.

—Creative Problem Solving: The Internet, mobile devices and access to information have almost eliminated the need for memorization. At the same time, there is an information explosion. So it is more important for students to understand how to find the right information and solve problems than it is to memorize information (like when we were growing up).

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There was a whole lot of life sciences news over the past week. Here’s my roundup.

—Carlsbad-based Life Technologies (NASDAQ: LIFE) said it’s taking orders for a benchtop genome sequencer that can to decode an individual’s DNA within 24 hours and at a cost of roughly $1,000. The company priced its new Ion Proton Sequencer at $100,000 to $150,000, which also represents a dramatic reduction compared with the cost of existing DNA sequencers, and might even entice some practicing physicians to buy into the idea of personalized medicine. A cross-town rival, San Diego-based Illumina, also introduced an improved version of its gene-sequencing machine capable of same-day service, although Forbes’ Matthew Herper says Illumina’s HiSeq 2500 is priced at $740,000.

—A $1 million gift to the Tech Coast Angels from the family of slain TCA member and life sciences investor John G. Watson has enabled the angel group to establish a nonprofit foundation to support entrepreneurism in the San Diego region. A financial adviser, who awaits sentencing following his conviction two months ago, murdered Watson in his La Jolla town home. Watson’s sister, Gillian Ison, told the TCA, “John loved investing, innovation, and the entrepreneurial spirit that he discovered when he arrived in San Diego. We believe that a foundation supporting entrepreneurism is the best way to honor his memory and his life.”

—San Diego’s AnaptysBio said it has established strategic alliances with Novartis and an undisclosed pharmaceutical company. The company plans to use its proprietary technology to discover and develop new therapeutic antibodies with multiple cancer-related therapeutic targets. AnaptysBio said the two deals provide global rights to develop and commercialize a limited number of antibodies against each cancer target that AnaptysBio generates.

—In his BioBeat column, Luke previewed the five myths likely to make the rounds at this week’s JP Morgan Healthcare Conference in San Francisco. You could say that Luke inoculated readers from excessive optimism by writing, “Hope and hype are a couple essential ingredients in this business, and every year both are on display at this conference. Sometimes the wishful thinking can congeal into conventional wisdom.” Is that good, or what?

— Wylie Vale, a Salk Institute scientist, renowned expert on brain hormones, and founder of San Diego’s Neurocrine Biosciences (NASDAQ: NBIX), died on Jan. 3 while vacationing in … Next Page »

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Venture capital deals backed off just a tad during the last three months of 2011, but remained strong enough to carry VC activity during the year to a new high-water mark, according to data being released today by CB Insights, a financial data firm that maintains a venture capital database.

VCs invested $7.6 billion in 755 companies nationwide during the fourth quarter, bringing the total for 2011 back to pre-recession levels, with $30.6 billion invested in 3,051 deals. The New York firm says that marks a 10-year high for both dollars and number of deals.

In the regional breakdown, Massachusetts regained its No. 2 ranking, eclipsing venture activity in New York during the fourth quarter. CB Insights reports that a total of $959 million was invested in 93 Bay State deals. In New York, $568 million went into 73 deals, which ranked third in terms of both deals and dollars.

California maintained its usual poll position during the quarter, with the $3.8 billion invested statewide accounting for just over half of the nationwide total and the 300 deals representing 40 percent of the total U.S. number. There wasn’t a lot of variation in California’s deal count over the previous four quarters, but the capital invested during the quarter was 45 percent higher than the $2.6 billion that went into the Golden State during the same quarter of 2010.

In Washington State, venture activity remained well behind the big three, with $146 million invested in 24 deals during the quarter, prompting the wags at CB Insights to write, “We’ll bring back our ‘Sleeping in Seattle’ metaphor as Washington continued its … Next Page »

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I’ve been dithering over my task of writing a year-end piece for Xconomy. Partly because I’m not a huge fan of them, and partly because, when it comes to my thoughts about the future of Detroit, there is just so darn much to contemplate.

Since I started this job in July, I have had the pleasure of talking to many people like Jerry Paffendorf, Anthony Holt, Veronika Scott, and Ida Byrd-Hill—people who aren’t content to let other people figure out how to make the city a better place.

Overwhelmingly, what I hear from the people I interview is that they genuinely feel the city has turned a corner. Optimism is surging among the maker/doer class, and the feeling that pervades is that this time, Detroit’s rebirth might just be for real.

I see it all the time in my Midtown neighborhood. I know I’ve said it in this space before, but after living in Lansing, where I had to drive everywhere, I’m so impressed by the fact that I can walk to everything: my bank, my hair salon, my chiropractor, my acupuncturist, a natural foods store, a great afrocentric bookstore, several boutiques that I can actually afford, my bakery, my dive bar, and my yoga studio. (I just realized that list reads like highlights from “Stuff White People Like,” but I suppose that’s a conversation for another day.)

My corner of the city is a bit of an oasis. The fact remains that great swaths of Detroit are still wrecked, wracked with devastating poverty, and populated with people for whom daily survival is an act of triumph. If Detroit is ever going to return to world-class status, we can’t revitalize a tiny portion of the city and leave everybody else in the wilderness. Those of us who have a platform from which to speak or money or a good job or an education have a responsibility to make sure that the coming prosperity trickles down, and that we engage the members of the community who dream of better things if only they knew where to start.

A city’s diversity and vibrancy is what attracts us to it. Let’s be vigilant, 10 years from now when Midtown’s population is expected to be double what it is today, that we’re mindful about gentrification and opportunity, and make sure that everyone who lives here gets a shot at taking part in it.

Of course, there are still those who look at things like the recent light-rail debacle and declare that Detroit is a lost cause. I will concede right here in print that, in my opinion, the biggest thing holding Detroit back is the abject failure of its institutions.

Something that I’ve heard people across the spectrum of race and class agree on is that, whether you’re talking about police response times, the lack of working street lights, the city council’s attempts to thwart the much-needed reform of districts, squabbling and inaction inside the mayor’s administration, the schools being run like for-profit endeavors by those entrusted to educate our most important resource, or the precarious power grid, there is simply no excuse for the level of dysfunction that infects every city institution.

I’m no longer worried about surrendering our power to an emergency financial manager, even at the behest of someone as craven and opportunistic as state treasurer Andy Dillon. If an emergency financial manager means I’ll no longer have to go down to the post office and plead with the clerk to go in the back and see if my paycheck is there because, inexplicably, my mail started getting routed to something called the “A to Z file”—despite a change-of-address form and two subsequent forms to correct a mistake I never made—then I think I’m all for it. In my opinion, the solvency ship sailed a long time ago, and the condition of our municipal infrastructure could not possibly be degraded any further than it already is.

What I’d like to leave you with is a quote from my favorite local writer, John Carlisle, otherwise known as Detroitblogger John, who has a unique gift for capturing the stories of Detroit. It’s from his excellent collection called “313: Life in the Motor City,” and it sums up perfectly why our city is worthy of all the hand-wringing, the mythologizing, and the fascination:

“There’s no place like Detroit. This city is wild and raw and unpredictable and eccentric. In Detroit, you can grow a farm in your front yard, or keep goats and chickens out back, or throw a blues concert in the field next door, or buy a historic church for $100 and make it a museum. You can even operate a strip club in your living room. In an unexpected way, Detroit in its decline has become the land of opportunity. You can do all sorts of things here that you can’t do elsewhere. … There’s a certain resilient hope among many Detroiters, a sense that you really can create your own world here, that things will get better because they can’t get much worse. And from that idea comes a feeling of freedom to do what you wish with your life here. Because in Detroit, you can be just about anything you want.”

Now that sounds like a place worth protecting, doesn’t it? So in 2012, let’s do what Detroit does best: Roll up our sleeves and get to work.

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A decade ago, when newspaper and magazine editors prepared their rundown of the year’s most important news stories, they really were just choosing the articles that they thought had the most impact. That was old media.

Today, everything is measured and anything can be quantified—at least on the Internet. In cyberspace, people vote with their clicks, and my list of the top 10 stories of 2011 is based on the stories posted on the Xconomy San Diego website (from Jan. 3 through Dec. 23) that attracted the most traffic. That’s new media.

And a new year is beckoning, so it’s out with the old and in with the new.

Believe it or not, some stories published before 2011 still pulled in a lot of interest over the past year. For example, one of the top stories of 2011 was a post I wrote two years earlier about the pervasive skepticism voiced by biofuels industry leaders during the 2009 Algae Biomass Summit in San Diego. It also is noteworthy, although perhaps no surprise, that a 2009 post I wrote about the first human trial of San Diego-based Histogen’s hair regrowth treatment continues to attract readers who are Googling for news about baldness and hair restoration.

The No. 1 story of 2011, however, was surprising—at least to me. It was a commentary about the dramatic changes underway in new treatments for hepatitis C by San Diego Xconomist Steve Worland, the CEO of San Diego-based Anadys Pharmaceuticals. Worland alludes to the spate of new product introductions by Merck and Vertex, and predicts an increasing number of direct acting, cocktail-type antiviral drugs. It’s a hot topic, although Wall Street’s interest might have been piqued as analysts and traders searched to understand why Roche acquired Anadys for $230 million about five weeks after we published Worland’s op-ed.

It’s also worth noting that these high-traffic stories tend to occur in … Next Page »

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The evolution of computer security is not merely some dark mirror, passively reflecting advances in technology. While technology provides new opportunities for threats, these become true dangers only when there is a motivation to exploit them and a means to do so.

Stefan Savage, writing in The New York Times, Dec. 5, 2011.

By his own admission, Stefan Savage’s interests are all over the map.

Savage is a professor of computer science at the University of California, San Diego, who works on computer and network security issues with researchers at the University of Washington, where he got his PhD, as well as UC Berkeley, the University of Illinois at Urbana-Champaign, and elsewhere.

Last year, a team led by Savage and UW’s Tadayoshi Kohno showed that a hacker with physical access to an automotive electronic control unit could alter software to stop the engine, disable the brakes, and carry out other nefarious tasks. In follow-up research published earlier this year, Savage and company said they had succeeded in performing similar tasks remotely—using the cellular phone in a car to insert malicious software that enabled them to override various vehicle controls. (Their findings can be found at the website of the Center for Automotive Embedded Systems Security, a UW-UCSD collaboration.)

Savage also has helped lead wide-ranging studies of Internet spam, outlining the global “ecosystem” that supports compromised accounts, spam mailers, credit cards, e-mail lists, and other tools of the trade. This work led to a comprehensive study of just how much revenue spam advertising can generate, even when most of the spam is blocked. In a recently published paper, the scientists from Berkeley and San Diego counted more than 100,000 orders a month in just one spam network. The group also offered a “rough but well-founded” estimate that revenue generated from spam-advertised pharmaceutical drugs amounts to tens of millions of dollars a year.

He recently fielded some questions from Xconomy:

Xconomy: You’ve been involved in so many different aspects of cyber-security. What do you see as the single biggest danger in … Next Page »

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Some of San Diego’s biggest tech news last week came out of the mHealth Summit near Washington, D.C. But we’ve rounded up all the other tech news too.

—San Diego-based Mingle, an Internet holding company operating Climber.com and several affiliated businesses, said it acquired Sunnyvale, CA-based Affinity Circles to expand its job hunting and recruiting capabilities. Financial terms were not disclosed, although VentureWire pegged the deal at about $1 million. Mingle CEO Michael O’Brien told me he plans to hire another 20 to 30 employees in 2012.

—Did you notice anything different about Xconomy last week? Just in time for the holidays, we completed an extreme home-page makeover, the first in a series of changes that are intended to make Xconomy more convenient and usable. We also moved our Xconomy headquarters in Cambridge, MA. We’re interested in your feedback, so please send us a note via editors@xconomy.com. If any of this suggests that Xconomy is growing and extending its reach into the innovation community, we are!

—After launching its ViaSat-1 satellite in October, Carlsbad, CA-based ViaSat (NASDAQ: VSAT) has begun a different sort of countdown. ViaSat said last week that its satellite-based Internet service is expected to begin through Wildblue Communications before December ends. ViaSat-1 is the highest capacity communications satellite ever launched into space, and download speeds for households in Wildblue’s sparsely populated service areas are expected to range from 2 megabits per second to more than 10 megabits per second.

—During the mHealth Summit near Washington D.C. last week, San Diego’s Qualcomm (NASDAQ: QCOM) said it formed a new subsidiary, Qualcomm Life, established a $100 million wireless health investment fund, and launched 2net Platform, a platform for distributing data from the potpourri of wireless health sources. As part of its new platform, Qualcomm also introduced the 2net Hub, a product that plugs into a standard electric outlet and serves as a gateway to the technology-agnostic, cloud-based 2net Platform.

—Other news from the mHealth Summit: Aventyn, a private health IT company based in Carlsbad, CA, said it has partnered with Annapolis, MD-based Zephyr Technology in an international, multi-center clinical study testing mobile technologies for remotely monitoring heart failure. Aventyn said the companies are working together to use Zephyr’s heart monitoring technology, which uses an Android smartphone to transmit data, with Aventyn’s remote patient monitoring and chronic disease management system.

—Independa also had news from the 2011 mHealth Summit this week. The San Diego startup unveiled Artemis, a wireless technology platform used to connect to a variety of in-home sensors for the elderly. Independa said the technology is intended to help relatives and caregivers monitor the vital signs of independent seniors, as well as room temperature, smoke, flooding, and other safety factors.

—The San Diego-based Endeka Group, a wireless Internet services provider and managed services operator, said recently it arranged $4.2 million in venture debt financing through the Agility Lease Fund of Prescott, AZ, and Trinity Capital Investment of Los Angeles. The two privately held firms specialize in financing and consulting for the broadband industry. Founded in 2004, Endeka provides wireless broadband services to campuses, military bases, hotels, convention centers, ships, and other locations.

—As part of an industry challenge to reduce the planning and installation costs of solar energy projects, the U.S. Department of Energy awarded $700,000 to the San Diego-based California Center for Sustainable Energy. The team will use the funding to develop standardized rules for permitting and interconnection processes to streamline rooftop solar projects, with the idea of fostering the adoption of solar projects throughout Southern California. Considerable barriers remain to scaling up solar, according to Andrew McAllister, director of planning and strategy at the nonprofit center.

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As we turn the page on the year 2011, there is no shortage of topics about which the entire world seems to be debating. One that interests me the most is the renewed debate on the role of government in the energy sector, specifically in the United States. Budget shortages, deficit increases, front-page analysis of public-backed private enterprises, and a particularly bitter political climate have combined to push this topic to the forefront more so in 2011 than in recent years. It’s as though we are back in the smoky classrooms of the University of Chicago in the ‘50s and ‘60s where economists engaged in frequent Keynes Vs. Friedman (Milton not Thomas, mind you!) debates.

Energy is always a popular topic in the U.S., given its strategic importance to national security. All this recent debating has been interesting to follow but a bit confusing. Economists, reporters, business folk, and politicians do not seem to agree on what constitutes a government subsidy, let alone which sub-sector is the recipient of how much. While I do not want to take any sides, I thought it would be worthwhile to examine what constitutes a government subsidy, and what subsidies and how much were provided by the U.S. government historically.

As I began to think about what sectors to focus on, it made sense to examine those that have been of significant strategic importance to U.S. economic growth in the past. The rise of the U.S. to be the largest economy in the world was driven to a large extent by what some refer to as the second industrial revolution constituting the rise of the railroad, steel making, telecommunications, petroleum, and the automobile industries. This article attempts to capture the subsidies provided by the U.S. government to some of these industries at different stages of their growth cycle.

What is an energy subsidy?

I am no economist, but it seems to me that we can all agree on what constitutes a government subsidy without too much debate. Table 1 (below) attempts to summarize the different forms that energy subsidies can take. Most of these subsidy types are immediately recognizable. The “type” that has generated much debate so far is the “Failure to include Externality Costs.” No matter where you stand on the climate change debate, it is not that hard to see that pollution has at the very least caused smog and acid rain—ask the residents of the Los Angeles from the ‘80s and, more recently, those from Beijing. There has not been a worldwide accepted externality cost measure yet, but as we move forward the chances of that happening are higher.

Regardless, it is safe to say preferential tax treatments and price controls are as much a government subsidy as a cash grant or a low-interest loan. The U.S. government wallet is a bit lighter in both cases.

Historical U.S. government subsidies

The growth of the U.S. economy after the Civil War to become the world’s largest economy was driven by increasing commercialization of technologies including the railroad, iron and steel making, petroleum, and the internal combustion engine. Besides private capital and resources, an important catalyst behind the development and growth of these industries were U.S. government subsidies at different stages. Table 2 summarizes the amounts, types, time period, and stage at which government subsidies were provided to these industries.

Railroad and transportation

U.S. railroad companies laid more than 35,000 miles of track between 1867 and 1873—more than three times that laid in the previous 30 years. Congress gave the railroad companies more than $64 million ($8 billion in 2011 US$ at 3.5 percent inflation) in loans and tax breaks and more than … Next Page »

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[Updated 12/12/11 11:20 am to clarify terms for startups. See below.] After spending much of her career in the tech sector, Melinda Richter has been pondering a provocative question for the life sciences industry.

“Billionaires are a dime a dozen in tech,” she says, “but it’s hard to find an entrepreneur in the life sciences who is a billionaire. I can’t think of a single small biotech company CEO who became a billionaire.”

Richter says she founded San Francisco-based Prescience International at least partly with the hope of addressing such inequities. Prescience helps start and manage life sciences incubators, institutes, and other research centers.

Melinda Richter

Mostly, though, Richter says she wants to make it possible for life sciences entrepreneurs to take advantage of the sort of low operating costs that make it so easy for a handful of tech entrepreneurs to start a Web 2.0 company with a few hundred thousand bucks. It’s that kind of minimal capital requirement that can enable biotech entrepreneurs to prove their concept, giving them something more than a business plan when they seek venture funding. The low-cost model might even help entrepreneurs hold onto a bigger ownership stake in their startups.

“You look at these IT companies,” she says. “You give a couple of guys a couple hundred thousand, and after a couple of months they’ve got a new iPhone app and they’re ready for business. But it’s not curing cancer or HIV.”

So Richter was on the ground floor, so to speak, as executive director when the San Jose Redevelopment Agency spent $6.5 million to start the San Jose BioCenter, a life sciences incubator that opened in 2004. The BioCenter officially hired Prescience to manage the facility in 2005, and Prescience took over management of a cleantech incubator, the San Jose Environmental Business Cluster, in 2009.

Now Prescience is in San Diego. Johnson & Johnson has hired Richter’s firm to manage the incubator it has been creating at its San Diego R&D facility, now known as the Janssen Labs at San Diego. Under a plan unveiled in October, J&J plans to host 18 to 20 startups at its new innovation center, which has various size wet labs and offices for individual companies, and common areas for shared use. Janssen Labs has emphasized that space in its innovation center comes with no strings attached. The startups that enroll will not be required to give up an equity stake or intellectual property rights. They simply have to pay a monthly fee under a 90-day lease agreement.

When we met recently, Richter told me she got into the business partly for personal reasons.

After graduating from the University of Saskatchewan (she is a Canadian), Richter joined Nortel Networks, where she says she spent more than eight years on a fast-track executive program that took her to corporate posts in the United States, Europe (she got her MBA in France), Latin America, and China.

While in China, however, Richter had what you might call a life-altering experience. She says she got very sick and was … Next Page »

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There wasn’t a lot of news out of San Diego’s high tech community last week. On the other hand, the news we had was big. Get your roundup here.

—Aptera Motors, which raised an estimated $36 million in venture funding to develop a teardrop-shaped, three-wheel electric vehicle, shut down its operations Friday, according to an e-mail signed by Aptera CEO Paul Wilbur that was sent to customers and others. The company ran out of resources, Wilbur says. After nearly two years of discussions and “exhaustive due diligence” with the U.S. Department of Energy, Wilbur writes that Aptera got a “conditional commitment letter” for a $150 million loan. However, Aptera needed fresh capital to match the DOE loan and Wilbur says large private investors had no appetite to invest in “the perceived low volume return of our three-wheeled vehicle.” Aptera’s venture investors included Idealab, Esenjay Investments, and Google.org, the philanthropic arm of Google Inc., according to VentureBeat.

—Nettle, the San Diego startup that came to light in August with a $500,000 investment from Google Ventures, launched MovieGoer, a new iPhone app. The free app helps people browse movies with friends from their social circle, find friends who have seen the movie, arrange to go see movies with their friends, and submit quick video reviews from their iPhone. CEO Brian Dear who founded San Diego-based Eventful in 2004, co-founded Nettle in late 2010 with Dan O’Neill, the chief technology officer. The two met a decade ago at MP3.com, where they worked together.

—San Diego-based Qualcomm (NASDAQ: QCOM) acquired Andover, MA-based Pixtronix, which has been developing low-power display technology for liquid crystal displays (LCD). Scott Kirsner of The Boston Globe reported the price is about $175 million to $200 million. While Pixtronix relies on micro-electro-mechanical systems (MEMS) technology, the move is nevertheleess puzzling, as Qualcomm is spending close to $1 billion to build a factory in Taiwan for its own Mirasol display technology.

—A spokeswoman for San Diego’s Chumby Industries tells me the software company has struck another partnership that will make its catalog of apps available on the LG Smart TV program. In June, Chumby showcased how its offering of Web-based music, photos, games, and web sites worked with Internet-connected TVs and set-top boxes under a collaboration with Pace. Chumby also has licensed its technology for use in its Dash internet-connected device, and the Tablet S, which Sony introduced in August.

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November was a big month for news in the algae-based biofuels sector.

On November 7, roughly four months after renewable fuels were approved for use in commercial aviation, United Airlines flew passengers from Houston to Chicago aboard a Boeing 737-800 powered by a mixture of algae-based jet fuel and conventional, petroleum-based fuel. Two days later, Alaska Airlines started 75 passenger flights (with its sister airline, Horizon Air) using a biofuel blend made from recycled cooking oil.

Ten days later, a decommissioned Navy destroyer arrived at the Naval Surface Warfare Center in Port Hueneme, CA, following a 17-hour cruise from San Diego, powered by a 50-50 blend of algal biofuel and a standard, petroleum-based military fuel.

A day later, Microsoft founder Bill Gates called for a massive boost in federal R&D funding for biofuels and other emerging energy technologies. In a guest editorial published in the May 18 issue of Science magazine, Gates urged the government to more than triple its funding for new energy technologies—from about $5 billion a year to $16 billion annually. Even during a time of economic crisis, Gates says it’s imperative to protect America’s interests.

Gates has moved to reshape the energy industry personally, by investing in several cleantech companies, including Sapphire Energy, a San Diego-based startup developing algal biofuels (although it wasn’t behind any of last month’s news).

Amid this fusillade of alternative energy news, I was eager to put a few questions to Jason Pyle, Sapphire Energy’s CEO and a San Diego Xconomist.

Xconomy: What is the next big milestone for the algal biofuels industry?

Jason Pyle: As an industry and at Sapphire, we’ve spent the last few years on R&D and proving that crude oil replacements like green crude from algae are possible and will scale with proper investment and government support. Although we’re still a few years away from reaching full commercial readiness, as an industry we’re scaling up at a pace that would be considered inconceivable by traditional oil and gas companies. Reaching commercial scale is critical. The next big milestone for Sapphire Energy is to complete construction and begin operating our commercial demonstration plant in Columbus, NM.

X: Do you see algal biofuels moving into aviation first, or does another sector make more sense to you?

JP: The great part about where Sapphire Energy finds itself as a producer of crude oil replacements is that demand for crude oil continues to rise significantly. Over the next 25 years as developing nations use more and more crude oil and we stretch the limits of the crude oil resource, all of the leading experts are projecting a 35-million-barrel-per-day gap between supply and demand. The U.S. military recognizes this gap as a major destabilizing issue—and as a serious strategic military issue in the years ahead—and is preparing our nation to not have to confront its consequences.

The U.S. military is making investments in the development of these technologies for strategic reasons because they understand a simple fact: that those nations who control energy resources maintain strategic advantage over those who do not. So soon, we will see the U.S. military as the leading customer for crude oil replacements. As pressure rises on … Next Page »

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Another day, another (wholly unscientific) survey from Men’s Health indicating Detroit is a crappy place to live. This time, they’ve named the Motor City the second saddest city in the United States; in August, the lad mag skewered residents of our fair city for not buying iPads fast enough.

This time around, they’ve created their list of top “frown towns” by culling suicide-rate data from the Centers for Disease Control and unemployment figures through June 2011 from the U.S. Bureau of Labor Statistics. They also used SimplyMap to determine the percentage of households that use antidepressants, as well as the number of people who report feeling blue all or most of the time. So which cities, according to the Men’s Health methodology, were the happiest? Honolulu; Manchester, NH; and Fargo, ND.

Since this Detroiter, for one, doesn’t care to dwell in the negative, let’s take a look at some of the other headlines floating around lately:

• Last week, the Associated Press found that Michigan’s drop in unemployment during October 2011 was one of the highest in the nation.
• The Business Journals reported that Ann Arbor, MI is the smartest U.S. city with 100,000 or more residents. In Ann Arbor, home of the University of Michigan, a whopping 72 percent of all adults age 25 or older hold a bachelor’s degree. (Incidentally, Ann Arbor beat out two other Xconomy towns—Cambridge, MA and Berkeley, CA—for brainiest city honors.)
• Forbes called Detroit the 40th best place in the nation to land a tech job. I know what you’re thinking. “40th? Big whoop!” Maybe, but the magazine also had this to say: “How about other potential up and comers for the coming decade? … The first: Detroit. Though the Motor City area lost 20 percent of its tech jobs in the past decade (ranking 40th on our list), it still boasts one of the nation’s largest concentrations of tech workers, nearly 50 percent above the national average. In the past two years, the region has experienced a solid 7.7 percent increase in technology jobs, the second highest rate of any metro area. The Motor City region seems to have some real high-tech mojo. According to the website Dice.com, Detroit has led the nation with the fastest growth in technology job offerings since February—at 101 percent. This can be traced to the rejuvenated auto industry, which is increasingly dependent on high-tech skills. Manufacturing is increasingly prodigious driver of tech jobs; games and dot-coms are not the only path to technical employment growth.”
• According to a recent U-M forecast, Michigan is on target to end 2011 with a net gain of jobs—something that hasn’t happened in more than a decade.

So forget you, Men’s Health. I was stuck in Fargo for a day in the 1990s during a road trip from Michigan to Montana. What I remember about Fargo is the dearth of open prarie, ghost town streets, and that the best meal I ate there came from Subway. I think I’ll stay in Detroit.

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For months, we watched the renovations and wondered what the heck they were turning that building a few doors down from the Bronx bar into. A Whole Foods, someone said. A bike shop, the construction worker lounging outside the building two summers ago told me confidently. Finally, we divined a name from the sign posted on the door facing the newly landscaped alley telling UPS how to handle deliveries: the Green Garage. “Oh yeah,” my boyfriend told me. “I heard it’s gonna be, like, a hippie mechanic joint.”

It turns out the Green Garage is not a boutique grocery store, bike shop, or a counter-culture mechanic—it’s workshop and office space available for rental by those who are developing cleantech business ideas.

“We want to work with businesses on their true development,” says Peggy Brennan, who, with her husband Tom, purchased the space and led a group of 200 volunteers in its design and development. “We’re looking for the core of what makes a business unique, viable, and good for the environment and economy.”

Acknowledging that most young businesses suffer from a lack of resources, connections, and funding, the Green Garage hopes to serve as a starting point, providing guidance with business plans, funding sources, and community connections. Once the businesses are established, the idea is that they will move out of the garage and into the Detroit business environment. The Green Garage also has a library dedicated to urban sustainability that’s available to the public for check out, and Brennan says anyone interested in urban sustainability can walk in and ask for help.

“Above all, we’re looking for people who want to work with others rather than in isolation, and that have a willingness to do what it takes to work in a green environment,” Brennan adds.

And what an impressive environment Green Garage is. The first thing one notices upon walking in is the … Next Page »

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