As you have read this week about the financial details of Facebook’s IPO filing, you have no doubt stopped to think about—or daydream about—what your own company might be worth.  While going public might be a distant or inappropriate goal for your own venture, Facebook’s IPO serves as a timely reminder that you should be calibrating your business and growth strategies to make your company attractive to investors or strategic partners.  After all, for most startup entrepreneurs, the eventual reward comes in the form of a merger or acquisition, rather than an IPO.

The good news is that the vast majority of technology CFOs (75 percent) expect M&A activity in the sector to rise in 2012, according to the fifth annual BDO Technology Outlook Survey, released this month by BDO USA, LLP, where I am a partner and national director of the Technology and Life Sciences Practice.  However, a word of warning: I’ve seen many deals derailed—with significant delays or value erosion—because of the management team’s undisciplined approach to presenting financial information.

Therefore, whether your own organization is in the market to acquire another business for strategic growth purposes, or you are working to position your company as an attractive acquisition target, there are two issues that are crucial to generating or maintaining shareholder value: Having an acute awareness of the motivating factors behind an M&A transaction, and providing an orderly financial snapshot that will answer the mostly likely questions from potential partners.

Motivating Factors Spurring M&A Transactions

In our survey, respondents predicted that the top three motivations behind M&A deals in 2012 will be revenue growth, enhanced market share, and the acquisition of new technology and intellectual property. In other words, a significant majority of CFOs believe that M&A transactions will mostly be offensive in nature. A company waging an offensive strategy isn’t necessarily engaged in hostile takeovers; rather, it means the focus is more on growth than cost-cutting. Therefore, companies are looking for acquisition targets that will fill in holes in product or technology portfolios, and are not necessarily angling to take a competitor’s product out of the market.

Financial Rigor

Understanding the motivations of other parties in a deal can put you in a more powerful position, either as an acquirer or a target. Equally important is meeting the due diligence requirements of an acquirer in an efficient and confident manner. By ensuring that reliable and accurate financial and operational information is available, companies can avoid roadblocks to the M&A process—roadblocks that can significantly erode shareholder value, if not derail the entire process.  For example, although the survey indicates a positive outlook for the industry this year, respondents foresee overall revenue increases of just 2.6 percent – significantly lower than the forecasted growth in last year’s survey (10.4 percent).  If you are experiencing a lower revenue forecast this year, be prepared to address how you intend to get your company back on track.

Beyond M&A Transactions

Even if M&As are not currently a part of your growth strategy, accessing capital remains a top of mind issue for technology companies. The good news is that—according to our survey—over three-quarters (76 percent) of respondents say they feel better about the ability to access capital in 2012. The hurdles to arranging debt financing remain high, but businesses with strong fundamentals and fiscal discipline are once again able to obtain credit. In fact, the majority of respondents who plan to raise additional capital this year intend to use debt financing. The key to making debt work for your company is to manage the process proactively, and avoid being forced into reactive mode.

Whether your business is planning to undertake a strategic transaction or simply needs to access capital through financing, careful planning is critical. A blend of fiscal responsibility, corporate discipline and the willingness to take measured risk are the keys to powering growth.

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Cambridge, MA-based Radius Health, which is on a quest to enter the multibillion-dollar market for osteoporosis treatments, said today it has filed to go public. The company hopes to raise $86 million in the proposed offering. The IPO will be underwritten by UBS Investment Bank and Leerink Swann, and co-managed by Cowen and Company and Rodman & Renshaw.

Radius’s lead compound, BA058, is a new type of “anabolic,” or bone-building, drug. In early trials, patients have re-grown bone with little risk of developing hypercalcemia, a dangerous overload of calcium that can result from current treatments. If the drug proves effective in pivotal trials, which the company is running now, it could become a major contender in a very large market. A recent study by Global Industry Analysts of San Jose estimated that the annual market for osteoporosis treatments will reach $8.8 billion by 2015.

The current iteration of Radius’s drug is an injection, but the company is working on a more convenient dosing option—a patch it’s developing in a collaboration with 3M (NYSE: MMM). Using 3M’s “microneedle” technology, Radius developed a patch containing 360 tiny needles that deliver a full dose in about 15 minutes.

Radius last made news in May, when it raised a staggering $91 million and merged with an unlisted shell company in preparation for an IPO. The company’s investors include MPM Capital, BB Biotech Ventures, MPM Bio IV NVS Strategic Fund, the Wellcome Trust, HealthCare Ventures, Scottish Widows Investment Partnership, BB Biotech, Brookside Capital, Saints Capital, Nordic Bioscience, and Ipsen Pharma.

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“It is the ‘silver’ age of VC/entrepreneurship. It would be the ‘golden’ age if we could fix the liquidity issues.”

Those are the words of Michael Greeley, general partner of Flybridge Capital Partners in Boston and treasurer of the National Venture Capital Association, referring to the very tight IPO market that is limiting capital-raising options for emerging growth companies. It is also an issue Greeley intends to explore this Wednesday afternoon, at Xconomy’s conference: New York’s Venture Emergence.

That’s because Greeley will be the moderator of a keynote chat with Barry Silbert, CEO and founder of SecondMarket, the hot New York broker-dealer that is doing its share to fix the aforementioned liquidity issue, in large part by creating ways to trade shares of privately held companies.

The chat between Silbert and Greeley is just one part of a fantastic afternoon of discussion and stories from some of New York’s—and the country’s—leading venture capitalists and entrepreneurs, including Union Square Ventures’ Fred Wilson, the Gilt Groupe founding team, 1stdibs CEO David Rosenblatt, RRE Ventures’ Eric Wiesen, Internet advertising pioneer Dave Morgan (now CEO of startup Simulmedia), Todd Dagres of Spark Capital in Boston—and a whole lot more.

If you don’t have your tickets already, get them fast—time is running out, and space is limited.

Greeley says he is really looking forward to his chat. Some questions he intends to ask Silbert include:

—What is the future of stock exchanges, and how companies raise capital and generate shareholder liquidity?

—What does Second Market look like in five years?

—What are the greatest risks to the business going forward?

—What regulatory issues do companies like Second Market face, and what should the government do?

And last but not least, says Greeley (who remember is from Boston): Who will win the Super Bowl? (I personally feel it will be the Patriots’ revenge).

There will also be time for you to ask Silbert a few questions of your own. We look forward to seeing you on Wednesday afternoon. Register here.

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It’s that outlook time of year, and Mark Heesen, president of the National Venture Capital Association (NVCA), was in San Diego earlier this week, talking about the 2012 outlook for venture capital. Today he’ll make a similar presentation to the New Jersey Technology Council. Next week,  John Taylor, the NVCA’s director of research is set to talk in Florida about the 2012 outlook.

Heesen began his presentation in San Diego by saying, “Be prepared for a roller coaster ride here, because that’s where we’ve been for the past year—and that’s where we’re going.”

In a conversation with Xconomy yesterday, Heesen talked about some of the broader trends he’s charting throughout the United States. Here are some of the takeaways from our talk, and from Heesen’s presentation in San Diego:

—The VC industry continues to contract. Venture capital investments in U.S. startups peaked in 2000, when VCs sank $99 billion into emerging companies of all kinds. There were 1,022 venture capital firms at that time, and they were collectively managing $220 billion worth of invested capital. In 2010, VCs invested more than $20 billion into startups of all kinds. The number of VCs had plunged by almost 55 percent—to 462 VC firms with $177 million under management.

—VCs are raising more capital from their limited partners, but it isn’t enough to sustain current investment levels. In 2011, U.S. venture firms raised a total of $18 billion. That was up significantly from the $14 billion that VCs raised in 2010—but it falls $10 billion short of covering the $28 billion that VC firms invested in 2011. As a result, Heesen says he expects venture investments in U.S. technology and life sciences companies to decline in 2012.

—A handful of VC firms accounted for … Next Page »

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[Editor's Note: We asked selected Xconomists a series of questions designed to zero in on the big issues of the year, including "What would you be willing to throw a punch over?"]

What would I be willing to throw a punch over? Solving the small-cap IPO bottleneck … to unleash the job creating potential of emerging growth companies.

For more than 25 years, America’s entrepreneurs have benefited from a capital system that has uniquely supported their independence and innovation. Once they had developed their products using private capital, emerging growth companies could capture markets or invent wholly new ones by accessing public capital to continue their growth and compete successfully across the globe. High-growth companies that go public create more jobs, generate more revenues in the U.S., and grow at a faster pace than their public peers.

But because the hurdles and costs of going public are higher today than ever, more and more companies delay or cancel their plans to go public. In fact, most turn to being acquired—a job killer in the short run as redundant positions are eliminated. If you look at the number of venture-backed company IPOs as a proxy for all small, high growth companies, there was a 75 percent decrease in IPOs between the last two decades. The result is a dangerously threatened ecosystem that is delivering fewer jobs, creating less wealth, and delivering lower tax revenue. Like any healthy ecosystem, the American economy needs new companies and competitors to continue a prosperous cycle of growth and replenishment.

So how are we starving this engine of growth that has served the U.S. economy for decades?

Over the last 15 years, market regulations intended for large public companies have disproportionately impacted emerging growth companies—those very same companies that deliver the job growth our economy so desperately needs. For example, accounting scandals from massive public companies like Enron, Tyco and WorldCom forced legislators and regulators to respond with an understandable “never again” approach. However, the accounting and reporting compliance designed for the complex accounting structures of large conglomerates like these are not scaled to fit newly public companies.

But it’s not just recent legislation that has impacted the growing companies of the innovation economy. Truth is, the bulk of financial market regulation that guides public companies today was created before the computer had been commercialized or the polio vaccine invented. These rules and requirements should simply be … Next Page »

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2011 was a year of bigger deals and fewer exits for venture-backed companies, according to data being released today by Dow Jones VentureSource.

VentureSource says that venture-backed companies netted $53.2 billion through a total of 522 deals of all kinds in 2011—mergers, buyouts, and IPOs. That was a 14 percent decline in the number of deals, and a 26 percent increase in capital raised when compared to 2010.

The median price paid for a venture-backed company was $71 million in 2011, a 77 percent gain over the median price of venture-backed M&A and buyout deals in 2010. VentureSource says companies raised a median of $17 million in venture financing to reach an M&A or buyout deal, which was a 12 percent slide from 2010.

The financial information service says 45 venture-backed companies raised $5.4 billion through initial public offerings in 2011. That’s significantly more capital than the $3.3 billion that 46 venture-backed companies raised in 2010. But the difference is due mostly to two IPOs in 2011, Groupon and Zynga, which together raised $1.7 billion.

“The IPO market saw some gains through the first half of the year, but the momentum was not strong enough to survive the volatility in August,” says Zoran Basich, editor of Dow Jones VentureWire, in a statement released today. “During 2012 we’ll get a sense of whether the last two years of flat IPO activity is the new normal for the industry or if there’s room to grow.”

During the fourth quarter of 2011, 10 IPOs raised $2.4 billion. Currently, 60 U.S. venture-backed companies are in IPO registration. Thirteen of those companies filed during the fourth quarter.

Connecticut-based Renaissance Capital, which tracks all IPOs, says 24 Internet companies went public in 2011—the highest number in a decade.

Renaissance Capital also counted 260 IPO filings in 2011, just one less than the 259 IPO registrations filed in 2010. But Renaissance also notes that 67 companies withdrew their IPOs in 2011, which is the second-highest number of withdrawals since 2003. The peak occurred in 2008, when 103 companies withdrew their IPOs.

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New Haven, CT-based Rib-X Pharmaceuticals announced today that it has filed a registration statement with the SEC for an initial public offering. The company, which is developing antibiotics, has yet to determine the number of shares it will offer or the price range. Deutsche Bank Securities will manage the offering, with assistance from William Blair & Company, Lazard Capital Markets, and Needham & Company.

Rib-X developed a drug-discovery platform based around an atomic, three-dimensional picture of the interactions between drug candidates and the bacteria they are targeting. The company has two antibiotics in clinical trials, one to treat skin infections and the other to treat drug-resistant infections. It has also partnered with French drug giant Sanofi to develop a new class of antibiotics—a deal that could be worth as much as $772 million to Rib-X.

Since its inception in October 2000, Rib-X has raised a total of $208.4 million in private funding. Its investors include Warburg Pincus, MedImmune Ventures, and Oxford Bioscience Partners.

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The biggest story of the past week on the Seattle tech innovation beat was surely the Demo Day for TechStars Seattle, the second-ever class of entrepreneurs to graduate from the bootcamp program in the Emerald City. Hundreds packed the venue to see the pitches, and were treated to some really solid and exciting pitches from hot new proto-companies.

I put together the most comprehensive rundown anywhere of the action, with snapshots of each company and their presentation, along with comments from TechStars CEO and founder David Cohen. And we followed up with a recap from Cohen and Seattle TechStars director Andy Sack, with some thoughts on the big trends we’re seeing in these startups, the incubator movement, and the Seattle startup scene.

Elsewhere around town, it was a pretty busy week:

—RealNetworks hired a new CEO: Thomas Nielsen, a former Adobe executive who most recently was in charge of Photoshop and other imaging software products. RealNetworks founder Rob Glaser told me that he was excited to bring on a really strong product executive in Nielsen, who also has worked at Microsoft earlier in his career. Nielsen’s first official day on the job is today.

—Zillow reported its third-quarter earnings, the online real-estate listing company’s second report since going public this summer. Zillow showed revenue growth, but lost money for the quarter on a new headquarters move. Zillow also reported that it had acquired Diverse Solutions, a real-estate marketing company.

—Money-losing wireless broadband provider Clearwire also reported its financials, which were largely a replay of some selected results the company had pre-released a little earlier to stop a stock slide. Clearwire is still burning through cash, but not quite as fast, and says it’s added some subscribers.

—Speaking of market doldrums, the turmoil on Wall Street is weighing on some Washington state tech companies that want to go public. In particular, we’re talking about traffic-data provider Inrix and semiconductor laser manufacturer nLight Photonics. Both have IPOs in the cards, but the current markets aren’t making that a smart move right now, so they’re waiting it out. A question mark is RFID maker Impinj, which filed its registration paperwork but hasn’t updated the file since July.

—Facebook is feeling pretty bullish on hiring prospects in the Seattle market—enough so that it’s upgrading its Seattle engineering office to a new space with roughly twice the room. Facebook Seattle, the company’s most significant engineering office outside its Palo Alto, CA headquarters, is now up to about 60 people.

—Thousands of people attended the first-ever Seattle Interactive Conference, which featured lots of great talks like this update on social in search from Bing chief Stefan Weitz. He says it’s clear from the data that, when seeking opinions or answers to questions, people crave other people in search. And Bing’s close connection with Facebook is something it’s still touting as an answer to that need.

—It’s the debate that never goes away for entrepreneurs: Finish school, or take the plunge and start your company? The folks at Gist (now part of Research in Motion) put together this handy infographic detailing some of the stats behind that age-old question.

—We had a Twitter chat with Kabir Shahani from Appature, the Seattle-based medical industry digital marketing startup, about the opportunity his company is tackling as it tries to help bring an old-school industry into the 21st centuray. Kabir’s going to represent Seattle—quite ably, I’m sure—at Xconomy’s 6×6 event Dec. 1, where we get people together to talk about six big ideas from the six cities we cover.

—And finally, we checked in with Seattle’s Hark, an online sound-clip library that had a pretty impressive milestone to report: People have listened to sound clips on its site 1 billion times since late 2008. That’s a load of movie quotes, speeches, and other assorted noises—but it adds up to real money. As CEO David Aronchick told us, Hark’s now a profitable business, and doesn’t see any need to raise money on the horizon.

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Groupon raked in so much cash through its initial public offering last week that it could buy the entire class of life sciences companies that have gone public in 2011.

For those of you who aren’t following the Groupon melodrama, the Chicago-based online daily deals site raised $700 million last week in its IPO after overcoming serious questions about its accounting practices. Groupon shrugged that off and saw its stock (NASDAQ: GRPN) boom 31 percent on the first day of trading. TV news commentators cheered, just like when social networking site LinkedIn (NYSE: LKND) went public in May.

The biotech IPO market, by comparison, has been about as exciting as the average Seattle Mariners game was this year.

Not everybody thought it would be this dull. Heading into 2011, market prognosticator Steve Burrill predicted there would be at least 25 biotech IPOs this year in the U.S. The final tally will be nowhere close to that. Renaissance Capital of Greenwich, CT, says there have been 13 healthcare IPOs this year, compared with 37 from the tech industry. Even by reaching for the loosest definition possible of the “life sciences” industry, there have been 16 life sciences IPOs so far this year, as tallied in August by The Burrill Report. But if you get rid of specialty chemical/biofuel companies, and you whittle out a Tibetan medicine company and a health IT player, that brings the group down to 10 true life sciences IPOs by my count. Six are drug developers, leaving a couple of medical device companies, a diagnostics company, and an instrument maker.

Here’s a quick rundown of the life sciences IPO class of 2011 that I put together. Three have gained value this year, two are basically treading water, and five have declined. The grand total of IPO money that went to these 10 companies is a paltry $640 million—less than a single online daily deals site raised last week. Just as worrisome, I’m almost certain that when scientific eyes look at this list, they glaze over with boredom.

It’s a sad state of affairs today that some daily deals website, which produces nothing of lasting value and will probably end up the poster child of another tech bubble gone bad, can generate so much attention and actual money.

Don’t get me wrong, I don’t think investors should just start taking fliers on unproven biotech companies. The vast majority of people who try that would surely get burned, like I’m guessing most people will get burned by Groupon.

This dynamic isn’t going to change anytime soon. The biotech VC world is in crisis, pharma companies are cutting their R&D capabilities, and the federal government is contemplating budget cuts that would put a dent in basic academic research. Hardly anybody, other than a few focused philanthropies, seems to be stepping up to invest in the risky, messy business of biomedical discovery that keeps the whole industry moving forward. Certainly IPO investors have made clear the past few years they want no part of that kind of risk.

Ironically, this same abundance of caution is coming during the same year of some major biotech home runs. There has been a string of outstanding innovation this year in life sciences from … Next Page »

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There was a time when most growing companies went to the public stock markets for the capital they needed to keep hiring and growing—but that time ended a decade ago. At no point since 2001 has the number of initial public offerings per year reached even the minimum levels set in the 1990s. (The pre-1999 average was 547 IPOs per year; post-1999, 192 per year.) In fact, some analysts peg the number of jobs lost or not created due to the IPO decline at 22 million—which, perhaps not coincidentally, is roughly the same number of people who are unemployed or stuck in part-time jobs today.

Back in 2008—when, for the first time in three decades, an entire quarter went by without a single IPO—the National Venture Capital Association issued a report calling the IPO decline a “crisis for the start-up community.” The darkest days of the 2008-2009 economic crisis are now behind us, but IPOs haven’t bounced back even to their tepid pre-2008 levels.

So the venture industry has gone back to work. An independent group of venture capitalists, CEOs, lawyers, academics, and investment bankers calling itself the IPO Task Force issued a report today (PDF) that blames the IPO crisis on a series of regulatory changes in Washington, D.C., and calls on lawmakers and regulators to ease the rules that make an IPO such a risky, expensive hassle for young companies.

The IPO Task Force, which is chaired by Scale Venture Partners founder Kate Mitchell (an Xconomist), said it doesn’t want to overturn regulations designed to protect investors, such as the Sarbanes-Oxley rules put in place in 2002 to govern corporate financial reporting and prevent future Enron-like accounting scandals. But it said that that its recommendations would “adjust the scale of current regulations without changing their spirit.” Taking these “reasonable and measured steps,” the task force argues, would “reconnect emerging companies with public capital and re-energize U.S. job creation and economic growth.”

For the venture industry, of course, the unspoken benefit of a new wave of public offerings would be to boost fund returns and unfreeze the enormous amounts of private capital currently locked up in pre-IPO companies.

The task force was formed this spring after the U.S. Treasury Department convened an “Access to Capital Conference” to gather recommendations on how to get more small companies through the IPO process. The group’s four recommendations—which are addressed mainly to the Treasury Department, the SEC, Congress, and the White House—are fairly technical, and it’s hard to boil them down. But here’s a quick overview. (The IPO Task Force summary slides and the full report are embedded below.)

1. Give “emerging growth companies”—those with revenue of less than $1 billion at the time of an IPO—five years to gradually meet the SEC financial reporting requirements imposed on public companies by Sarbanes-Oxley rules and other regulations. Compliance costs amounting to $2.5 million to $4 million per year are a big deterrent to going public for … Next Page »

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Venture capital firms invested $6.95 billion in 876 deals throughout the United States during the three months that ended Sept. 30, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.

The numbers marked a slowdown from the preceding quarter, when venture capitalists put $7.9 billion in 1,015 deals.

But look at what’s happened since June: Fresh worries about Europe’s debt crisis, U.S. market volatility, and waning economic confidence all followed a protracted political stalemate over raising the federal debt ceiling and adopting a new federal budget. Are we better off than we were six months ago?

Still, VC activity during the third quarter was significantly better than a year ago. The MoneyTree Report, based on data from Thomson Reuters, shows that the $6.95 billion VCs invested during the third quarter of 2011 was nearly a third more (31 percent) than the $5.3 billion invested during the same quarter last year. The 876 deals also was higher, albeit only slightly, than the 850 deals counted during the third quarter of 2010.

The slowdown charted in the MoneyTree Report contrasts with the VC report released last week by CB Insights, which shows continuing momentum, with VC activity strengthening this year from $7.5 billion invested in 738 deals during the first quarter through the $7.9 billion invested in 790 deals during the third quarter.

The MoneyTree Report also highlighted a fairly dramatic shift in VC activity, with funding flooding into the software and Internet sector and pulling back in the life sciences and cleantech sectors.

Venture investments in 263 software and IT-related deals totaled $2 billion during the third quarter—the biggest slug of money to go into IT since the fourth quarter of 2001, according to the MoneyTree Report.

Meanwhile, venture funding for biotech startups fell. The $1.1 billion invested in 96 biotech deals nationwide during the third quarter represented an 18 percent drop in dollars and a 20 percent decline in deals from the preceding quarter, according to Tracy Lefteroff, a global managing partner of PricewaterhouseCoopers’ U.S. venture capital practice. Funding for medical devices and equipment showed a similar decline. The $728 million that was invested in 74 deals during the quarter marked an 18 percent decline in capital and a 21 percent fall in deals compared with the preceding quarter.

“For life sciences investors, 2011 started with quite a bit of optimism, with six IPOs in Q1 and a nice bump in Q2 investment,” said Nina Kjellson, a general partner in the Menlo Park, CA office of InterWest Partners. “But we’re now returning to … Next Page »

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Time for our periodic data-driven roundup of company news from the San Francisco and Silicon Valley tech world.

$1.05 billion—The size of Khosla Ventures IV, the new investment fund closed last week by Khosla Ventures, the Menlo Park, CA-based investing firm founded by Sun Microsystems co-founder Vinod Khosla. As with its first three funds, the firm plans to concentrate on cleantech, IT, mobile, and Internet investments.

$440 million—The size of a new venture fund raised by Sofinnova Ventures, as Luke Timmerman explained this morning. It’s the eighth fund for the Menlo Park, CA-based firm, which invests exclusively in companies developing new drugs.

$69 million—The hoped-for yield in an upcoming IPO for Chemocentryx. Xconomy profiled Chemocentryx, a Mountain View, CA-based startup developing a treatment for Crohn’s disease, last November.

$50 million—New funding raised by Sunnyvale, CA-based Sunpreme for a solar panel factory in Jiaxing, China, according to an announcement today. The capital comes from the World Bank Group through its private sector investment arm International Finance Corporation, as well as existing investors Capricorn Investment Group and Tsing Capital.

$7 million—A Series D investment for Grockit, the San Francisco-based provider of online test preparation programs. The funds came from new investors NewSchools Venture Fund and GSV Capital Corp. as well as previous backers Atlas Venture, Benchmark Capital, and Integral Capital Partners.

$538,114—The portion of a planned $1.076 million funding round collected so far by San Francisco-based Ditto.me, according to a regulatory filing. The startup, which was founded by Jaiku co-creator Jyri Engestrome and is backed by True Ventures, makes a social recommendation app for the Apple iPhone.

30 megawatts—The combined output of two solar power plants to be built by San Francisco-based Q-Cells North America in California’s Central Valley, under an agreement announced this week with Pacific Gas & Electric.

22.6 percent—The rise in the stock price for Ubiquiti Networks (NASDAQ: UBNT) since its initial public offering on Friday at $15.00 per share. The company makes base stations and other equipment for commercial-scale Wi-Fi networks.

5—The number of employees at San Francisco-based social media marketing startup Flowtown, which has been acquired by marketing automation provider DemandForce. Xconomy profiled Flowtown in November 2010. The company originally helped marketers convert e-mail lists into networks of social contacts on Facebook and Twitter, but had to change business models after Facebook moved to prohibit brokering of user information; the company’s new product was a Twitter scheduling tool called Timely. Flowtown was backed by Lotus founder Mitch Kapor, Mint.com investor Mark Goines, 500Startups founder Dave McClure, Baseline Ventures partner Steve Anderson, and Red Swoosh founder Travis Kalanick.

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Time for our data-driven roundup of business and technology news and deals in the San Francisco Bay Area. From biggest to smallest:

$6.3 billion—the aggregate value of the 101 merger-and-acquisition deals involving venture-backed companies in the third quarter of 2011—an 8 percent increase over the second quarter, according to data released today by Thomson Reuters and the National Venture Capital Association (PDF). That good news was balanced out by some bad: only 41 venture-backed companies have managed to go public in 2011, only five of them in the third quarter.

$300 to $350 million—The reported amount that Intel, the Santa Clara, CA-based chipmaker, is paying to acquire Telmap, an Israeli maker of navigation software. Intel said in a blog post that Telmap’s local search and mapping services “helps bring to life our vision for integrated, uniform experiences across consumer devices.”

107 million—The number of iPhones Apple will sell worldwide in 2012, according to a prediction from Janney Capital Markets analyst Bill Choi. That would be a 27 percent jump over predicted 2011 sales of 84 million units.

$30 million—The reported size of the latest funding round for Mountain View, CA-based Coupons.com, announced today. Greylock Partners contributed the funds, joining a group of institutional investors who put $200 million into the digital coupons company in June.

$15.5 million—A new funding round announced today for Axcient, the Mountain View-CA-based provider of backup and disaster recovery services. Scale Venture Partners led the round, with existing investors Allegis Capital, Peninsula Ventures, and Thomvest Ventures joining in.

$4.9 million—A Series A venture round for Mobeam, a Cupertino, CA, startup with software that uses the LEDs illuminating most mobile handset displays to communicate data directly to the laser barcode scanners in supermarkets and other retail locations. According to today’s announcement of the round, Yet2Ventures, Samsung Ventures, Mitsui, and unnamed independent investors provided the funds.

$4.4 million—A Series C funding round announced today for Enkata, the Redwood City, CA-based customer experience analytics startup. New investor IT Farm Corporation participated in the round, which was joined by existing investors Apex, ComVentures, Sigma Partners, and Enkata CEO David Stamm.

More than 250,000—The number of websites that use fonts from Typekit, the San Francisco-based cloud typography startup acquired today by Adobe. The startup had raised just over $2 million from True Ventures, Freestyle Capital, and individual investors Ron Conway, Caterina Fake, Matt Mullenweg, Chris Sacca, and Evan Williams. The financial terms of the acquisition were not disclosed.

20,000—The number of core Twitter users who generate 50 percent of all tweets, according to a Yahoo study cited in this week’s New York magazine cover story on Twitter.

300 percent—The increase in sales at London- and San Francisco-based Huddle in the company’s latest fiscal quarter, according to a release. The company makes business collaboration software platform that competes with Microsoft’s Sharepoint server. Huddle also announced that it has stolen a key international executive away from Salesforce.com: Simon O’Kane, former managing director of Salesforce.com’s UK and Ireland operations, has joined Huddle as its vice president of enterprise.

$100 per month—The starting price of Pantheon‘s new cloud-based platform for building and hosting enterprise websites based on the Drupal content management system. The San Francisco company introduced its service on Friday.

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An overriding story of the past several years has undoubtedly been the global economic volatility. Conditions in the stock markets have been unpredictable and therefore many venture capital firms have felt the need to reserve more capital for existing investments, postpone new investments and, in some cases, postpone raising new funds. While a number of firms adapted to the challenges by supporting many of their companies with additional investment rounds, the challenge to raise new funds, even smaller funds, still appears to be present.

According to a recent global study Deloitte LLP did with the National Venture Capital Association about the state of the global initial public offering market, VCs appear to be very concerned about the lackluster IPO market and the potential for IPOs in the future. Many VCs believe that without the higher returns generated by IPOs, the exit opportunities offered by M&A alone are not compelling enough to draw limited partner interest over the long term.

Other trends that stood out from this survey include:

• VCs feel the pinch from low IPO activity: More than 80 percent of venture capitalists surveyed felt the current IPO level of activity was too low to support a healthy VC industry. Many believe the higher returns generated by IPOs are important to providing superior returns to LPs and growth capital necessary to developing portfolio companies.

• U.S. exchanges are viewed as most promising for venture-backed IPOs: 87 percent of global respondents selected the NASDAQ as one of the three most promising stock exchanges for venture-backed IPOs. The New York Stock Exchange was the next most promising with 39 percent.

• Lack of key drivers a cause of light activity: 83 percent of all respondents indicated there needed to be a stronger investor appetite for equity in public companies in order to create … Next Page »

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For a while, I was optimistic that 2011 would be a good year for venture capital-backed IPOs, and it wasn’t just wishful thinking. There were 72 VC-backed IPOs last year—six times as many as in 2009. The year ended with a bang and 2011 got off to a good start. In the first half of 2011, there were 36 IPOs, right on target for at least a replay of 2010.

Lately, however, I have parked my optimism at the side of the road.

Our high jobless rate has not budged, housing remains in the tank, and the sovereign debt crisis in Europe now threatens the United States. In addition, the U.S. government’s debt load grows more out of control every day. And, of course, we have stalemate over fiscal policy in Washington.

Predictably, all this makes the stock market very volatile, and that isn’t a good backdrop for IPOs. When the market goes up 200 points one day and down 200 points the next, very few investors are interested in IPOs. You need market stability and a better economic backdrop. Marque companies like Zynga, Facebook, and perhaps Groupon can probably go public in this environment (Groupon postponed plans for an IPO in September), but most companies will be on the sidelines until deep into 2012.

Many of them are good, solid middle market companies that are growing briskly and making money, but aren’t big enough, in the current climate, to interest Wall Street investment bankers. This could eventually change, but not in this market.

Fortunately, the picture isn’t completely bleak, because there are alternatives in the private market, both short-term and long-term. One is the advent and growth of markets for trading illiquid assets online, such as SharesPost and SecondMarket, which have created a marketplace for trading shares of private companies. Trading on the secondary markets allows company founders and key managers to liquidate some of their stock and tie themselves over financially until their real payday comes along.

Longer-term, more private equity buyers may enter the fold to help middle-market companies monetize themselves. The incentive is there; unlike the IPO market, a record amount of cash was generated from exits in the private equity sector in the second quarter, inspiring confidence in the asset class. According to Preqin, an alternative asset research firm, private equity general partners generated $120 billion from 300 exits in the second quarter.

Seasoned technology private equity firms such as TA Associates and Summit Partners are already a part of this picture as so-called growth capital investors, and they focus heavily on middle-market companies—companies with revenues of $50 million to $1billion that are typically profitable. In aggregate, these middle-market companies generate more than $6 trillion in annual revenue, or 40 percent of the national GDP, and employ 25 million people.

TA Associates, Summit Partners, and other companies like them usually make a minority investment in such companies when they are seeking help to finance a transformational event in their lifecycle, such as a substantial international expansion. In addition to their capital, these firms provide strategic guidance and a significant network of contacts. Unlike venture firms, they often use debt rather than equity in their financings.

Corporate recipients of growth capital don’t necessarily want money for international expansion. They may want money to diversify their product line, for example, or to expand into a related but new field. But in a global economy, particularly at a time when the U.S. is growing much more slowly than it once did, accelerated international expansion is often the highest priority. International business surveys show that well over half of executives of midsize American businesses plan to increase their overseas sales targets.

Many growth capital companies eventually go public, but with a substantial lag. Some middle market companies may seek more aggressive avenues for growth—they can be acquired, operated and re-tooled to become more successful , for example. This is traditional work for a private equity firm in select industries. Such scenarios, however, are far less likely in the case of technology companies.

It would be easier and probably better if seasoned and strong technology companies could go public today. But if they cannot, it’s nice to know that there may be options besides acquisitions.

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The big news for San Diego life sciences companies over the past week fell into two categories, raising money and winning regulatory approval. Either way, it’s all good news.

—Genomatica, which genetically engineers microorganisms to produce industrial chemicals from renewable raw materials, has applied to raise $100 million through an IPO. The proceeds would be used for research and development, capital projects and other purposes. Genomatica plans to produce commercial quantities of butanediol, used to make spandex and resilient plastics, by the end of 2012. The company also disclosed plans to make butadiene, one of the seven basic chemicals at the core of the chemical industry, and an important ingredient used to make products such as tires, engineering polymers and latex products.

—Tandem Diabetes Care has raised $12 million of a financing round that could eventually total nearly $13.7 million. Tandem Diabetes is waiting for the FDA to respond to its application to market its wearable insulin pump in the United States.

—Zogenix (NASDAQ: ZGNX) plans to raise roughly $50 million from a secondary offering of nearly 13.8 million new shares of its common stock. The company, which has developed a needle-free injection device, plans to use the proceeds as it seeks regulatory approval to sell its second therapeutic drug, an extended-release painkiller, and to begin clinical trials of its third drug for schizophrenia and bipolar disorder.

—Gen-Probe (NASDAQ: GPRO) said Canadian regulators approved a medical device license for a new molecular diagnostic device that tests whether a biopsy for prostate cancer is warranted. The company said it also won approval in Canada for another molecular diagnostic system that tests urine for the presence of chlamydia and gonorrhea.

—Apricus Biosciences (NASDAQ: APRI) said the FDA has cleared it to sell two reformulated over-the-counter drugs for topical treatments. The first was for Tolnaftate-D, a topical treatment for foot fungus that combines the tolnaftate used in existing products such as Tinactin and Lamisil with a proprietary compound that helps to increase absorption through the skin. The company also won FDA approval for Hydrocortisone-D, a reformulation of the over-the-counter anti-itch compound.

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[Updated at 4 pm Pacific] Real-estate website operator Zillow (NASDAQ: Z), which went public in late July, reached profitability in the second quarter on revenues of $15.8 million, more than double the sales of a year earlier. The Seattle company’s net income for the quarter was $1.6 million. A year earlier, it had lost $2 million.

As has been the case for the past few years, revenue growth was driven by ”marketplace” revenues, which include subscription fees for real estate agents and advertising sold to mortgage lenders, along with charges for lenders to participate in the company’s Mortgage Marketplace.

That revenue stream reached $9.7 million in the second quarter, up from $2.6 million a year earlier. Display advertising, meanwhile, still grew—but nowhere near as rapidly, reaching $6.1 million for the quarter, up from $4.7 million in the same period during 2010.

Zillow said average monthly unique visitors to its website nearly doubled for the quarter, to 20.8 million. All the publicity around the company’s IPO certainly helped drive eyeballs.

[Update] Here are some key takeaways from the conference call with analysts:

—Zillow is going to spend some money this year to beef up technology, ramp up sales, and grow the staff. The company cleared nearly $80 million from the July IPO after underwriting fees, and had $16.2 million in cash on its balance sheet and no debt at the end of the second quarter on June 30. Now at around 265 employees, Zillow is moving to a new headquarters this month and is hiring for about 40 positions.

—Zillow didn’t break out a net-income guidance figure for the third quarter and rest of this year, but gave an outlook for overall revenues and its adjusted EBITDA earnings. The company expects $16-$17 million in revenues in the third quarter, with non-GAAP earnings of around $8 million. For the year, Zillow is looking at revenues of between $59-$61 million, with non-GAAP earnings in the range of $8-$10 million. Both of those revenue figures would be around double the performance from a year earlier.

—Agents signed up for Zillow’s Premier Agent program are spending more on their accounts, helping overall revenue from that segment grow faster than the pace of new agents signing up. CEO Spencer Rascoff said that means overall “marketplace” revenues are a better measurement, cautioning analysts not to lean too heavily on the number of new agents as a performance indicator. The agent program is the biggest slice of those marketplace revenues, which also include sales from its relatively new mortgage-shopping site.

—There are about 13,400 agents signed up to the premier program, a fraction of the 1 million nationwide that Zillow estimates are active in the real estate business. Zillow also estimates that the nation’s real estate agents spend about $6 billion annually on marketing, leaving a huge source of revenue to attack. “We have less than a 1 percent share of their advertising budgets right now,” Rascoff said. “We think we’re dramatically under-penetrated, relative to our traffic and our importance in the industry.”

—There’s been some improvement in the sluggish housing market following the historic collapse of a few years ago, and it’s not ready to rebound just yet, according to Zillow’s data. While some markets, such as Washington, D.C. and Pittsburgh have improved, “Zillow’s data says that we haven’t bottomed yet, and we don’t think we’re going to bottom until 2012,” Rascoff said.

“We’re certainly closer to the end of the housing recession than the beginning, but we’re not through it yet. However … we’ve managed to grow quite nicely through this recession,” he said. “I think, actually, the housing downturn has accelerated the migration of advertising budgets for real estate advertisers from offline to online, and Zillow’s clearly been a beneficiary of that acceleration.”

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San Diego-based Genomatica, an industrial biotech that uses engineered microorganisms to produce high-value chemicals in fermentation tanks, has submitted plans for an initial public offering, according to a regulatory filing today. The underwriters include Morgan Stanley, J.P. Morgan Securities, and Jefferies & Company, and the company hopes to someday trade under the ticker symbol GENO.

All shares to be sold in the IPO will be offered by Genomatica. The company did not specify the number of shares to be offered, or the price range, but CEO Christophe Schilling indicated in June that Genomatica was looking to raise about $150 million.

The San Diego company, which was founded in 1998, has emerged in recent years as a pioneer in industrial biotechnology. Using a proprietary software technology to model metabolic processes, the company has successfully demonstrated its ability to create a blueprint for genetically engineering microorganisms such as E. coli bacteria to consume renewable resources (sugars) and produce butanediol, or BDO—and more recently—butadiene. Before now, such chemicals were produced by the petrochemical industry, using methane and other fossil fuels as the raw material in CO2-spewing processes.

BDO is used to make a resilient plastic material, which in turn is the raw material for making spandex clothing, running shoes, and dashboards, among other things. In its IPO filing, Genomatica says global demand for BDO in 2009 was 2.8 billion pounds, which equates to a market size of approximately $4 billion (based on prices in June 2011). The company estimates that the global market for butadiene, a basic chemical used in a variety of other everyday products such as tires, carpeting and latex products, is even bigger—about 20 billion pounds and $40 billion. The company says it has identified about 20 other intermediate chemical products for its future product pipeline.

Because of the industrial-scale production required, Genomatica has been forging partnerships with industry partners, such as Tate & Lyle in the United States and Novamont in Europe.

Genomatica was founded in 1998, and operated as a research and development group with specialized expertise in using its proprietary software technology to model metabolic processes. The company funded its operations mostly through collaborative research agreements, grants, and by licensing its software to other researchers. In 2007, the company seemed to re-invent itself—or at least to focus more directly on its current commercialization strategy.

The company says it has raised $84.2 million in total proceeds from the issuance of convertible preferred stock. It’s biggest existing shareholders include Fort Worth, TX-based TPG Biotechnology Partners, which holds 19.1 percent; Menlo Park, CA-based Mohr Davidow Ventures, 17.3 percent; San Bruno, CA-based VantagePoint Venture Partners, 12.6 percent; Palo Alto, CA-based Alloy Ventures, 10.4 percent; and Batios Holdings of the British Virgin Islands, 7.4 percent.

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Semiconductor laser manufacturer nLight Corp. is heading toward a possible public stock offering after completing a $17.5 million round of venture financing from existing investors.

In an interview with VentureWire, chief financial officer Dave Schaezler said nLight is ”at a size where it makes sense to plan for an IPO,” although the Vancouver, WA-based company doesn’t have specific dates in mind for an initial IPO filing. (The full VentureWire story is behind a paywall, but a the Wall Street Journal’s Venture Capital Dispatch has a summary.)

The latest venture round included participation from longtime investors Oak Investment Partners, Mohr Davidow Ventures, and Menlo Ventures, which nLight described in a release as having “a strong record of companies achieving initial public offerings.” nLight’s total equity funding stands at about $110 million.

The company, founded in 2000, makes lasers for a wide array of uses in medical, defense, and industrial scenarios. The company said it has continued to grow its profitability while adding more than 100 employees in the past year and booking more than $60 million in orders in the first six months of 2011.

The news is part of a long-term survivor’s tale for nLight. The company was started in Seattle, and initially focused on the telecommunications industry. That quickly changed when telecoms went through a huge downturn in 2001.

As we reported in this 2009 profile, nLight dropped from about 80 employees down to 20 and refocused on different sectors, an era that CEO Scott Keeney said the company “barely survived.” Looks like it’s paying off now.

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Global spending on information and communications technologies is fueling higher valuations for public software companies, according to a quarterly report released by the San Diego-based Software Equity Group. Much of that increased spending, however, reflects an intensifying demand for cloud computing and software as a service (SaaS), as big-company CIOs increasingly accept the notion of outsourcing many programs that were previously installed on corporate networks.

As a result, valuations of public SaaS companies have continued to climb, and more SaaS companies got acquired during the second quarter that ended in June.

For all sectors of the software industry, the Software Equity Group counted 397 buyouts and mergers with a cumulative value of more than $21.3 billion during the second quarter. That was down from a revised tally of 423 mergers and acquisitions during the previous quarter, although the latest quarter’s $21.3 billion worth of deals was almost twice the $11.1 billion total in the previous quarter.

However, that $21.3 billion was skewed by a single mega-deal—Microsoft’s May 10 acquisition of Skype for $8.5 billion. During the same quarter of 2010, the firm counted 378 mergers and acquisitions valued at a total of $17.2 billion.

The firm also counted nine software IPOs, which collectively raised more than $3 billion, at an average of $344 million. That was up sharply from the four software IPOs with an average valuation of $120 million during the previous quarter. The nine companies listed … Next Page »

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