Last month, Aastrom Biosciences president and CEO Tim Mayleben and his wife, Dawn, announced they are funding a new “venture shaping” program at the University of Michigan.

Venture shaping refers to the process of systematically vetting a nifty idea for a startup, with the idea that the failure of a less-than-viable business will occur at a much earlier stage before too much financial damage has been done—a key component in supporting new businesses led by student and faculty entrepreneurs.

“My wife and I decided we wanted to give back, and we liked [managing director of U-M's Zell Lurie Institute] Tim Faley’s scientific approach to new company creation,” Mayleben says.

What the Mayleben Family Venture Shaping Program will do, Mayleben says, is help students weed out failing business ideas earlier. Grants of $500 will be awarded to approximately 25 teams of students or faculty who have an idea for a startup that they want to test or refine. Each team will then evaluate their idea for profitability and market viability through a three-step process.

“The grant is meant to encourage students to do business discovery work,” Faley says. “People are writing plans on vague ideas. That’s an interesting first pass, but go talk to the potential customers and find out what the revenue stream might look like.”

Faley calls the venture shaping program a needed bridge between the university’s 1,000 Pitches competition, which generates raw ideas, and the Dare to Dream program, which awards up to $10,000 to the most promising of those ideas.

“To get students to do the [venture shaping] work without an incentive was challenging,” Faley says. “It fills in a really nice gap.”

Aastrom is an Ann Arbor, MI-based startup that recently entered the final stage of clinical trials for its multicell therapy for patients with critical limb isschemia. Mayleben has a lots of experience developing life sciences startups. Before joining Aastrom, he served as chief operating officer of Esperion Therapeutics, which raised more than $200 million in capital under his direction before being acquired by Pfizer in 2003.

Mayleben says he has gotten to know the folks at Zell Lurie by serving as both a formal and informal advisor to the student-managed Wolverine Venture Fund for the past decade. He likes the school’s disciplined approach to failing early. He says university entrepreneurial programs fall short when they only track the number of companies created.

“The more relevant score is how many successful businesses get launched,” Mayleben says. “The venture shaping program will increase the likelihood of success, and that’s especially true for first-time entrepreneurs.”

Faley says he and the university are thrilled that the Maylebens are funding the program, and he says they’ve already expressed that they’ll entertain the idea of providing more venture shaping grants if the program grows the way Faley hopes that it will.

“Tim is a very successful serial entrepreneur, but he’s also a very thoughtful and methodical person,” Faley says of Mayleben. “That helps us when we’re trying to move students through the program.”

The first recipients of the Mayleben Family Venture Shaping Program will be announced on February 17 during the Michigan Business Challenge finals.

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OncoSec Medical CEO Punit Dhillon tells me the startup he helped establish in San Diego last March is beginning mid-stage safety and efficacy trials of its proprietary technology for enhancing drug delivery in treatments of several types of skin cancer.

The technology, which OncoSec acquired from Blue Bell, PA-based Inovio Pharmaceuticals (AMEX: INO) almost a year ago, transmits intense electrical pulses into skin tumors through six electrode needles that are pushed into the skin. The electricity causes the tumor cells to become permeable with each jolt, and makes it easier for anti-cancer drugs injected into the region to pass through the tumor cells’ tough outer membrane. Known as electroporation, the process increases the concentration of an anti-cancer drug within the tumor.

“What we’re doing is a much more elegant and targeted approach,” says Dhillon, who estimates the technique increases the uptake of anti-cancer drugs by 4,000 to 10,000 times. As a result, doctors can reduce the dosage of anti-cancer drugs used with electroporation technology.

Dhillon, who previously served as Inovio’s vice president of finance and operations, says Inovio has been an electroporation pioneer. The Pennsylvania company decided last year, however, to sell technology that was unrelated to its strategic focus on developing DNA vaccines for cervical dysplasia, leukemia, and hepatitis C virus therapies.

The deal to acquire Inovio’s assets didn’t happen by chance. Inovio chairman and former CEO Avtar Dhillon is Punit Dhillon’s uncle, and their family and friends raised the initial $1.1 million that funded OncoSec after the company sprang to life through a reverse merger with a dormant public company. The San Diego startup raised another $3 million last June from two New York health funds, Hudson Bay Capital and Heights Capital. That should be enough cash for OncoSec to complete three mid-stage trials the company plans to begin before the end of March.

The three studies will use OncoSec’s electroporation technology to deliver the company’s lead drug candidate, called Interleukin-12 (IL-12) cytokine, to three groups of patients with different lethal skin cancers—metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. The experimental drug is intended to both trigger and boost a strong immune response to each type of cancer. The combined treatment, known as electroimmunotherapy, represents a potential new anti-cancer treatment with broad applicability, although Punit Dhillon says the company must pursue separate regulatory approvals to treat each type of cancer (as a combination drug-and-device product) on an application-by-application basis.

OncoSec says its technology also can be used in the same way in electrochemotherapy, which uses an established anti-cancer drug like bleomycin while a tumor is being electroporated. The use of electroporation in chemotherapy has been studied more throroughly, and Punit Dhillon says he wants to advance OncoSec’s approach through a partnership with a bigger pharmaceutical company.

“2011 was a great year for us,” he says, “and we’ve got some exciting milestones to look forward to in 2012.” Once the latest studies have been completed, OncoSec’s Dhillon says he looks forward to licensing opportunities and other commercial prospects, and he adds, “We also still have the chemotherapy program in the wings.”

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Plans for IPOs and venture funding dominated the New England deals news this week.

—A new seed fund, backed by venture firm New Enterprise Associates and hosted by Harvard, came out of the woodwork last week. The Experiment Fund will invest up to $250,000 in seed funding in selected startups, with a focus on technologies that come out of Cambridge, MA. The news broke just a few days ahead of Facebook—the one that got away—revealing its plans to go public.

—Radius Health, a Cambridge-based startup working on treatments for osteoporosis, filed paperwork indicating its plans to raise as much as $86 million in an initial public offering.

—A PricewaterhouseCoopers and National Venture Capital Association report shows a mixed picture for life sciences investing in 2011, my colleague Arlene reported. Biotech companies raised $4.7 billion, showing a 22 percent increase over 2010, but the deal volume for the sector dropped 9 percent to 446 transactions. Medical devices companies also showed an increase in funding dollars but a drop in number of deals.

—Cambridge-based Brightcove set the price range of its initial public offering at $10 to $12 per share, according to an amended filing with the SEC. The video hosting startup plans to sell 5 million shares, and give underwriters the option to purchase another 750,000 shares. Brightcove first filed paperwork last August indicating it intended to raise $50 million in an IPO.

—Synchroneuron of Waltham, MA, nabbed $6 million in Series A funding from Morningside Technology Ventures. The startup is developing treatments for movement disorders such as tardive dyskinesia.

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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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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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San Diego’s MOGL, a Web-based customer loyalty and rewards program for restaurants and bars, says it has raised $10 million in venture funding to fuel its expansion into San Francisco, New York, and other markets.

The Menlo Park, CA, office of Sigma Partners led the Series B round, which was joined by San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures. That brings total funding for MOGL to $12.4 million, according to a statement from the company. Entrepreneurs Jon Carder, Jarrod Cuzens, and Jeff Federman started MOGL in 2010.

The Internet startup offers its customers multiple incentives for returning to member restaurants and bars, using a mixture of technology, games, and psychology. The incentives include a 10 percent cash back each time a customer returns to eat at participating restaurants. A contest  offers monthly cash prizes to the top three most-frequent customers at each locale. Customers also can automatically donate a meal to someone in need every time they spend $20.

MOGL Homepage Screenshot

MOGL says it provides customer analytics and return-on-investment data for participating bars and eateries. In a statement from the company, Sigma partner Peter Solvik says, “The MOGL team has generated an explosive response from both consumers and restaurant partners, while effectively positioning itself as the most innovative loyalty platform of its kind.”

Since it was launched last April, MOGL has signed up nearly 350 Southern California-based eateries and bars, donated more than 27,000 meals to Feeding America, and has rewarded its members with more than $350,000 in cash back to date.

The company also offers a location-based mobile app for iPhone and Android, so MOGL members can easily locate participating restaurants while on the go. The mobile apps also help customers track their cash rewards and jackpot opportunities, as well as the number of meals donated in their name.

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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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The unsolicited $5.7 billion offer that Roche made for Illumina will no doubt dominate San Diego’s biotech news for weeks to come. We have it and more.

—Switzerland’s Roche offered $5.7 billion, or $44.50 a share, for San Diego-based Illumina (NASDAQ: ILMN in a hostile bid disclosed yesterday. Roche’s bid to stake a claim in genetic diagnostics by acquiring the market-leading maker of DNA sequencing instruments would be the Swiss pharma giant’s biggest deal since its $46.8 billion buyout of Genentech almost two years ago. Roche is the world’s biggest maker of cancer drugs, which suggests its quest for Illumina represents a significant move to base cancer treatments on each patient’s genome.

—Venture capital investors sank $4.73 billion into 446 biotechs nationwide in 2011, according to the MoneyTree report from the National Venture Capital Association, PwC, and Thomson Reuters. But as Luke pointed out in his BioBeat column, there is an alarming drop in support for early stage life sciences startups. Only 153 biotech and medical device startups got their first round of financing in 2011, the lowest amount of seed investment activity in 15 years.

—At an Xconomy dinner discussion, former Amira Pharmaceuticals CEO Bob Baltera said insufficient access to capital is the biggest driver for decision-makers on both sides of biotech-pharma partnerships. So what are some other key factors? We asked some of San Diego’s life sciences leaders to explore the question in an “on the record” dinner discussion late last year.

—San Diego’s Sequenom (NASDAQ: SQNM) completed its secondary public offering, raising roughly $62 million in gross proceeds (before underwriting costs) in the sale of 14.95 million shares, including additional allotments granted to underwriters. Sequenom said it plans to use the net proceeds for … Next Page »

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An acquisition and startup financings made up the New England deals news this week.

—Waltham, MA-based marketing software firm Constant Contact acquired the Boston startup CardStar, the developer of a mobile app for customer loyalty and rewards programs. The deal, whose terms were undisclosed, enables Constant Contact (NASDAQ: CTCT) to expand its marketing offerings for small businesses.

—My colleague Greg rounded up the top 10 venture deals in the Boston area from the fourth quarter of 2011. Rapid7, Warp Drive Bio, and Agios Pharmaceuticals were at the top.

—Hewlett-Packard has spent more than $10 million to set up a new office near the Alewife train station in Cambridge, MA. The office serves as the new headquarters for Vertica, the big data company HP acquired last winter (previously based in Billerica). The new facility will also serve as a center for technology development and local outreach.

—Bluefin Labs, a Cambridge-based startup focused on understanding social media conversation surrounding TV, nabbed $12 million in Series B financing. The deal was led by Time Warner Investments, and included new investor SoftBank Capital and return backers Redpoint Ventures and Lerer Ventures. Bluefins says it will put the money toward sales and client services, as well as its social analytics technology and further R&D.

—Mevion Medical Systems, a radiation therapy company based in Littleton, MA, announced it had pulled in $45 million in funding from ProQuest Investments and existing investors Caxton Heath Life Sciences, Venrock, and CHL Medical Partners. The money will go toward development of its proton beam radiation therapy system, which is designed to be smaller and less expensive than existing X-ray radiation therapy devices.

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—Venture capitalists invested $269 million in 23 deals in the San Diego area during the last three months of 2011, according to the MoneyTree Report from the National Venture Capital Association, PwC, and Thomson Reuters. That was almost a 20 percent gain in dollars, but a 28 percent slide in deal count from MoneyTree data for the fourth quarter of 2010. For the full year of 2011, the MoneyTree VC survey said $829 million was invested in 104 deals in San Diego, a 5 percent decline in dollars and a 17 percent slide in deals from the $871.7 million sunk into 126 San Diego deals in 2010.

—What should students study now to be prepared for the workplace 10 years from now? We asked that question of 22 Xconomists, including San Diego Xconomists Ramesh Rao, Duane Roth, Drew Senyei, Larry Bock, and Robert Noble. We’ve compiled all 22 answers in an Xconomy special report on education, which you can find here.

—San Diego Gas & Electric hosted a grand opening of its new Energy Innovation Center, which is designed to serve as an energy innovation showcase and education facility, and to meet the U.S. Green Building Council’s requirements for a platinum LEED (Leadership in Energy & Environmental Design) certificate. The center includes a full commercial “food service demonstration kitchen” where San Diego chefs can test their recipes on energy efficient appliances and restaurant owners can learn about the advantages of new and more energy efficient equipment. Utility officials said Commercial kitchens are particularly energy intensive.

—San Diego-based Tealium raised $1.1 million in Series A financing from private investors, and plans to use the funding to expand development of the tag management technology the company created to help enterprise customers manage their online marketing. Tealium said the investors include Limelight Networks CEO Jeff Lunsford, former Visual Sciences CEO Jim MacIntyre, Collective CEO Joe Apprendi, EyeWonder CEO John Vincent, and eValue Group CEO Thomas Falk.

—After previewing their plans last year, the X Prize Foundation and San Diego-based Qualcomm Foundation officially unveiled the Qualcomm “Tricorder” X Prize, a competition offering $10 million to the team that can develop new wireless diagnostics technology. The winning entry must be able to accurately diagnose a set of 15 diseases across 30 consumers in three days, capturing real time, critical health metrics such as blood pressure, respiratory rate, and temperature, and providing information in a consumer-friendly way.

—Qualcomm’s leadership has been talking for several years about the anticipated competition between its ARM-based semiconductors and the CPUs developed for desktop computing in the expanding market for smart devices. Now some of those skirmishes are beginning. Illinois-based Motorola Mobility (NYSE: MMI)  said recently it would use Intel’s (NASDAQ: INTC) latest low-power x86 Atom processor in a number of future Motorola products, marking Intel’s opening move into the smartphone market. A Motorola spokeswoman told me by email, “We will continue to use multiple chip set vendors.” Qualcomm (NASDAQ: QCOM) already has hundreds of mobile devices using its Snapdragon processor, and has been working with manufacturers on hundreds more.

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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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Here’s our weekly roundup of San Diego’s life sciences news.

—Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health (CDRH), briefed reporters in San Diego on his efforts to make the regulatory review of new medical devices more predictable, transparent, and efficient. Shuren is undertaking reforms at a time when eight out of 10 biomedical CEOs say they “agree or strongly agree” that the FDA regulatory approval process has slowed the growth of their organizations.

—More than 500 people turned out Monday evening for the open house that Johnson & Johnson’s (NYSE: JNJ) new Janssen Labs startup center. The first four startups to be inducted are Diomics (diagnostics, integrated DNA analysis); Neurolixis (drugs for schizophrenia, Parkinson’s and other CNS disorders); Tem Systems (comprehensive blood test for anti-coagulants); and Yolia Health (optometry device company).

—San Diego-based Auspex Pharmaceuticals, which is developing deuterium-based drugs, has raised $3 million of a $6 million round of debt and convertible promissory notes, according to a regulatory filing. Previous investors include CMEA Ventures, Costa Verde Capital, and Thomas McNerney & Partners. Auspex uses deuterium to replace metabolically sensitive hydrogen atoms in compounds to create new versions of existing drugs.

—BrainCells, a San Diego developer of neurological drugs, raised $2 million toward an $8 million round of debt, rights and securities, according to a regulatory filing. BrainCells previously raised $77 million from Alexandria Real Estate Equities, Bay City Capital, MedImmune Ventures, Mitsubishi UFJ Capital, Mizuho Capital, NeuroVentures, New Enterprise Associates, Oxford Bioscience Partners, Pappas Ventures and Technology Partners, according to VentureWire. The company says it is developing novel therapies for treating central nervous system (CNS) diseases, based on the principal of blocking select metabotropic glutamate receptors (mGluR).

—To have the skills needed in 2022, San Diego Xconomists Robert Noble and Larry Bock recommend that students should “learn how to learn.” Drew Senyei says students should study anything they are passionate about; Duane Roth would like to see a new major that encompasses engineering, biology, chemistry, physics, law, business, humanities and communications; and Ramesh Rao would emphasize studying new techniques for sensing data, as well as data analysis. They all offered their views for an Xconomy special report on education, and what students should be studying today to be prepared for 10 years from now. Their comments are available online here.

—In a talk with Sanofi CEO Chris Viehbacher, Luke explained the company’s strategy since it acquired Cambridge, MA-based Genzyme, and cut back on its internal research and development.

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“Money is money, anyone can do that,” says Brian Zimmerman, managing director of Boston-based OpenView Venture Partners.

Go on.

“We have this idea of providing real value to our portfolio companies. If we’re going to call ourselves partners, we really need to be partners.” he says. Plenty of venture capitalists say they like to take that partner approach to their investments. But OpenView is backing that statement up with staff and infrastructure dedicated to sales growth and more.

That comes in the form of what the venture firm calls OpenView Labs. At first mention, OpenView Labs sounds like it would be the name for an incubator arm at the firm. But, as my colleague Greg has written, OpenView brands itself as an “expansion-stage” venture firm, eyeing investments in the more complex business-to-business and cloud computing software spaces. Its target companies already have annual sales between $2 million and $20 million, so, no, its Labs aren’t about helping young mobile or consumer software startups develop their technology or roll out a beta version of their product. Instead the unit is focused on helping its startups tackle the more grown up challenges of recruiting and hiring talent, identifying key markets, and generating sales leads.

To that end, the company has four full-time recruiters, who have filled about 100 jobs across OpenView’s portfolio companies in the last few years, says Zimmerman, who oversees the Labs operation. The goal is to fill another 200 this year.

We said the OpenView Labs is past helping startups toy with their technology. But sales and marketing strategy are another story. Startups at the expansion stage need to work in refining exactly which market their targeting as their customer base, says Zimmerman.

“They’ll say, ‘we sell to small businesses.’ That’s not enough,” he says. So Labs has an entire research and analytics team focused honing and refining exactly which sub-markets and customer segments portfolio companies should be targeting. It starts with Internet research and goes all the way through calling and surveying customers in the potential markets, says Zimmerman.

Once the Labs gets the companies primed with staff and a market to go after, it helps them build their marketing message around those customers, and then find specific sales leads. That third component is what Zimmerman calls the Labs’ “go-to-market” team.

Zimmerman puts companies in three categories: startup (figuring out the technology and idea), expansion (building revenue and refining a target market), and growth (preparing for an exit). “We’re focused on everything it takes for … Next Page »

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Web startups, venture firms, life sciences companies, and a biofuels developer rounded out the deals news this week.

—Cambridge, MA-based Flagship Ventures announced it had closed a $270 million fund, surpassing the $250 million it had originally targeted for its fourth fund.

—Extreme Reach, a Needham, MA-based startup developing cloud storage technology for delivering video ads to TV and Web publishers, said it closed a $9 million credit line from TD Bank. The startup also acquired commercial talent rights management and payment firm Spotlight Business Affairs, in a deal that enables Extreme Reach’s ad distribution system to be in compliance with existing talent and rights agreements.

—Massachusetts regained the number two spot for venture funding and deals in the fourth quarter of 2011, with $959 million invested in 93 transactions, according to a report from the data firm CB Insights. Nationally, venture dollars and deals had their strongest showing in a decade, at $30.6 billion invested in 3,051 deals.

—Cambridge-based Constellation Pharmaceuticals inked a drug development deal with Roche’s Genentech unit that’s worth $95 million in an upfront payment and three years of research support. It’s also eligible for milestone payments and royalties on the products that could potentially result from the deal.

—Bedford, MA-based Joule Unlimited announced it had pulled in $70 million in financing from the aforementioned Flagship Ventures and other new and existing investors whose identities it did not reveal. The money will go to a New Mexico facility that Joule hopes will demonstrate its ability to scale its technology for producing fuels from sunlight and carbon dioxide.

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San Diego’s SG Biofuels, an agricultural biotech developing the Jatropha plant to produce biofuels, says today it has raised $17 million in a Series B round of financing led by Thomas, McNerney & Partners. San Diego-based Finistere Ventures also joined the round, along with existing investors, Carlsbad-based Life Technologies (NASDAQ: LIFE) and Flint Hills Resources, the Kansas refining and chemicals business owned by Koch Industries.

Thomas, McNerney partner Pratik Shah, who moved his office to San Diego from San Francisco last year, has joined SG Biofuels’ board, along with Jerry Caulder, Finistere’s managing director and the former CEO of Mycogen, an agricultural biotech founded in San Diego.

SG Biofuels says it will use the additional capital to expand its research and development, advance commercialization efforts, and scale global operations. The company says it is working with an airline industry consortium to plant 250,000 acres of Jatropha. The agricultural biotech has focused on improving the jatropha plant to optimize its productivity in various climate zones. The shrub’s golf ball-size seeds produce oil that can be processed into jet fuel, biodiesel, and other fuels.

In a statement from the company, SG Biofuels CEO Kirk Haney says, “The funding comes at a time when we’re experiencing significant commercial adoption of our hybrid Jatropha and will be instrumental as we continue to expand our global footprint.”

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[Corrected 1/16/12, 1:20 p.m. See below.] When Xconomy’s biotech editor Luke Timmerman first wrote about Axonia Medical in January 2011, he wondered if the Kalamazoo, MI-based startup would be able to raise the investment funds it needs, given the cautious venture-capital climate and the unprecedented nature of Axonia’s nerve-regeneration technology. The startup produces living, functional tissue-engineered nerve grafts in the lab that can replace and repair damaged parts of the nervous system.

Harry Ledebur, Axonia’s president and CEO, recently contacted Xconomy to let us know that the company has just raised its first million in seed financing from the Southwest Michigan First Life Science Venture Fund and expects to close on another $500,000 to $1 million in the next six months, bringing Axonia within reach of its goal of $3 million.

“I took quite a few meetings,” Ledebur said, describing what the past year has been like for the company. “I got a lot of valuable feedback, which I used to structure our strategic plan.”

The initial investment allows Axonia to formally kick off operations, with Accelerator‘s president and Chief Business Officer Dave Schubert serving as chairman of the board. The company also was invited to join the Rutgers-Cleveland Clinic Consortium of the Armed Forces Institute of Regenerative Medicine (AFIRM), which may offer Axonia a small grant in the future to support support preclinical studies for peripheral nerve injury using its tissue-engineered nerve grafts. [An earlier version of this paragraph listed the wrong title for Dave Schubert. We regret the error.]

“It’s a validation of our approach,” Ledebur says of the opportunity of join AFIRM. “Our technology fits with the current medical needs of the Department of Defense’s Wounded Warriors program.”

The concept of Axonia’s technology, which is spun out of the University of Pennsylvania, hinges on the production of axons, the long thin parts of nerve cells that carry signals to distant target cells. Unlike other regenerative treatments in development, Axonia’s method doesn’t involve stem cells. Rather, Axonia uses neurons from patients or cadavers to grow long, integrated tracks of axons in the lab and then implants this tissue into the body, which then enables or accelerates the body’s natural repair system.

“Axons seem to be the key catalyst in the repair process,” Ledebur explains. “We’re the only company, to my knowledge, that knows how to grow fully differentiated nervous tissue.”

The results so far in rodent models are promising with patients who have peripheral nerve damage, spinal cord injuries, and brain injuries—injuries that the body has a very difficult time repairing on its own. He estimates that millions of U.S. patients per year with nervous system injuries could utilize Axonia’s proprietary process, which the company says represents a $1.2 billion market.

Axonia has already acheived its proof of concept in a rat model of spinal cord injury. The next step, Ledebur says, is to test it in pigs. If all goes according to plan, Axonia will begin clinical trials in roughly three years.

“We’re focusing our money now on proving the superiority of our standard of care,” Ledebur adds. “We want to repair what’s currently unrepairable.”

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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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Boston area software and life sciences startups are starting off the new year right with a slew of financing, acquisitions, and partnerships news.

—Marlborough, MA-based Physicians Interactive Holdings received a $17 million pledge from Merck Global Health Innovation Fund to develop Web and mobile apps for connecting physicians and life sciences companies.

—Repeat biotech entrepreneurs Bob Langer and Omid Farokhzad founded a new startup, called Blend Therapeutics, along with Stephen Lippard. Blend is backed by $2.8 million from Flagship Ventures, New Enterprise Associates, and NanoDimension, according a FierceBiotech report.

—Last Friday saw a number of financings, some for quirkily named startups: $4 million more for Cambridge-based GrabCAD and $4.5 million for Cambridge-based Krush, $6 million for Boston- and Nashville-based Moontoast, $8.3 million for Linkwell Health, and $4 million for Novogy.

—Safari Books Online, a joint venture between O’Reilly Media and Pearson Education, acquired Threepress, a Boston area company focused on digital publishing tools. The price tag of the deal wasn’t disclosed.

—Woburn, MA-based LogMeIn (NASDAQ: LOGM), which makes remote access and customer support software, paid $16.5 million to acquire Kansas-based Bold Software, a developer of technology for live-chat systems and click-to-call customer service.

—A cluster of area digital marketing startups inked deals: Newton, MA-based Neolane raised $27 million, Boston-based … Next Page »

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San Diego’s Cebix, founded in 2008 to develop a new supplemental treatment for complications arising from type 1 diabetes, intends to raise more than $20 million in a Series B round needed to fund pivotal trials, according to VentureWire. Cebix CEO James Calloway told VentureWire the startup raised $28.5 million from Sofinnova Ventures, InterWest Partners, and Thomas McNerny & Partners in its first round of funding.

At the American Diabetes Association’s annual scientific conference in San Diego last summer, Cebix presented data on its C-peptide replacement therapy to address microvascular damage associated with type 1 diabetes.

As we reported at the time, C-peptide has been shown to play a role in keeping the smallest blood vessels healthy in different tissues. The deficiency of C-peptide, which is produced naturally in the body during the process that forms insulin, leads to nerve damage and a variety of other complications in patients with type 1 diabetes.

Diabetics using insulin often experience a circulatory-related decline in nerve function, kidney function, and vision from a deficiency of the peptide. Callaway said Cebix is completing a 30-patient study of C-peptide replacement therapy, and plans to conduct a pivotal trial with 600 patients.

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[Updated 12:20 pm] Here are a couple of notable Boston-area deals in digital advertising and marketing, each with a certain je-ne-sais-quoi European flair. Plus one more local company worth watching…

—Neolane, a social marketing tech company based in Paris with North American headquarters in Newton, MA, has closed a $27 million financing round led by Battery Ventures. The company’s previous investors also participated in the round. Neolane, which has 240 employees globally—just under 50 in New England—says it will use the money to expand its operations, particularly in North America. Neolane says it competes with IBM/Unica, Aprimo, and SAS.

—DataXu, the Boston-based digital advertising and marketing startup, has acquired U.K.- and Germany-based Mexad, a top European “demand-side platform” provider (meaning it gives advertisers tools to optimize when and where they place ads). Terms of the deal weren’t given. DataXu makes a software platform for advertisers who want real-time information and insights on consumer behavior across Web, mobile, and video channels. I spoke with CEO Mike Baker last year about DataXu’s recent growth and strategy in the ad-tech sector.

—ClickSquared, a Boston marketing software startup, has closed $9 million in equity financing led by Staley Capital, with existing investors also participating. The company, which started in 1999, does e-mail marketing and delivery, customer analytics, and campaign management, among other things. [This deal was added to the roundup after the first two were published---Eds.]

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