A decade ago, scooters and mopeds made up the bulk of motorized transport in India. Today, motorcycles and cars of all makes are a common sight, from Harley Davidson and French carmaker Renault to Suzukis. India is undergoing important socio-economic shifts that are resulting in the segmentation of existing markets and the opening of previously nonexistent ones.

Even though India seems full of opportunities and market potential for almost any foreign product, it requires a lot of sensitivity and awareness because the complexities arising from its heterogeneity make it a challenge for companies looking to copy-paste business models from abroad. In addition to experiencing growth in the consumer market, India is also the stage for an emerging entrepreneurship sector.

Big retail is a prime example of how the diversification of India’s class structure is creating new market opportunities. As little as five years ago, the viability of giant retail stores operating in India would have been seriously questioned. In her book Winning in the Indian Market, published in 2006, India’s leading market strategist and consumer analyst, Rama Bijapurkar, explains that large discount retail outlets in Indian cities have failed for multiple reasons. The principal one being that supermarkets cannot cater to India’s lower income groups because they live day by day and do not have the discretionary income for volume purchases, even at a discounted price. The model adopted by manufacturers of fast moving consumer goods (FMCG) is small quantity at an even smaller price. An example of such would be hotel-like sachets of shampoo for two rupees (0.04 USD); these small packaged goods accounted for 40 percent of the sales of FMCG. Nonetheless, India’s rapid growth has given rise to a new socio-economic group that is filling the demand void, allowing hypermarkets to set up shop in India.

India’s middle class has grown tremendously over the years, due in part to substantial investment in education, and a booming job market fueled by foreign investment. India is outputting almost half a million engineers a year, amongst others skilled employees. Salaries are on the rise with 11.7 percent hikes in 2010 and a projected growth of 12.9 percent in 2012, according to consulting firm Aon Huwitt. Devinder Mahna, general marketing manager at Mechelonic Engineers, explained that it is no longer infrequent for engineers graduating from top schools to find jobs with salaries closely matching those they would find in the U.S. Even though this is not the norm and many will only earn between 400 and 700 dollars a month, it is still preferable for them to buy their groceries at a one stop-shop location rather than waste time purchasing their goods in the various specialty stores.

Even though many of these young wage earners shop at big retail outlets and drive a Chevrolet, it does not translate into a general infatuation with western goods, for the simple reason that Indian and western consumers have diverging tastes. Satya Bonala, head of Delhi-based market research firm Vox Populi, argues that many multinational companies have often made this mistake. India, having 20 officially recognized languages, with dozens more regional tongues, each with its own culture, is an extremely heterogeneous market requiring products tailored to each segment’s needs. Bonala went on to explain that The Coca Cola Company learned this lesson when it attempted to re-introduce its product in India after almost a 20-year absence, by … Next Page »

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When Ecomotors International set out to change the way car and truck engines are built, it set up shop in Livonia, MI, a suburb of Detroit, in hopes of eventually licensing its technology to the big U.S. automakers. It was a calculated risk. As radical as Ecomotors’ opposed-piston engine design may be, at least the company’s founder, Peter Hofbauer, has unquestionable auto-industry credentials—he’s the guy who helped Volkswagen build its first mass-production diesel engine.

Pinnacle Engines isn’t even bothering with Detroit. The San Carlos, CA, startup, which recently won the backing of the world’s largest venture capital firm, is also developing an opposed-piston engine, one that promises to marry the fuel efficiency of diesel technology with the lower cost structure of gasoline-burning engines. But Pinnacle’s founder, James Montague “Monty” Cleeves, is a veteran of the semiconductor industry; for him, designing engines and tinkering with cars was always an avocation, not a profession. He’s pretty convinced that Detroit will never listen to his ideas—so Pinnacle is looking farther east for its first commercialization opportunities. Much farther east. To India, in fact.

“This ought to be music to Detroit’s ears, but to them I’m just some whacko in California,” says Cleeves. “This is Silicon Valley, and what does Silicon Valley know about making engines? Folks in Asia have almost zero ‘not-invented-here’ issues, whereas it’s pretty prevalent all over the U.S.”

Pinnacle won its first funding in 2007 and has been testing prototype engines based on its patented “Cleeves Cycle” since the spring of 2009. This year, Pinnacle struck a joint development agreement with an Indian scooter manufacturer—it can’t yet reveal which one—that could see the technology move to the test track by next year and into commercial production by 2013.

But to buy a Pinnacle-powered scooter, you’ll have to go to Mumbai or Bangalore. With gas prices here stable at around $3.50 per gallon, “I don’t know what it’s going to take to get somebody in the U.S. excited” about fundamental improvements to the venerable internal combustion engine, Cleeves says. “But most of Asia is sensitive enough about fuel economy that they get it.” For many families in India, a two-wheeler is the main mode of transportation, and a scooter engine that consumes 25 to 50 percent less fuel, as Pinnacle promises, could be a big boon for the household budget.

Cleeves says his engine can also be scaled up for larger vehicles, and can easily be modified to run on diesel, ethanol, or even compressed natural gas, which means it could also turn up in light commercial vehicles or even cars in India or China. But the startup, which has raised $13.5 million from venture giant New Enterprise Associates (NEA) as well as Bessemer Venture Partners and Infield Capital, doesn’t see its engine as a cure for petroleum addiction. Instead, Cleeves describes it as a bridge technology, incrementally improving the efficiency and lowering the emissions of internal combustion engines as a warming world weans itself from carbon-spewing technologies.

“It’s going to take a long while for Detroit to adopt new technologies,” says Pinnacle CEO Ron Hoge, a veteran of diesel engine maker Cummins. “They may surprise us—it may happen faster than we think. But it’s not even important to us on a business level, because the opportunities we are uncovering in Asia are going to be massive and much more accelerated and have a bigger impact on world consumption of petroleum.”

The basic concept of an opposed-piston engine is so simple that it’s remarkable how long automakers have been ignoring it. In a traditional engine, each piston sits in its own cylinder, and combustion occurs inside the cylinder head, where intake and exhaust valves regulate the inflow of air and vaporized fuel and the outflow of exhaust. In an opposed-piston engine, there’s no cylinder head: two pistons move toward and away from one another inside the same cylinder, with … Next Page »

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Jobs are the single biggest political issue of the day in the U.S., and rightly so. As of August, the official unemployment rate in the United States stood at 9.1 percent. That was down one point from the October 2009 peak of 10.1 percent, but still higher than at any time since the 1930s, with the exception of the worst months of the 1982-83 recession. And today’s real unemployment rate, if you include discouraged workers who have stopped searching for jobs and people who have settled for part-time positions, is much higher, at around 16 percent. That translates into 25 million Americans who need work.

That’s a terrifying number, because no one knows how the country might create that many new jobs. Let’s say President Obama’s $447 billion jobs bill were enacted in its current form (an unlikely prospect, given the levels of partisan obstructionism in Congress). The most optimistic estimates from economists are that the new spending in the bill would add only 2 million jobs to the economy in 2012. That’s nothing to sneeze at, but it’s a tenth of what’s really needed.

On top of that, technology-driven productivity gains are allowing American corporations to rack up big profits despite their trimmed-down workforces. So even if consumer demand were to magically return to pre-recession levels, companies probably wouldn’t hire back all the people they’ve laid off since 2008.

Could there a technological cure for unemployment? Ever since the 2005 introduction of Amazon Mechanical Turk, a Web service that pays users small amounts for completing tasks such as transcribing short audio recordings or recognizing an object in a picture, tech pundits have been talking about the benefits of digital crowdsourcing. It’s been portrayed both as a way for companies to get work done cheaply and as a source of supplemental income for casual Internet users with a little time to kill. But with the joblessness picture looking so dire, observers are now starting to ask if crowdsourcing technology could play a more central role in economic recovery. Could Internet-mediated “microwork,” as this kind of employment is being called, give millions of people a way to earn meaningful amounts of income?

Mechanical Turk, by itself, certainly isn’t a panacea. As a service, it’s not terribly inviting or easy to use, and Amazon itself has never expressed much ambition to improve or expand it. And by definition, Mechanical Turk workers need a computer to complete tasks, which leaves out a big slice of the unemployed population.

Here in San Francisco, though, there are at least four organizations taking Amazon’s idea and tweaking it to make microwork more feasible for broader populations. One is Samasource, a non-profit that distributes computer-based tasks such as data verification and audio and text transcription to workers in Haiti, India, Kenya, Pakistan, South Africa, and Uganda. Another is Servio, which creates crowdsourced editorial content for clients using a platform called CloudCrowd. Then there’s CrowdFlower, a kind of meta-platform that helps big, Fortune 500 companies with data management tasks by farming out the work to Mechanical Turk, Samasource, and other crowdsourcing engines. Finally, there’s a new player called MobileWorks; it’s a Y Combinator-backed startup that offers digital work to underemployed people in India and Pakistan, but with an emphasis on tasks that don’t require a computer and can be completed using only an Internet-connected mobile phone.

Yesterday I called up MobileWorks co-founder and CEO Anand Kulkarni to find out how people are using his platform, and whether the technology might offer hope for unemployed people here in the United States. As you might expect, he’s bullish on … Next Page »

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Written on the whiteboard on the first day of my entrepreneurship class at Tufts was a sobering statistic: 80 percent of startups die in their first four years. There exist a variety of factors that can kill a business. Luckily, Boston is full of programs and organizations designed to help entrepreneurs navigate through the startup process. The National Collegiate Inventors and Innovators Alliance’s Sustainable Vision VentureLab, led by James Barlow, is a five-day intensive incubator program for companies doing business in emerging markets (it ran August 26-30). I initially thought that it would be an abbreviated version of a conventional business class curriculum, somewhat similar to what I had experienced in the five-day boot camp organized by MassChallenge: what are the best ways to structure a company, to manufacture, distribute, and market product X in market Y, and how to go about getting VC funding?

On the contrary, it is a back-to-basics introspective program that emphasizes the human element of a business, such as being able to communicate your value proposition in an effective and clear manner. This may sound elementary. The reality is that this is the foundation for any business. James compared it to humming a song in your head. When vocalized you can clearly hear the tune and the words, even though the person across from you may be shooting you a puzzled look. This is a problem many entrepreneurs unknowingly struggle with. Having become so familiar with the intricacies of their businesses, they have lost the ability to break it down into its simplest and most coherent forms. When hearing these entrepreneurs pitch, the listener finds himself unable to understand the core of their idea, akin to listening to a hummed song.

Oftentimes, the founders themselves are confused and are unknowingly in disagreement about what the value proposition of their businesses is. Even if they are aware of the value proposition, they are unable to translate it in a way that speaks to the wants and needs of their market. That is why the VentureLab program focuses so much on deconstructing the human element aspect of your business. This is often a tricky process because it requires you to examine your business in a manner in which you are unaccustomed to and uncomfortable doing. At Roof For Two, we looked at all the factors that could sink our company and discovered the need to connect with different influencers in our product market. It became an exercise in stitching together our business and value proposition in a manner that resonated with each one of these individual actors. For example, our company provides a motorcycle weather accessory for riders in India to shield themselves from the monsoon rains. It saves them time in their commute and increases the efficiency of businesses whose employees lose time when seeking shelter from the downpour. When we started looking beyond our end user and examined other people potentially impacted by our product, we began asking ourselves very different questions from the ones we had originally posed. We had initially asked: What do Indian motorcyclists look for in a product? How will our product affect their lifestyle?

However, during VentureLab we looked beyond the commuter towards businesses, institutions, and society. We asked ourselves very different questions: What businesses stay open during the heavy monsoon season? Would small businesses have incentives to subsidize our product for their commute sensitive employees? How do we best communicate our value proposition to both the commuters and the businesses that depend on them?

Besides the introspective portion, part of the learning process in programs such as VentureLab comes from the interaction between participants who can help one another, despite operating … Next Page »

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If you see a couple of guys riding around on a motorcycle with a weird contraption over their heads, don’t worry, it’s not the latest fraternity hazing ritual. You might have caught a glimpse of a local startup testing out what could be a very global product. Especially if it’s raining.

Boston-based Roof For Two is developing a collapsible, detachable roof that can be pulled over a motorcycle in a few seconds to protect the rider(s) from heavy rain. Yes, it’s kind of a quirky idea. But it just might work. The seven-person startup, which is a finalist in the MassChallenge incubator program, came out of Tufts University, where it won first place in the Tufts $100K business plan competition this spring.

The idea came from founder and CEO Karan Randhawa, a native of New Delhi, India, and a recent Tufts grad. He was working in New Delhi and noticed that his colleagues were coming in sopping wet during monsoon season. Many people there rely on motor bikes to commute, yet there isn’t much they can do to shield themselves from the incessant rain except to use a poncho, umbrella, or other improvised method (see photo above). So Roof For Two is targeting Indian consumers exclusively for now.

The company’s bike roof is designed to protect up to two riders from the top, sides, and back, says co-founder Max Pinto, who serves as chief marketing officer. Pinto says the material is “very lightweight,” and the system is designed to be safe for speeds of up to about 100 kilometers per hour (and maybe faster in the future).

Roof For Two has just filed a provisional patent on the technology. Until now, it has been pretty cagey about the details. The startup is in the process of finishing its third prototype and has been testing and tweaking various models—hence the bike rides around the Boston area. (The team bought a motorcycle that resembles the most popular bike in India to do its tests here.)

Pinto might not have the best last name to represent a transportation-related company (as those of us alive in the ‘70s will attest), but he makes up for it with his drive, enthusiasm, and general worldliness. He’s a native of France and has lived in the U.S. and Argentina. And he says the Tufts competition, entrepreneurship classes, and all-night work sessions helped the team learn how to craft its business plan and better understand the market it is going after.

The dynamics of the Indian market make it “drastically different from how you would market to Americans,” Pinto says. “They think differently,” he says, pointing out that the Indian middle class is broken up into many tiers, and each has a distinct mentality. (He didn’t get into specifics yet about how the company will sell its hardware to the different tiers, but I presume that as usual, it’s about understanding the problems of each customer and solving them in a reliable and affordable way.) About his current incubator experience, he says MassChallenge is “fantastic” and has opened a lot of doors for the startup.

By late August or early September, Roof For Two plans to build about 25 prototypes and ship them off to Delhi, where Randhawa is based, for consumer testing. If all goes well, the company will then look for a first round of outside investment to help it produce 100 to 200 prototypes for further testing.

For now, the startup has a simple goal, which is reflected in its tag line: “making monsoons manageable.”

By the way, it looks like rain is expected in Boston on Sunday and Monday. So keep your eyes peeled.

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A local tech startup that has been toiling away for four years saw its first partnership with a big company come to fruition last week—and it could be a sign of bigger things to come.

Back in February, Cambridge, MA-based OfficeDrop, a digital filing software company, inked a deal with Nuance Communications (NASDAQ: NUAN), the speech and imaging tech firm in Burlington, MA. OfficeDrop provided the software and expertise for Nuance’s new cloud-based scanning and document-managing service, called PaperPort Anywhere, which rolled out last week.

It’s a big deal for OfficeDrop, which stands to get about $1 million in revenue from Nuance in the first year of the partnership, says Prasad Thammineni, the co-founder and CEO of OfficeDrop. Nuance’s scale could help the startup reach millions of new users—so it’s a distribution model that Thammineni is looking to replicate with other big companies in the next year or so.

OfficeDrop lets people (primarily in small businesses) organize, index, and share their digital data, and look at their documents instead of a list of files, for example. “We take visual elements of paper and replicate it,” Thammineni says. “And we bring search to the table.”

The startup sits somewhere in the middle of a swirling ecosystem of companies, many with Boston roots, offering cloud-based services like data storage (EMC), online backup (Carbonite, Backupify), paper digitizing and document management (Iron Mountain), personal file management and search (Evernote), and file hosting and sharing (Microsoft SharePoint, Box.net, and Dropbox, the astronomically-valued startup du jour).

OfficeDrop (formerly called Pixily) started in 2007 as a service to help people scan in and digitally organize their paper documents. It has evolved to include collaborative features and mobile apps, so people can scan documents and access their files from their iPhone, iPad, or Android device. The company has 20 employees, split about equally between the Boston area and Brazil, where most of its software developers are.

Interestingly, although the three founders are Indian, OfficeDrop has no employees in India. Thammineni says that’s because most software developers in India have a big-company mentality that doesn’t mesh well with a startup. Brazil, on the other hand, has a lot of “out of the box” talent that fits with the OfficeDrop culture. “They challenge you at every turn,” he says.

Thammineni’s company, his fifth so far, was self-funded in its early days. It raised a small financing round in 2009, followed by a $1 million angel round this spring—and it will be looking to raise more money this fall, he says. But for now, OfficeDrop’s main focus is on “making the product better and better,” Thammineni says. And on squaring away its next big-company deal.

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Today Natick, MA-based Boston Scientific (NYSE: BSX) announced second-quarter sales of $1.975 billion and earnings excluding special items of $0.17 a share, which beat analyst expectations by nearly a dime. Sales of its neuromodulation devices were up 16 percent, and the company reported sales increases in many of its product lines. It also said the recent introduction of its new drug-eluting stent, Ion, has gone well. To cap it all off, Boston Scientific announced its intention to repurchase $1 billion of its common shares—a classic sign of optimism, and a common tactic companies use to boost their stock price.

But much of the focus on the earnings call with analysts was on news the company announced yesterday: It’s greatly expanding its presence in China. Boston Scientific said it would invest $150 million in China over the next five years, and it expects to expand its employee base there from 200 to 1,200 as it builds out a fully staffed manufacturing presence. The company also intends to invest in R&D, with the goal of developing innovative devices designed for the China healthcare system.

Boston Scientific’s outgoing CEO Ray Elliott said during the call that the China expansion would help bring the company’s products into a market that’s still largely untapped when it comes to less-invasive cardiac devices such as stents. What’s more, Elliott said, “Longer term, the products we develop in China may ultimately reach other markets.”

During the question-and-answer session with analysts, Morgan Stanley analyst David Lewis asked what the return on investment might be with the China program, and how the initiative differed from previous emerging-market strategies the company had initiated. “It’s additive,” responded Boston Scientific chief financial officer Jeffrey Capello. “We enjoy over 20 percent growth in India and China, and we see it as a situation in which we’re just getting started.” He noted that the buildout would take four to five years, but that investors could start seeing an upside from the initiative as early as next year.

In the shorter term, Boston Scientific expects to capitalize on a surprise announcement from stent rival Johnson & Johnson. On June 16, J&J (NYSE: JNJ) announced it would exit the stent business that it’s credited for creating, and it will stop marketing its flagship drug-coated Cypher stent by the end of the year in the face of declining sales. “It’s a rare opportunity, and frankly a rare gift,” Elliott said during today’s analyst call. Some analysts predict Boston Scientific will grab … Next Page »

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“I am not convinced that I would put my child in an incubator that is made of car parts.”

That’s Krista Donaldson speaking. She’s the CEO of Palo Alto, CA-based D-Rev, and the quote says a lot about the non-profit organization and its philosophy on designing healthcare equipment for the developing world.

You may have read about the incubator in question—it’s called NeoNurture, and is the creation of Cambridge, MA-based design studio Design That Matters. The device made a media splash and won design awards last year for its unique solution to the parts shortages that often render medical equipment inoperable in rural hospitals in developing countries. NeoNurture uses car headlights to keep neonatal infants warm, a dashboard fan for air circulation, and a motorcycle battery for backup power. The machine’s designers reasoned that since car parts and car-repair experts can be found almost anywhere, NeoNurture ought to be easier to maintain than a more specialized unit.

But to Donaldson’s way of thinking, the folks at Design that Matters forgot to ask a key question about their device: Could they imagine selling it to a U.S. hospital? “It’s a great example of a product that resonates with the techie community because it very cleverly solves a real need,” says Donaldson. At D-Rev, by contrast, “Our approach is that we are developing world-class products that meet quality standards here, but are designed to meet the needs of the environment there. With every project, we ask, ‘Is this something that could be used at Stanford Hospital? Is this something I would put my children in?’”

D-Rev isn’t building an infant incubator, but it is building a phototherapy device for treating severe jaundice, a condition that afflicts about an eighth of all newborns. And if there’s a simple premise behind that project and the others underway at the four-year-old organization, it’s that patients and healthcare providers in the developing world deserve access to the same high-quality technology available here—and that sometimes all it takes to make such technology affordable is a little Silicon Valley-style design and engineering thinking, matched with on-the-ground market know-how.

Indeed, if you visit D-Rev’s Emerson Street headquarters, just a couple of blocks away from world-famous design consultancy IDEO (where Donaldson once interned), it feels much like any other Palo Alto startup, with the requisite Macs, iPad, and overhead projector. The only sign that D-Rev is developing physical stuff, rather than software, is in the laboratory, where prototypes litter the floor and there’s a workbench complete with circuit boards and soldering irons. And the only sign that D-Rev is a non-profit is…well, there aren’t any.

D-Rev CEO Krista Donaldson shows a prototype for the Brilliance phototherapy device to doctors in India.

“One of the things that makes us a little out of the ordinary, and one of the things that makes us really successful, is that our methods are 95 percent business methods,” says John Dawson, chairman of the board at D-Rev (the name stands for Design Revolution). “It’s not like we are taking just a little bit of Silicon Valley and shoving it into a non-profit. Most of this organization operates like a startup.”

The main difference, Dawson told me when I visited him and Donaldson in Palo Alto in late April, is that D-Rev is aiming for social benefit, not big profits.

“Our currency is impact,” says Donaldson. “We collect minimal royalties on our products, we have licensing deals, but our measure is how successfully we treat children who wouldn’t otherwise receive treatment, and mobilize people who wouldn’t otherwise walk.” (That’s a reference to the JaipurKnee, D-Rev’s multi-axis prosthetic knee joint for amputees.) D-Rev depends on philanthropic grants to fund early product R&D that the market can’t support—the Bill and Melinda Gates Foundation is its largest supporter. But its product development methods are straight out of the for-profit world. And it doesn’t waste time on products that don’t have a market measuring in the millions of people, or for which it can’t find eager manufacturing and marketing partners.

Donaldson is a mechanical engineer who joined D-Rev in 2009 after working as a product designer with KickStart International (then ApproTec) in Kenya, a reconstruction advisor for the … Next Page »

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As a technology venture capitalist, I provide funds to help companies reach their next evolutionary level more quickly, efficiently, and successfully than without my cash. My mandate is to also offer non-cash benefit and support that, one might argue, is even more critical than cash to speed ahead of milestones, competitors, and expectations.

In the course of my work, I have had the opportunity to invest in my home market, the United States, and in international and emerging markets including the BRICs (Brazil, Russia, India, China). I’ve also held various operational roles in some of these markets. While working in these places I’ve discovered, unsurprisingly, that the nature of business and entrepreneurship differ significantly from region to region. Sometimes these differences lead to great confusion, sometimes to great competitive advantage. Of the markets I’ve invested in, I seem to always get asked about the highly visible BRIC market of India, where I spent several years as a private equity and venture capital investor. So highlighted here are a few themes that may be of interest to those investing in or doing business on the Indian subcontinent, or thinking about it.

One key theme that crops up repeatedly is the ability of the Indian entrepreneur to build a company on limited resources. Getting more mileage out of the same resources seems to be an Indian talent. This is not simply due to pure frugality (which is an accusation I’ve heard but is hard to believe if one has experienced some Indian weddings or Indian hospitality). Nor is it due to goods and services being less expensive in India versus other regions (because on a relative basis this is not necessarily true). This phenomenon has to do with the very DNA of the populace and to a degree cuts across stratifications of class and wealth.

Generally, Indians think lean; they are orientated to do a lot with little. The understanding of this trait is reflected as a general bias in the Indian investment community which expects Indian entrepreneurs to bootstrap to a milestone or revenue target—whereas it is equally well understood that an American counterpart would need to raise a round to get to the same goal. This mentality also extends to the personal sphere. I recently met with an Indian student attending an MBA program here in Boston who confided that Americans had advised him to budget a horrifying amount for two years; he’s doing it on 40 percent less and says he hasn’t missed out on a thing.

Adjustment is another idea that runs deep in the Indian psyche. The visitor to India is sure to be asked to “adjust” to (admittedly sometimes inane) situations. In fact, adjusting is the only way to survive in India. Ultimately one comes to understand this is how a nation of one billion souls—often vastly different from one another in the physical, economic, mental, and spiritual spheres, and with different ambitions—co-exist without a major civil war. Adjustment is a key characteristic of how businesses are built and run, too. Entrepreneurs who suddenly face a threat to cash flow immediately institute all sorts controls, standard and imaginative, to conserve and extend cash runways indefinitely.

Imaginative and unapologetic cost cutting are modus operandi and occur in cities and rural villages, amongst the educated and illiterate, the rich and poor. In one real example, an Indian CEO … Next Page »

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The Seattle tech scene got its first entrant in what looks like a coming wave of initial public offerings when Zillow made its intentions official, filing paperwork with federal regulators Monday for a future stock sale. In its filing, the online real-estate listing and mortgage database said it would seek about $52 million from the stock market—not a huge sum for an IPO, but significant for the area’s entrepreneurship and investing community nonetheless.

Zillow has seen increasing competition in the online real-estate sector, including vocal San Francisco-based startup Trulia, which recently boasted that it was assembling an “IPO-ready management team.” HitWise reported that Zillow’s traffic ranked No. 3 among real estate websites, one spot ahead of Trulia and just behind Yahoo—where Zillow’s listings appear under a partnership.

There was plenty more action elsewhere on the Seattle tech beat:

—PopCap looks like it’s also ready to hit the public markets. The Seattle casual game company recently went on a media and investor blitz in New York, talking up its growth, revenue, and position in the hot gaming market. We gleaned a lot of interesting bits from the various interviews that PopCap gave, including an assertion that it generated $100 million in revenue last year, an increase of about 20 percent from the year before. The company’s leaders also discussed difficulties in getting investors to understand the difference between its development compared to a console game publisher, and the attractiveness of hitting the public market before social-game giant Zynga.

—Speaking of Zynga, I headed over to the San Francisco company’s new Seattle office to look at the digs and hear some remarks from founder and CEO Mark Pincus on the company’s plans for its new Northwest beachhead. In one word: Hiring. The maker of addictive Facebook-based games like “FarmVille” and “Mafia Wars” was not shy at all about inviting techies in the packed crowd to send in their resumes—Pincus gave out his e-mail address and spent quite a bit of time talking one-on-one with people afterward about jobs.

—Microsoft co-founder Paul Allen continued drumming up interest in his new autobiography, “Idea Man,” with an interview on 60 Minutes that delved into some of the early Microsoft stories and Bill Gates arguments detailed in the excerpt published recently in Vanity Fair. For a guy who hasn’t … Next Page »

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Online retailer Exclusively.In, which offers flash sales of discounted Indian clothing and jewelry to its members, has started a luxury travel division, according to a statement from the company. Exclusively.In launched last summer with $2.8 million in funding from Accel Partners India and Helion Venture Partners, and has offices in New Delhi and New York. By expanding into discount travel, the company is following a trend popularized by other members-only, flash-sale sites, including New York-based Gilt Groupe.

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A New England energy giant is making big strides overseas. Devens, MA-based American Superconductor (NASDAQ: AMSC) said today it plans to acquire The Switch Engineering Oy, a power technologies firm based in Finland, for 190 million Euros (about $265 million) in cash and stock. The deal is expected to close by the end of August.

American Superconductor, which focuses on wind power and other renewable energy technologies, says the acquisition will make money immediately and will support the firm’s growth to $1 billion in annual revenue by 2014. The Switch makes power converter systems, permanent magnet generators, and other equipment for wind turbine manufacturers in China, Europe, Korea, and the U.S. The Finnish company made a profit of about $15 million on $179 million in revenue in calendar year 2010.

AMSC’s fiscal year 2009 (ending March 31, 2010) was its first full year of profitability, thanks in large part to its wind power business. The company says it expects “another record year of revenues and earnings in fiscal 2010,” which ends this month.

AMSC, which was founded in 1987 by four MIT professors (including current CEO and chairman Greg Yurek), initially entered the wind power market in 2006-2007. The company has a strong presence in Europe, China, and India.

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Bessemer Venture Partners, which has offices in Cambridge, MA, and Menlo Park, CA, wants to raise as much as $1.5 billion for a fund to invest in technology startups, two unnamed sources told Bloomberg. The investments would be made from the firm’s offices in the U.S., India, and Israel. The Larchmont, NY, firm and other major venture outfits are attracting billions of dollars because of positive momentum in the market for initial public offerings, Bloomberg reports.

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The three asses of entrepreneurship—A smart-ass team with a kick-ass product in a big-ass market: Never before has entrepreneurship been so succinctly captured as in this line coined by Jeff Clavier of Softtech VC.

I met Jeff during the Silicon Valley “tech trek” organized by the MIT Sloan School of Management earlier this month. As a part of the Entrepreneurship & Innovation certificate requirement, this trek was a way of initiating the class to the world of Silicon Valley, the hotbed of entrepreneurs and innovation, with an ecosystem that fosters enterprise like no other place in the world. For me, this was a trek back home.

My name is Akash Bhatia and I am a first year MBA student at MIT Sloan School of Management. I also lived in the Silicon Valley for seven years, before I went back to India and co-founded India’s first and largest ticketing company.

It all started early in the morning on January 3, 2011, when at breakfast, we met with Jim Kim of Khosla Ventures. After a talk by Jim and Bill Aulet of the Entrepreneurship Center at MIT Sloan School of Management, about 120 students from the MBA class of 2012 went out in groups of 5-7 to various companies they wanted to meet with, and explore their urge to be entrepreneurs. Students had selected the companies they wanted to visit from a long list of companies in the Silicon Valley. Some wanted to visit hitherto unknown startups operating in stealth mode, some wanted to visit companies like Facebook and Google, that, until a few years ago, were startups. Some people, like me, wanted to make their first pit stop at Softtech VC in Palo Alto.

Jeff started Softtech VC in 2004 with a view to investing in “next generation capital efficient companies.” His very first investment gave him a 17x return within 11 months. Since then, he has invested in 20+ companies. The other key take away from this meeting with Jeff was that start ups should get acquired, and not sold. What he meant by this remark is that a startup should be in a position where there is inbound interest to acquire it rather than the startup being out there trying to solicit buyers. This one simple line made a world of sense to all of us. This trek was on a roll.

Next stop was the Plug and Play Tech Center in Sunnyvale. Plug and Play is an incubator that provides office space, facilities and even funding opportunities to start-ups. It has partnered with Google, eBay, Nokia, Microsoft and Yahoo to mentor startups in its community and also organizes events where startups and investors can meet and interact. A visit here just underscored why Silicon Valley remains the best place for a tech startup. The place reeks of entrepreneurship!

Tuesday saw me driving up the peninsula to San Francisco, where we met with the founders of Hipmunk, a travel website that is a serious competitor to Kayak. Just when you thought that online travel was a saturated space, come these two sites (Hipmunk and Kayak) and prove all of us wrong. With a co-founder who had met success with his earlier start-up, reddit.com, Hipmunk has raised $1 million in Angel funding and is Y Combinator-backed. Tucked away in … Next Page »

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For some people, innovation is not enough. Gururaj “Desh” Deshpande is one of those people. Let’s just say the Boston-area tech entrepreneur and billionaire philanthropist has earned the right to make such a claim.

“For innovation to have impact, it needs relevance,” he says. “Innovation plus relevance equals impact.”

Deshpande is talking about global impact, but his latest project is in his own backyard. Last month, his foundation committed $5 million over the next five years to support a new innovation center housed at the University of Massachusetts Lowell. The Merrimack Valley Sandbox, as it’s called, will work together with local colleges and nonprofits to boost entrepreneurship among students and professionals, and to develop local leadership through mentoring and seed funding programs.

The new initiative has similarities to the Deshpande Center at MIT and a social entrepreneurship center Deshpande set up in northern Karnataka, India—with some big differences. But to understand what Deshpande is really trying to accomplish with the Merrimack project, you need to know more about his story.

Gururaj Deshpande grew up in India and studied electrical engineering at the Indian Institute of Technology in Madras (Chennai). He went on to do his PhD in data communications at Queen’s University in Ontario, Canada. Starting in the late 1980s, he founded a series of successful technology companies—Coral Networks, Cascade Communications (which sold to Ascend Communications for $3.7 billion in 1997), Sycamore Networks (NASDAQ: SCMR), and Tejas Networks. He currently serves as chairman of Sycamore, Tejas, and A123Systems, among other top-level duties.

The success of Cascade and Sycamore made Deshpande a wealthy man, and he and his wife Jaishree set up the Deshpande Foundation in 1995. Its unifying theme has been to foster innovation ecosystems and social entrepreneurship. Its first major initiative was setting up the Deshpande Center for Technological Innovation at MIT in 2002. That organization has been active in providing grants to MIT labs, connecting faculty with the business community, and more generally tying ivory- tower research to market realities.

“In society, thinkers all come together, and they come up with new ideas,” Deshpande says. “But as they keep coming up with new ideas, they have to play the game of impressing each other”—whether that means other professors or government funding agencies. “In the process they lose the ability to have impact,” he says, because of a lack of relevance to real-world problems (and products). “The center at MIT is about bringing that relevance.”

After a few years, Deshpande looked at setting up something similar in his native land. “But somehow doing nanotechnology in India didn’t sound that exciting,” he says. Instead, he thought, … Next Page »

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The biofuels industry is still chugging along in Massachusetts. Marlborough, MA-based Qteros said today it has closed $22 million in the first tranche of its Series C financing. The investors in the round were not disclosed, but Qteros said both new and existing ones participated. The company’s previous backers include Battery Ventures, Venrock Associates, Long River Ventures, Soros Fund Management, Camros Capital, Valero Energy, and BP.

Qteros, formerly known as SunEthanol, had raised nearly $30 million before this latest financing round. The company has developed an experimental process for making ethanol from plant waste and other non-food sources—corn stalks, sugar cane leftovers, wood chips—that could someday make the cost of biofuels competitive with fossil fuels.

The cellulosic ethanol industry still faces many challenges, but here’s one promising bit of news: Qteros also said this week it has formed a strategic partnership with India’s Praj Industries, a major ethanol producer that has installed plants in more than 50 countries. Financial details weren’t given, but the deal exemplifies Qteros’s technology licensing approach—and it could be a big step forward for the firm.

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Most of the time, we find out about companies that have collected venture investments one at a time, via announcements or regulatory filings from the companies themselves. Today Santa Clara, CA-based Intel Capital shook things up a bit, unveiling a big bundle of investments all at once.

The venture wing of the giant chipmaker said in an announcement at the Intel CEO Summit in Huntington Beach, CA, that it has invested $77 million across 18 companies spanning 11 countries, including  Brazil, China, Germany, India, Israel, Malaysia, the Netherlands, Russia, Taiwan, the Ukraine, and the United States. All of the companies on the list are working on technologies that relate to Intel’s core PC and server processor business, or to what it called “adjacent” areas of computing such as Internet-based video delivery and consumer electronics.

The amounts Intel invested in each company weren’t revealed. Four of the companies hail from Xconomy home cities, including Ortiva Wireless in the San Diego area (as Bruce reported); Lilliputian Systems in New England; and Verismo Networks and YuMe in the Bay Area. Here’s the full list:

Adaptivity (Charlotte, NC)—IT design and implementation
Althea Systems (Bangalore, India)—Cloud-based video discovery
Anobit (Herzeliya Pituach, Israel)—NAND flash memory products
boo-box (São Paulo, Brazil)—Social media ad distribution
De Novo (Kiev, Ukraine)—Ukraine’s first enterprise-class data center
IPTEGO (Berlin, Germany)—network optimization software
Layar (Amsterdam, Netherlands)—augmented reality platforms for mobile devices
Lilliputian Systems (Wilmington, MA)—small fuel cell batteries for consumer electronics
Ortiva Wireless (La Jolla, CA)—mobile video delivery
Rock Flow Dynamics (Moscow, Russia)—hydrodynamic modeling software for underground oil and gas reservoirs
Select-TV (Kuala Lumpur, Malaysia)—Internet-based television deployment
SilkRoad Technology (Chicago, IL)—SaaS-based talent management for businesses
Taifatech (Jhubei City, Taiwan)—chip design for digital video delivery systems
Videon Central (State College, PA)—software services for digital media product development
Verismo Networks (Mountain View, CA)—open Internet TV platform
WinChannel (Beijing)—information and sales management software for the consumer industry
YuMe (Redwood City, CA)—vide ad delivery across mobile, desktop, and television Yummly.com (Palo Alto, CA)—semantic search and recommendations for food

Intel also said it had made follow-in investments in five firms: Fonality, GainSpan, JackBe, TecTotal, and Wortal. As Bruce noted, Intel said that it’s been an “excellent” year so far for companies in Intel Capital’s portfolio, with 28 companies exiting this year through either an IPO or acquisition. In 2009, Intel put $327 million into 107 companies, about half of which were outside the United States.

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It would be easy to say that Zoho, whose online office productivity software has attracted 3 million users, is the worst nightmare for desktop software makers like Microsoft and even for a newer generation of Software-as-a-Service companies like Salesforce.com. But Zoho is more complicated than that.

To figure in its competitor’s nightmares, Zoho would have to be an entity that other companies understood and therefore feared. In fact, the Pleasanton, CA-based company is something new and almost completely alien to the established software culture: a tech-savvy company that got tired of paying high prices for the software it needed to run its own business, and simply assigned its engineers to build something cheaper and better.

There are plenty of startups in the San Francisco Bay Area where the engineers “think they can build a better word processor than Microsoft can,” says Sridhar Vembu, Zoho’s founder and CEO. “But if you apply business thinking to it, it’s not strategic for them. But [at Zoho] the engineers rule. From the beginning I have kept the company in that mode.”

The first application Zoho’s engineers built, a primitive online word processor called Zoho Writer, came in 2005. It was a side project at the time—the company’s real revenue was (and still is) generated by its network management software for enterprises. Zoho Writer didn’t really take off until Google bought a competing program called Writely, turned it into Google Docs, and proved to the world that browser-based software could handle tasks like word processing.

But five years down the road, Zoho has created online alternatives to nearly every piece of software required to run a small or medium-sized business. Business customers pay a single bill each month and get access to e-mail, word processing, calendars, Web conferencing, spreadsheets, project management tools, presentation builders, customer relationship management tools, website monitoring, and more. “We are trying to be the IT department for these small and medium businesses,” Vembu says. “We’re trying to create a portfolio of products so that businesses can pay a monthly fee like a utility bill and get all the software they need.”

Of course, that’s also the ultimate vision behind Google Apps, Microsoft’s Office Web Apps, and Microsoft’s brand-new Office365 offering. But Google itself offers only seven Web-based office applications (Gmail, Calendar, Docs, Groups, Sites, Video, and Wave). Microsoft’s experiments with online software, meanwhile, extend only to Word, Excel, PowerPoint, and OneNote on the productivity side, plus Exchange, SharePoint, and Lync in Office365. Both companies have been lapped several times over by Zoho, which offers 25 online productivity applications—all built on a single core that makes it almost trivial for Zoho’s programmers to let users cross the boundaries between its apps. If you’re a sales executive using Zoho CRM, for example, it’s easy to read and reply to Zoho e-mail and even open and edit Zoho Writer documents without leaving the CRM app.

How has a 1,200-employee, 100-percent bootstrapped company come out of nowhere to offer a serious challenge to the giants of consumer and business software? As Vembu hints, it’s largely the story of a company where the engineers have the upper hand—which isn’t too surprising when the CEO has a B.Tech from the India Institute of Technology and a PhD in electrical engineering from Princeton. So there was nobody sitting in the company’s sales, marketing, or financial offices with the power to tell its developers that it was impossible to reinvent the productivity software market.

But there are some other important factors as well. For one thing, the company had room to experiment. Known as AdventNet until last year, when it took on the brand of its fastest-growing product line (the name Zoho is a play on “small office/home office”), the company enjoys … Next Page »

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Bellevue, WA-based mobile Internet service provider Motricity (NASDAQ: MOTR) has inked a big deal with one of India’s largest mobile operators, Reliance Communications, according to Brier Dudley of The Seattle Times. The news has caused the company’s stock to soar about 34 percent, closing today at $17.42. The recent deal is all part of Motricity’s aggressive international expansion plans, detailed in our interview with founder and chief executive Ryan Wuerch last week.

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Hydrovolts has scored an investment deal that looks small at first blush, but could take the cleantech startup to the next level. The Seattle-based company, which develops small hydropower turbines that generate renewable energy from small streams and canals, last week received a $250,000 investment from civil engineering firm DLZ Corp. to develop prototype turbine for the company. DLZ plans to use the 25kW hydrokinetic turbine on the 14-km Chilla Canal in northern India.

While $250,000 may sound like small potatoes for a cleantech company—or even a tech startup, for that matter—CEO Burt Hamner says this deal, the first for Hydrovolts, is a big opportunity. The investment, in fact, could lead to an estimated $20 million in product orders down the line.

“It’s a huge accomplishment for small company,” he says. “This is our first deal and our first sale, and it has potential for being $20 million. The customer is investing $250,000 to get the first machine built specifically for his application.”

The U.S.-based DLZ, which reports annual revenues of more than $100 million, recently obtained permits to develop a 10 Megawatt hydrokinetic power project on the Chilla Canal, which feeds water into a traditional hydropower plant on the Ganges River. If Hydrovolts’ prototype turbine works as planned, DLZ says it intends to order another 400 just like it (though this agreement is not binding).

Hydrovolts first appeared on our cleantech radar in May 2009, when we spoke with Hamner about his invention—the “flipwing” turbine—one that he hopes will revolutionize the industry. Hamner’s turbine, which is designed to fit in flowing waterways such as canals, rivers, and even wastewater channels, operates like a submergered paddle wheel turbine—only it’s much more efficient. Here’s how they work: Flowing water pushes each blade from the front of the turbine back, as the “paddles” go around, they flip. This simple change reduces drag, and increases the ability to harness the renewable power generated. (See the flipwing turbine in action in the video below).

The floating turbines are also easy to deploy—all you have to do is drop them in the water and tether or anchor them. The electricity generated by the turbine is then sent to shore by a power cable. And because the wheel blades turn slower than the water current, the turbines are designed to be safe for fish, who can either swim around them or through them.

The turbines are small, built in modules that can be shipped and assembled on site, and generate renewable energy from water currents at rates as slow as 1 meter per second. This, according to Hydrovolts, makes the technology an inexpensive and viable option for many man-made canals and waterways in the U.S. and abroad. It also sets them apart from the competition—and the DLZ investment is proof, Hamner says.

“There have been perhaps a dozen entrepreneurs in the last 20 years who have or actually are trying to make turbines for canals, but there is only one really significant competitor to us. It is a … Next Page »

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