I can’t do justice to a comprehensive review of yesterday’s FiReGlobal (West Coast) conference at the Four Seasons Hotel in Seattle. Instead, I’ll just give a few of my key takeaways. The all-day event, organized by Strategic News Service, focused on how to solve some of the most pressing problems in technology, business, and society—in areas as diverse as broadband access, entrepreneurship, education, sustainability and the environment, political discourse, human health, and mobile devices.

The sweeping conference had the tagline, “Global technology driving local solutions.” Interesting, as that’s sort of the reverse of Xconomy’s mantra, which is reporting about local stories with global impact. But I think they’re two sides of the same innovation coin.

So, in “ESPN plays of the day” style, here’s my top 10 list from the conference (if only I had the video to go with it):

10. Setting up entrepreneurial zones. A panel led by Ty Carlson of Microsoft proposed denoting special “R&D zones” from Oregon to British Columbia geared toward supporting startups in fields like renewable energy, sustainable farming, and biotech. The idea would be to offer tax credits and other incentives to create a more entrepreneurial culture in the Northwest, especially in rural areas.

9. What government should and shouldn’t do. Investor and entrepreneur Martin Tobias of Seattle-based Kashless said, “Startups and investors can’t make a 10-year bet when you have a two-year tax credit.” Those conditions freeze out small companies, especially in costly ventures like energy. So government should create open markets and set minimum market sizes for new technologies, Tobias said. But it shouldn’t pick the technology winners themselves.

8. Northwest tech startups do the Olympics. Tom Guthrie, CEO of Seattle-based Twisted Pair Solutions, said his company has helped numerous agencies on the Olympic Peninsula inter-operate their radios—a key problem in disaster response and other scenarios. Twisted Pair, which is backed by Ignition Partners and other investors, is also working on a laser system to deliver broadband signals. Meanwhile, Paul Manson, CEO of Vancouver, BC-based Sea Breeze, talked about his company’s project to build a high-voltage, direct-current undersea cable between Victoria, BC, and Port Angeles, WA. This would be a fast, controllable power transmission component of a smart grid; it should be under construction by mid-2010, he said.

7. The world according to Dell. In a chat with Mark Anderson of Strategic News Service, Michael Dell said he is excited about China and the rest of Asia as fast-growing economies. He anticipates a U.S. recovery from the recession, but says, “I don’t think you’ll see an immediate snap-back.” And he likes South America as an emerging market (Dell does sales of more than $1 billion in Brazil alone). But Europe, not so much—he sees a lot of uncertainty in the workforce there.

6. Get ready for Dell smartphones. “Mobility is absolutely the theme,” Dell said. He was talking about the relative importance of desktop computers, laptops, netbooks, and mobile devices to …Next Page »

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Omeros, the Seattle biotech company accused by its former chief financial officer of filing false time records on grant work for the National Institutes of Health, disclosed late last night in a federal court filing that it alerted the government to its internal mistakes, and that the NIH accepted the results of an internal investigation that concluded the company didn’t overbill the government.

Omeros, which is defending itself while simultaneously seeking to raise as much as $80 million in an initial public offering this week, provided a detailed response to charges raised in U.S. District Court on Sept. 21 by Richard J. Klein, its former finance chief. Omeros acknowledged it made mistakes in keeping track of how much time its scientists spent working on an NIH grant to search for new targets for anxiety treatments, but the company spotted the errors and corrected them before it submitted bills to NIH, according to a letter from Omeros general counsel Marcia Kelbon to a federal compliance officer dated May 14. The company ended up underbilling the federal government by $55,000 after it discovered the mistakes in keeping track of its employees’ time.

An assistant compliance officer at NIH, Kathy Hancock, appeared satisfied with Omeros’s summary of what had happened, according to documents disclosed in federal court late last night.

“This email confirms NIH’s review of the report and our acceptance of the corrective actions taken by Omeros,” Hancock wrote in an e-mail on June 29, which was attached in the Omeros federal court filing. “We appreciate you calling this error to our attention.” Hancock added, “We commend your organization for its actions taken to address this issue and to ensure compliance with federal requirements.”

A spokesman for Omeros declined to comment, citing an ongoing “quiet period” mandated by the Securities and Exchange Commission for companies preparing to go public. The NIH’s Hancock and an attorney for Klein didn’t immediately respond to requests for comment.

The letter from Omeros’s Kelbon to the NIH describes what happened with the company’s timekeeping practices in more significant detail …Next Page »

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Gregory Bialecki is Massachusetts Governor Deval Patrick’s Secretary of Housing and Economic Development, and leads an ungainly collection of agencies charged with everything from promoting affordable housing in Massachusetts to attracting international business investment to the state. Here at Xconomy, we cross paths with Bialecki quite a bit, since he’s also responsible for many of the state’s initiatives to support high-tech innovation and greater collaboration between business, academia, and government.

I interviewed Bialecki at length last week, and in Part One of our conversation, published yesterday, I asked him how his work as an attorney specializing in real estate development and land-use permitting related to his current business-development role for the state. We also talked about the roles state government can play in promoting innovation. Bialecki said the Patrick Administration has spent much of the past two years simply helping players in various technology sectors to recognize that when it comes to working with business, state government can play a supportive rather than an adversarial role.

In particular, we were talking as Part One closed about the state’s obligation to help business by improving the quality of science, technology, engineering, and math education for young people. In this second half of the interview, I pressed him for more examples of things state government can do to accelerate innovation. And we went on to talk about the need for more funding to move ideas from the lab bench to early-stage commercialization, the debate over non-compete agreements in employment contracts, and the Administration’s progress drafting new business regulations on protecting consumer data.

Xconomy: I think it’s pretty easy for everyone to agree on the importance of science and engineering education. But what are some of the other parts of this innovation agenda—things that maybe are not so easy to agree on?

Secretary Bialecki: There are other aspects of the innovation ecosystem, if you will, where I think we can play a partnering role. When it comes to thinking up great ideas, Massachusetts is fantastic. But when it comes to converting those good ideas into commercial products and services, we need to do a better job. The way to do that is a collaboration between business and academia and government to look systematically at the ways we do that. In other words, what great ideas are behind the university walls right now that aren’t coming out? When I describe the state government [as] having a partnering role, in many cases it’s as simple as being a convenor or facilitator. So, for example, the Governor, who is very interested in innovation, has the capacity to say to all of the public and private universities, “Can we get together and compare notes and talk about how we are commercializing our ideas? Who has the best practices and are there things we can learn from each other? Are there things the state can do to make public universities better at it?”

That’s one of the things we are focused on—learning from universities and businesses the ways we can make these connections better and literally get good ideas out of the lab and into …Next Page »

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From his corner office on the 21st floor of the MacCormack State Office Building on Beacon Hill, Gregory Bialecki has what is probably the best view of any state official in Massachusetts. To the south, the floor-to-ceiling windows peer over Boston Common, Downtown Crossing, the South End, and South Boston; to the east, they look toward Back Bay, the Charles River, and MIT.

But if any official can benefit from such an expansive view, it’s Bialecki. As the secretary of the Executive Office of Housing and Economic Development, after all, his job is to help all the people he looks out upon find homes to live in and jobs to go to. Because his office includes the state Department of Business Development, he’s also in charge of attracting new employers to Massachusetts and making sure that existing employers stay here and grow. And that means he’s the point man in Governor Deval Patrick’s administration for all efforts to build on the commonwealth’s track record of high-tech innovation, through efforts like the Massachusetts Life Sciences Center, the Massachusetts Clean Energy Center, and the new MassChallenge business plan competition.

In the inaugural post of his “Mass Innovation” blog in July, Bialecki argued that innovation gives Massachusetts its fundamental competitive advantage, but that the state still needs “a deliberate innovation agenda” to improve collaboration between industry, academia, and government. A Newton, MA, resident and Harvard-trained lawyer, Bialecki replaced former Cabinet secretary Daniel O’Connell in January. He invited Xconomy to his office last week for our first formal interview; the questions we covered ranged from Bialecki’s background to non-compete agreements, data privacy regulations, and the role of state government in funding early-stage commercialization work. We’ve condensed and edited this far-ranging conversation. Part 1 follows here; we’ll publish Part 2 tomorrow.

Xconomy: You’ve practiced law with big firms like Hill & Barlow and DLA Piper. What kinds of work did you do for them?

Secretary Bialecki: Over the years, the vast majority of my clients were in real estate development. There’s a lot of moving parts in real estate development. Your clients are buying land, designing projects, getting permits, getting tenants, getting financing. Within that broad outline, my specialty was permitting and land use regulation. So I tended to work with clients who had chosen projects that, by either their size or their location, involved very significant land use issues. For example, with the Fan Pier site in Boston, I represented the Pritzker family at the time they acquired the property. The zoning had been the same for decades, and was consistent with the history of South Boston’s waterfront—there were warehouses and parking lots and an old industrial neighborhood, and Fan Pier itself used to be a trainyard. So if Fan Pier was going to be redeveloped and brought into the current generation…a critical element was to work with the city and the state, because in Massachusetts, waterfront property is subject to very significant state land use regulations. So advancing that involved working with the city and the state to come up with new zoning and land use regulations that would accommodate a new generation of uses for that site [which is now home to a convention center, several hotels, a federal courthouse, and the Institute of Contemporary Art].

X: How do you feel this sort of work prepared you for your current role helping the Patrick Administration interface with the business community?

GB: In permitting and land use work, even when you’re representing private clients, you’re very involved with the public sector, because you’re working very closely with …Next Page »

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Todd Park, co-founder of Watertown, MA-based Athenahealth (NASDAQ: ATHN) and San Mateo, CA-based Maria Health, has been tapped to serve as chief technology officer of the U.S. Department of Health and Human Services, Athenahealth announced. To satisfy government requirements, Park will resign this month from his post on the board of Athenahealth, a provider of  Web-based tools used by medical practices to managing billing, electronic medical records (EMRs), and other functions.

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Seattle’s mighty Amazon isn’t feeling too friendly toward the Ocean State. This morning, the online retail giant sent out a terse notice to its Rhode Island affiliates, informing them that their accounts were closed effective June 29th, due to impending changes to the state’s tax laws that apply to certain online purchases. This echoes a similar move the company made three days ago in North Carolina, after that state enacted a similar tax change.

The affiliates are members of a program called Amazon Associates, in which participants place ads for Amazon products on their websites. Users are funneled to Amazon’s website through the links, and each affiliate receives a commission if purchases are made. A new provision in the Rhode Island state budget will require Amazon to collect sales taxes on all purchases made through the affiliates program. Amazon’s letter, which was posted on Seattle news website TechFlash, calls the provision “an unconstitutional tax collection scheme.”

The legislature says it is merely closing a loophole. Under the current incarnation of Rhode Island tax law, Amazon is not required to charge sales tax on purchases since it does not have a “physical presence” in the state. The tax (here called a “use tax”) does legally have to be paid, though—it’s just that most consumers do not take it upon themselves to send the state government a check for seven percent of their Battlestar Galactica DVD box set and other affiliates-related purchases. Many other states, including financially floundering California, are looking to enact similar proposals.

Steven Costantino, chair of the Assembly’s Finance Committee, told the Providence Journal that the changes in tax law were a “matter of fairness” to local businesses with actual physical presences in the state. The loophole-closing provision is based on previous legislation enacted in New York state— called, appropriately enough, the “Amazon law.”

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I’m sure some of you have heard a version of this quote before: “In the 1950s, 60s, and 70s, large families in the U.S. sent their fifth or sixth child to work for the government or a utility company under the assumption that the later the child was born the less intelligent he/she was.” Even for most of us from the generation X (or Y or Z, whatever they are calling us these days) any mention of government or utility jobs brings visuals of diesel locomotives coughing dark soot and slowly chugging away to, well, nowhere. When was the last time you saw a glossy business school brochure highlighting how many students they place with the Bureau of Land Management or Pacific Gas & Electric? Exactly.

Is this about to change? Has it suddenly become sexy to work for the government and/or a utility company? There definitely are some signs here at the MIT Sloan School of Management that attitudes are changing. More than a handful of my classmates have accepted summer internship offers from utility companies and/or government agencies this year.

“How is this possible?” I’ve been asking myself. How can two such dissimilar worlds—the business schools that are the ultimate centers of capitalist education and the utilities and government offices that are the ultimate conservative workplaces—come together? Well, it turns out that we’re living in a new world in 2009.

Today, with $900 billion of stimulus capital being handed out, Washington, D.C. is being touted as the new Wall Street. After decades of inaction, there is suddenly urgent talk of building 220-volt electricity transmission lines all across the U.S. Today, consumers want an hour-by-hour update of their electricity consumption. Today, new business models are being talked about to get ready for carbon pricing. It’s in this environment that students from business schools are expected to thrive.

“Working at the US Department of Energy (DOE) today is like working at NASA during the Apollo program,” says Leland Cheung, a first-year Sloan student. Leland will spend his summer at the Advance Research Projects Agency-Energy (ARPA-E) in Washington. ARPA-E, under the DOE umbrella, has been tasked with dispensing $400 million to companies moving advanced energy technologies toward commercialization.

Cheung, with a pre-Sloan career in the venture capital industry, hopes to get valuable exposure to the energy sector and develop his network while at ARPA-E this summer. While he does not think a full time job in the government is something he would prefer, he says “I would try to adopt and incorporate best practices from the private sector in the government to make it more attractive for bright and energetic individuals.”

Obama Administration policies seem to be making government jobs more attractive. “Obama changed the tenor of what it means to pursue an energy career with the US government,” Christina Ingersoll, a first-year Sloan student, told me. “Under Bush’s administration, I would have felt different and probably more suspicious of working for the government.” Ingersoll will spend her summer at the National Renewable Energy Laboratory (NREL) in Golden, CO in the Technology Transfer Office.

Prior to starting at Sloan, she had not given any thought about working for the government. She changed her mind after talking to a faculty member at MIT Sloan and fellow MIT students. “NREL is a phenomenal place if you’re interested in renewable energy,” she says. “I knew I would work hard, but with smart interesting people. I have the chance to develop an expertise, and to have access to some of the leading scientists in the world on energy. Also, Colorado is a great location for the summer!”

Changes in regulations, including feed-in tariffs/decoupling/advance metering, seem to be making the utilities a sought-after destination for business school students. A group director at Massachusetts utility NSTAR told Pavel Gavrilov, a first-year Sloan student, that she felt change was coming due to the increase in MBAs coming through the organization. Gavrilov was one of those interested students. He has accepted a summer internship offer from NSTAR.

Gavrilov would like to see further changes at utilities. “For too long it’s been slow and steady growth as the only option for utilities and thus they just build rate base” he says. ” I think with changing regulations they are able to fulfill their shareholders needs in other ways–just look at decoupling.”

Veronica Metzner, another first-year Sloan student, agrees with Gavrilov and says that the utilities should go further. “It is critical for the utilities to asses how to best meet the needs of their customers by helping them become as energy efficient as possible while at the same time continuing to deliver sustained and respectable returns to shareholders,” says Metzner.

Metzner accepted a summer internship offer from the California’s largest utility, PG&E. She added that she always wanted to be in the energy field, but the support of MIT’s Energy Club and other campus resources helped her maintain a focus and get access to career opportunities.

Like other organizations, government agencies and utilities expect students to have a grasp of both traditional management skills and cross-disciplinary concepts. A strong focus on energy related activities and quantitative skills help immensely, Metzner and Ingersoll commented. Gavrilov on the other hand thinks that while MBAs are becoming a more important part of utilities, there’s a long way to go for most of them. To apply skills learnt and using the MBA experience to help the organizations flourish in these changing times will require some time and patience.

What remains to be seen is whether the change that seems to be getting business-school students excited about working for government agencies and utilities will continue, or whether these organizations will settle back into the conservative status quo ante. Can a bunch of motivated business school students armed with management and quantitative skills catalyze this change? Stay tuned.

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Yesterday, I participated in a very exciting event that culminated with the announcement by Massachusetts Governor Deval Patrick of an important funding program—a $1 million annual business plan competition called MassChallenge.

The essence of this announcement is to match the next generation of young aspiring entrepreneurs with numerous sources of capital, most likely local venture capitalists. The Governor has committed the State to match dollars committed by private sector investors to the top entrepreneurs who survive the MassChallenge screening process.

During the course of the events yesterday, my good friend Andy Ory (CEO of Acme Packet) and I moderated a panel stocked with local success stories: Desh Deshpande, Paul Sagan of Akamai, Bob Hower of Advanced Technology Ventures, Scott Savitz of Shoebuy.com, and Brian Shin of VisibleMeasures. We explored what was and was not working in the region as we try to build great venture-backed companies.

One consistent theme that the panel identified was the lack of broad-based mentorship to help this next generation of great entrepreneurs get started. So here is the commitment that Andy and I made to the audience: we will recruit 12 great successful CEOs to work with 12 VCs to mentor 12 promising young entrepreneurs to launch 12 new companies over the next 12 months. (Admittedly, I stated to the audience that it would be 20 companies in the first year, but upon reflection the alliteration of “12″ worked much better).

Office Hours: So what I will pursue over the next few months with Andy Ory is to see if we can establish “office hours”—that is, can we get a dozen successful CEOs in town to commit to open up their calendars and Rolodexes to a dozen promising entrepreneurs. Ideally these CEOs would serve as non-executive chairpersons and possibly provide some initial capital, but more importantly, they would provide guidance and advice. VCs get paid to see new opportunities, so it should be reasonably straight forward for me to line up the investors (maybe I will lean on the board of New England Venture Capital Association, which I happen to chair). And working with organizations such as MassChallenge, as well as our own deal flow, we should be able to identify a dozen great opportunities that merit funding.

I will keep you posted on our progress.

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SpectraWatt, a Hillsboro, OR-based maker of photovoltaic cells, received a $500,000 contract from the National Renewable Energy Laboratory yesterday.  Part of the American Recovery and Reinvestment Act, the contract is for the company to develop ways of improving solar cells without changing current manufacturing processes.  SpectraWatt was one of 13 companies to receive money from NREL, the ultimate goal being to speed up the commercialization of solar energy technologies.

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Seattle-based Verdiem has some encouraging news today from around the country—and its own backyard. The maker of energy-saving software for personal computers is announcing results from trials performed by the city governments of Seattle, Chicago, and Honolulu. These customers have been using Verdiem’s product over a period of months to a year, in an effort to make their PCs smarter about shutting down when they’re not being used, while also allowing the computers to do things like turn back on when software patches need to be installed.

Verdiem’s PC software package, called Surveyor, now includes a dashboard feature, also announced today, which lets corporate and government customers monitor PC energy costs and carbon emission savings more effectively through the use of charts and graphs.

Energy costs and emissions from PCs are surprisingly high, mainly because there are so many of them (about a billion worldwide). According to a 2008 report from the Global e-Sustainability Initiative, PCs account for more than 30 percent of all IT energy costs—more than servers, data centers, or printers. What’s more, companies, organizations, and individuals waste some $4 billion a year by leaving PCs, laptops, and monitors on when they’re not being used.

All three cities involved with the Verdiem announcement reported significant PC energy savings:

—The City of Seattle has deployed Verdiem’s software on more than 8,000 PCs across 30-plus city departments, and reduced PC energy consumption by some 35 percent. “The results we are achieving with Seattle-based Verdiem in reducing the City’s PC energy consumption demonstrate, in a very tangible way, how we can collectively save on energy costs and protect our planet,” said Seattle Mayor Greg Nickels in a statement.

—The City of Chicago started using Verdiem’s software in February of this year, and says it has reduced its PC energy consumption by 37 percent and has eliminated more than 350,000 pounds of carbon dioxide emissions.

—The City of Honolulu deployed the software on 1,700 PCs starting in July 2008, and saved the city $30 per PC per year, reducing PC energy costs by more than 30 percent. Honolulu has the highest energy rates in the country (30 cents per kilowatt-hour), so its city government has extra incentive to reduce its electricity consumption.

Verdiem was founded in 2001 and is backed by Kleiner Perkins Caufield & Byers and NCD Investors, among others. It appears to be moving full steam ahead under new leadership: the company announced its incoming CEO, Jeremy Jaech, six months ago. Jaech was the co-founder of software giants Aldus and Visio, and was also involved with Trumba, a Seattle startup. When he took the helm of Verdiem back in December, he told me that big companies and other organizations are where the real energy and emissions savings are—and where Verdiem’s biggest opportunities lie. “It’s a simple concept with a quick ROI,” Jaech said. “Companies are starting to get really interested.”

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Old places can accomplish new things.

Boston and Tokyo are both about 400 years old. Yet we’re different when it comes to planning for the future. Not long ago, Tokyo finished building a new island in its harbor, and a new city on that island, complete with a subway system that runs without human intervention. The goal? Explore what its future might look like by building “a showcase for future living.”

Closer to home, Toronto recognized a few years ago that it was losing ground in the sciences, so it deleted two-square kilometers of its downtown and replaced it with the Mars Discovery District, a vast collection of intertwined university research facilities, commercial research space, and the best biotech incubator space I’ve ever seen—and I’m an incubator guy.

Tokyo and Toronto prove it’s possible for places to set ambitious goals and achieve them.

Recently, at the Nantucket Conference, I interviewed a successful Boston-area CEO who reminded me that smart organizations think long-term. With sales of over $500M, Robert Keane’s 15-year-old Vistaprint dominates its sector. Yet he remarked, “We are a young company. This is the beginning of the Vistaprint story. Our management’s perspective is decades, not years.”

Greater Boston should take a page from Tokyo, Toronto, and business leaders like Robert Keane, and dedicate energy to thinking long term and thinking big.

Let’s not kid ourselves: we haven’t been doing this lately. Other than putting a car tunnel underground and creating a ‘subway line’ that looks suspiciously like a bus service, I can’t think of much we’ve done in the past 20 years that one could fairly describe as BIG.

Visions for our future in the Boston area will not be handed to us on a platter by President Obama, or anybody else. We need to craft them ourselves. It is time we began a dialogue about what we would like to accomplish together. I invite Xconomy readers to share here their personal grand visions for our future. What should we set our sights on?

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It was a relatively light week for deals in the Northwest, perhaps owing to the holiday weekend. But there was still action in biotech, marketing software, and alternative energy.

—Kennewick, WA-based Infinia raised $14.1 million in debt financing out of a $50 million offering. The company, which is backed by Vulcan Capital, Khosla Ventures, and other investors, develops solar power generation technology that uses free-piston Stirling engines and power systems.

—Luke reported on the story behind Vulcan Capital’s investment in BiPar Sciences, the Brisbane, CA-based cancer biotech firm that was recently sold to Paris-based Sanofi-Aventis for $500 million. Vulcan led the seed financing round for BiPar back in 2005, and pumped $13 million in capital into it through its lifetime. The sale will earn Vulcan more than $100 million in cash, which managing director Steve Hall says has helped put the firm in the top 10 percent of all U.S. venture funds over the past five years. BiPar’s drug, BSI-201, could be a fundamental advance against breast cancer, ovarian cancer, and other tumors.

—Bellevue, WA-based Visible Technologies, a startup that makes software for online brand reputation management and customer service, raised $6 million in debt financing. Visible Technologies was founded in 2003, and is backed by Bellevue-based Ignition Partners and New York-based WPP.

—Seattle-based Survey Analytics, a marketing and customer relations software startup, scored a partnership with the White House to power the Open Government Dialogue website, which seeks to solicit ideas from the public on how the government can be more transparent, participatory, and collaborative. Financial terms of the deal were not given. Survey Analytics, which has been bootstrapped since 2004, has developed a software platform for hosting and managing feedback communities called IdeaScale.

—Luke reported that Seattle-based Uptake Medical, which is developing minimally invasive technology to treat emphysema, raised $3.1 million in a debt financing. Uptake makes a device that seals off access to diseased parts of the lung where air gets trapped. The technique does not leave an implantable device behind. The latest funding adds to the $3 million bridge financing the company raised for its clinical trials in December.

—HealthUnity, a Bellevue, WA-based maker of software for connecting healthcare IT systems, raised $2 million out of a $4 million equity financing, Luke reported. The company was founded in 2004 and is led by CEO Prem Urali, a former group manager in the BizTalk Server division at Microsoft.

—Luke also reported that Oncothyreon, a Seattle-based developer of cancer drugs, received commitments from several investors to buy new shares and warrants for $11.1 million. The deal was underwritten by Boenning & Scattergood. Oncothyreon (NASDAQ: ONTY) has been diversifying its pipeline, and has gotten renewed interest from investors in its cancer immunotherapy program, since Seattle-based Dendreon has had recent success in that field.

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Dave Danielson, founder of the MIT Energy Club and Boston’s greenest VC, has left his position as senior associate at General Catalyst Partners for the U.S. Department of Energy. As an automated e-mail response explains: “I will be making a transition from my role as a member of the General Catalyst Partners’ Cleantech investment team into an exciting new role as a co-founder of the ARPA-E program…I am very excited about this opportunity to help shape this program that, if done right, has the potential to become one of the most important early-stage transformational energy technology funding organizations in the nation…”

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Portland, OR-based SignaCert, a maker of IT security and management software, announced it has raised $8.8 million in Series B funding. The round was led by existing investors including DCM, Intel Capital, and SmartForest Ventures, with new participation from In-Q-Tel and other strategic investors. SignaCert was founded in 2004, and has customers in financial services, government, and healthcare.

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April 2—(I am back aboard Delta Airlines, this time in Seat 7B, slowly moving up in life…much smoother, too).

As expected, the two-day junket went quickly. Today was mainly a series of briefs from the Department of Energy’s Program Managers (the professional/career DOE staffers that manage the various technology verticals). In many ways, it was much less titillating than wandering around Capitol Hill, but these PMs are the folks who disperse significant money (with more coming from the Stimulus package) and influence grants, program direction, and technology priorities. Programs briefed included Solar, Biomass, Hydrogen/Fuel Cells, Federal Energy Management (efficiency programs), and Industrial Technologies.

A few things to keep in mind when one thinks of DOE. First, it was originally and remains in large part a nuclear agency, with the renewable (Energy Efficiency and Renewable Energy) dimension being just a portion of the overall agency mandate. Second, the dollars flow in support of legislative mandate and are not always as broadly deployed as the technology/start-up community would like, or perhaps it should be.

Take biomass for example (of note, I am on the DOE/USDA Biomass Advisory Council), which is really about leveraging biomass for creating liquid transportation fuels, not for electricity or thermal generation. The biomass team certainly understands the broader play, but their mandate is to make the Renewable Fuel Standard (RFS) numbers of 16 billion-plus gallons of alternative biofuels by 2022. The solar program seems to be making good progress with the goal of grid parity (with incentives) by 2015. Currently that number is ~$3 per installed watt (total system cost), with the current average sitting at ~$5/watt for commercial and ~$6.5/watt for residential. A bit of a ways to go but getting there; as a data point, Bill Davis of Ze-gen (who is sitting next to me on the flight) is installing 10kW of solar panels at his home in Winchester at a cost of $78K, which less an $11K state rebate and a 30 percent tax credit brings the installed cost down to about $5/W. This provides a 7-year payback and does not yet factor in RECs, carbon credits, or the ability to sell excess capacity back to the grid. Pretty cool, thanks Bill…

Two other briefings are worth noting; first is the hydrogen/fuel cell program, which seems to be languishing as compared to the others—largely due to the immense technical hurdles associated with those technologies and difficult commercial deployment obstacles, although there are pockets of success emerging from the space. It will be interesting to see how hydrogen fares in the new Administration as it was moved to the fore again recently as a result of the Bush administration, the reasons for which could be a whole ‘nother discussion it seems. The other is the industrial technologies group, which …Next Page »

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~5pm, April 1—Outside the Library of Congress (it’s raining lightly, and hordes of students are milling about).

A full day of running around Capitol Hill began yesterday with the New England Clean Energy Council masses arriving at the Capitol Building just as it was having a security alert—again, April Fool’s or not? Turned out to be real, but we circumnavigated our way to a cramped briefing room inside the Capitol, where NECEC president Nick D’Arbeloff provided an overview of the Council’s priorities and talking points, which are headlined by the need for a viable “Cap & Invest” Program for Carbon. This item turns out to be very timely; it is the main hot button topic on the Hill right now (in addition to the budget), as the Waxman/Markey Climate Change Bill was introduced yesterday.

The Council priorities and programs also include a push for a Renewable Energy Standard and a set of Energy Innovation Accelerator Programs from early R&D support to commercial deployment and everything in between, both on the funding and policy/permitting sides. There is also a call out for the Invest part of the Cap & Invest program to be focused on efficiency investments and initiatives. The Council Policy Committee has done a nice job of coalescing a broad set of ideas into a cogent set of initiatives and preparing Council members to brief various members of Congress that we all were to meet with this afternoon.

We then spent an hour on the receiving end of several rapid fire briefs from various New England staffers on their core issues, the budgeting process, the climate change bill, and myriad other topics. Each briefing ended abruptly as the particular staffer hurried off, obviously late for his or her next 10-minute meeting, which seems to be the clock cycle of DC, which I actually quite liked—quick formalities, get to business, highlight action items, and then move on to the next meeting. It’s clear that the budget process, especially appropriations (i.e. earmarks), is the top priority as the deadline is this Friday, so perhaps the mostly mid-20 staffers are more harried than normal, but each was insightful, articulate, and obviously engaged. Key takeaways mirrored my earlier comments, with the added emphasis that it is a long process (start soon for FY 11), and one only needs to walk the halls of the Capital Office Buildings for a few hours to realize that there are many and varied parties vying for the ears of our lawmakers, often with very different agendas.

Next up was Congressman Ed Markey, who was very generous in spending nearly an hour with us, briefing us on his Climate Change Bill and the battle that will ensue over the next several months to make it a reality. The President and Chairwoman Nancy Pelosi have been specific on calling for a Cap & Trade structure, but it seems that there are pockets of Carbon Tax folks who are vocal as well. The Waxman/Markey bill is Cap & Trade and will be flushed out very heavily over the next 4-6 weeks with some fundamental questions and structural issues yet to be worked out. The takeaway is …Next Page »

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Spring has sprung in DC—the Cherry Blossoms are out, and the buses full of students are everywhere.

First stop for the day was Congressman Barney Frank’s office to discuss an initiative to develop a clean energy accelerator park in New Bedford, MA. More on this later, but a few immediate takeaways:

—The prep work for the FY 10 budget is essentially done, the real work now begins behind committee doors to sort out specifics and priorities. FY 11 efforts begin soon…

—Legislators have limited control over flow of stimulus dollars; they can endorse (and you should engage on this), but ARA (stimulus) money will flow through mostly pre-existing channels, which is both good and bad.

—Earmarks may or may not be dead, but it’s clear that they have changed with the notion of competitive bids for any earmark that does make it into a budget. How that will work? Anyone’s guess at this point.

—The Staffers are good, smart, and extremely busy; be prepared, respectful, and get to the point—and, as always, relationships matter.

Extra credit trivia question: How many monuments are there in DC? I don’t know the answer but it’s a big number.

Jim

[Editor's note: This is the second installment of a travelogue written by venture capitalist Jim Matheson, who is in the nation's capitol as part of a DC Fly In organized by the New England Clean Energy Council. You can read his first post here.]

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As I sit here in seat 8B on the 6:40am Delta Shuttle to DC, I am hoping the extraordinarily bumpy ride is not a harbinger of the prospects we face over the next two days as a large group of clean tech industry leaders converge on Washington as part of the DC Fly In organized by the New England Clean Energy Council.

Looking around the partially full plane, there are a number of familiar faces rallying to bring the message of New England’s cleantech leadership to the nation’s capitol—and to forward our collective vision for the best regulatory frameworks to accelerate the US cleantech industry and explore how to bring more federal funding home to MA and to each of our specific concerns.

This trip follows an event we held at Flagship Ventures last evening for our portfolio companies on exploring alternative sources of financing—including stimulus package funds, state and local grants, SBIR grants, and myriad other familiar and esoteric sources of capital that may be available depending on a company’s specific focus, stage, and creativeness. Thinking differently about obtaining financing is certainly in vogue right now, but we believe that given the disruption in the traditional capital markets (private and public), the uncertain future of capital flows, and the highly certain increased role of government in the commercial landscape that understanding, exploring, and leveraging these various avenues is mission critical.

Last night’s discussions included a variety of external panelists (lobbyists, grantors, tax experts, and state officials) and internal panelists (portfolio company leaders who have successfully and creatively obtained alternative sources of financing), along with nearly 50 of Flagship’s portfolio company representatives and Team. A few of the main takeaways for successfully pursuing new sources of funding were:

• Committing resources over a period of time (average minimum exertion was one person year to get real traction) is necessary

• Treating these various parties like a partner and understanding their needs (in many cases, jobs)

• Fomenting a relationship before you really need anything (Sales 101)

• Realizing that some of the outcomes of these efforts are binary and thus to go down the path with your eyes wide open

• Recognizing that startup executives do not have experience with these funding sources, so finding a guide (read lobbyist) is worth examining

• Networking: There are many folks in our portfolio and across the local Boston scene who have been down these paths and are open to sharing their learnings, so it is worth trying to network to get smarter, quickly.

• Think Broadly: Most of these funding sources go far beyond just the stimulus package, which is the most immediate and visible pool of money, but which will be temporary. Many of these programs have existed and will continue to exist long after the current deluge of federal funding.

The agenda for the next two days is jam packed with a variety of meetings across DC, including sessions with a variety of New England-based legislators and their staffs, time with Carol Browner (President Obama’s Assistant for Energy/Climate Change), and briefings from a swath of Department of Energy Program Managers. Also embedded in the agenda is time for the NECEC contingent to compare ideas and experiences, discuss and debate the path forward for New England and the US in cleantech leadership, and hopefully a drink or two.

Looks like we are descending. Hopefully the pilot does not think that hitting more bumps is a good April Fools Day prank. More from the Capitol later today…

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With the financial crisis as a backdrop, venture capitalists and policy makers are today finding themselves on common ground more than ever. Our economy has some serious structural problems. And the way past these problems will be through innovation and job creation. Venture capital has been the engine for America’s new, innovative companies for over forty-five years. Now, with the passage of the American Recovery and Reinvestment Act, Congress and a new Administration have signaled their readiness to invest in this portion of the economy that has created the majority of new jobs during every recovery since the Great Depression.

The passage of the stimulus bill was no easy task. Congress should be applauded for its willingness to make tough trade-offs for the greater good. No special interest group was without disappointment in certain areas. Yet, many of the sectors that are beneficiaries of stimulus dollars are poised to serve our region and country and in the process also improve our long term global competitiveness. These are industries that the venture industry also supports with billions of dollars of capital investment each year. And our industry has the track record to prove its worth. In fact, one out of every ten Americans works for a company that was founded or grown with venture capital investment and guidance. And collectively these companies account for 18 percent of U.S. GDP.

The venture capital community is largely responsible for the creation of the biotechnology industry, the Internet economy, and the software, semiconductor, and personal computer industries. It is poised to create additional jobs in these areas as well as in the newly emerging clean technology sector over the next several years. There is no question that together venture capitalists and the government can create significant value.

With a total of more than $37 billion in funding for clean energy grants, loans, and tax credits, the stimulus bill represents a significant expansion in federal funding for renewable energy, conservation, efficiency—in short, green jobs. Here in New England, these provisions will …Next Page »

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How should Massachusetts strengthen and grow its innovation ecosystem? What are the best ways to foster entrepreneurship, improve the high-tech work force, and entice companies, whether here already or thinking about a local presence, to expand in the Bay State?

Last month, after witnessing a flurry of talk focused on addressing such issues by rebranding the Bay State as an innovation hub, Wade weighed in with a thought-provoking column. Rather than worrying about branding, he suggested the state’s time, money, and energy would be far better spent helping innovators and innovative companies succeed. “Indeed, there’s so much amazing innovation going on in Massachusetts already that it seems superfluous to worry about better marketing slogans…” he wrote. “It would be far better for economic growth in the state if public-private initiatives like the Information Technology Collaborative focused on a few substantive policy reforms targeting the all-too-numerous obstacles to prosperity for local businesses, technology professionals, and entrepreneurs.”

He put forth a list of suggestions that included replicating efforts like MIT’s Desphande Center for Technological Innovation at other universities, getting rid of non-compete clauses, and promoting the Bay State’s gay friendly credentials (especially compared to California). His column attracted a slew of comments. But more than their number was the quality of the ideas put forth. Unanimously, as far as I could tell, commenters who weighed in on branding agreed that it should not be the focus of Bay State attention. “Creating a new slogan or tag-line is backward. Real accomplishments [are] the way to attract attention. Nicknames like ‘Silicon Valley’ appear after that, not before,” wrote Dan Weinreb.

Many readers put forth their own ideas for what should be done. Some came from well-known innovation leaders (including two Xconomists), others from voices I hadn’t heard before. But as a whole, their ideas and perspectives were so interesting that I wanted to round them up and draw fresh attention to them in hopes of evolving the discussing even farther—and faster. Indeed, we need to get this discussion more out in the open, and not leave it to committees alone—as important as those committees may be. Innovation comes from out-of-the-box thinking, and sometimes that can best be found through out-of-the-box outreach.

You can read all the comments here. But below are three ideas, or action areas, that particular jumped out at me.

• Improve student engagement and encourage young entrepreneurs—This was one of the most talked about areas. Alexa Scordato laid out a key part of this issue: “Boston does a crappy job of retaining the youth population that is drawn to the city. As an academic acropolis housing an undergraduate population of over 250K, Boston misses the opportunity year after year by failing to convince people to stay…I was recently told that if I ever want to have a shot at being innovative, that I MUST leave Boston because leaders here would never mentor or cultivate my professional interests.”

Those thoughts were echoed by Tim Rowe, president of the Cambridge Innovation Center, home to a constant stream of startups, who put forth some ideas for retaining students after they graduate and encouraging student entrepreneurship:

—Fund programs like MIT’s Venture Mentoring Service in every school.
—Expand efforts like Flybridge Capital Partners’ Stay in MA program that pay for students to attend conferences and other networking events.
—Create a grant program for helping startups hire interns.
—Replicate successes like Northeastern University’s internship program in other schools.

But as important as such efforts may be, at least one local entrepreneur, Xconomist Vinit Nijhawan, thinks you can only do so much to retain students in today’s world, where students who come to Boston from around the globe naturally want to (and now can) return home to pursue their dreams. “I believe it is ultimately futile to try to increase (from its natural rate) the retention of the hundreds of thousands of students who study here,” Nijhawan argued. “In the flat world let’s make Boston the hub that all these alumni communicate through and occasionally gather at. Let’s create an annual alumni gathering in Boston, coordinated by all colleges. We can have sub-fairs at this gathering with themes such innovation, arts, sustainability, healthcare, etc. Economic activity will naturally arise from making Boston the ‘knowledge hub’ of the flat world.”

• Create new sources of seed funding for entrepreneurs—Enrico Polazzo was blunt: “Disruptive innovation creates new markets, and enables radically new business models, and the seed money fuel for that type of innovation has always been way too limited in Boston – no doubt …Next Page »
  
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