Last Wednesday, October 21, it was our privilege at Xconomy to provide a stage for a conversation between two legends of the investing world. The guest of honor was Peter Brooke, the founder of Advent International and TA Associates and the man most widely credited with spreading the idea of venture capital and private equity investing to the world outside the United States. Interviewing Brooke was Terry McGuire, the co-founder and general manager of Polaris Venture Partners and chair of the National Venture Capital Association.

The discussion, which ranged from inside stories from Brooke’s investing career to the health of the VC and PE industries amidst global economic uncertainty, drew a packed audience to the 26th-floor conference room at event host WilmerHale. We plan to bring you a full writeup of the event, as well as a video, a bit later—but we thought we’d tide you over with a few pictures from the event.

All of the photographs here were taken by Kevin Vogelsang, a 2009 MIT engineering graduate who volunteered to handle the camera for the evening. You can click on the photos to see larger versions.

Peter Brooke (left) and Terry McGuire

Left to right: Peter Brooke, Bob Buderi (Xconomy), John Chory (WilmerHale)

A full house of listeners.

Left to right: Richard Kane (Advent International), Peter Brooke, Michael Ristaino (Advent), Alex Earp (Bank of America)

Left to right: Linda Hellstrom (Halloran Consulting Group), Laurie Halloran (Halloran Consulting Group), Vijay Chandra (Babson College)

Left to right: Chris Sheehan (Common Angels), Doug Moon (JP Morgan), Greg Calkins (Xconomy)

Terry McGuire (left) speaking on stage with Peter Brooke

The audience at WilmerHale listens raptly.

Peter Brooke (right) answers a question from Terry McGuire.

Howard Anderson (Sloan School of Management, MIT) engages Brooke from the floor.

Audience member Wei Yong puts a question to Brooke.

Left to right: Terry McGuire (Polaris Venture Partners), Howard Anderson (MIT), Ruzwana Bashir (Harvard), Pat McGovern (IDG)

Left to right: Noubar Afeyan (Flagship Ventures), Bob Buderi (Xconomy), Vinit Nijhawan (Boston University)

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This is Terry McGuire’s fifth big economic downturn as a venture capitalist, the first being Black Monday in 1987. But when he gets together to chat with Peter Brooke tomorrow night, he’ll be the inexperienced one. That’s why I’m incredibly excited about our Xconomy Forum tomorrow night, which will be held at the offices of WilmerHale in downtown Boston. The two venture capital pioneers will be offering a fantastic lens—or set of lenses—with which to view our economy, the state of venture capital and private equity today, and how they have evolved and will continue to be major forces in shaping our local and global economies.

You can find out all about the event here. We only have about 10 tickets left, and sales end at midnight tonight, so get yours now. But just to give you the basics, McGuire is a co-founder and managing director of Polaris Venture Partners and chairman of the National Venture Capital Association. Brooke is the founder and chairman of Advent International and TA Associates, and one of the true pioneers of the venture industry in New England who has also played a major role in the emergence of the private equity market. 
Brooke’s forthcoming book, A Vision for Venture Capital, written with Daniel Penrice, covers his long and successful career in VC and private equity—and looks ahead to provide insights on how the private equity field can help the world’s economies recover from the current recession and grow.
Although the book has not yet been released, a few advance copies will be on hand at the event for attendees to look over.

The chat will start off with a short overview from Brooke about the evolution of venture capital and private equity, and then McGuire will provide a quick picture of the current state of venture. Then the two will sit down together and McGuire will conduct a chat with his fellow investor—one that they hope will have plenty of audience interaction.

McGuire says that the single thing he is looking forward to most is Brooke’s views on past recessions and the insights they hold for the current downturn. “I would like to hear how he reflects on when the economy hit a rough patch, what impact did it have on the business, and what lessons can we learn today,” McGuire says. But they will also talk about the scandals that have wracked private equity in the past year—and how Brooke thinks that might influence the field going forward. McGuire and Brooke will also tackle anything else that’s on the audience’s mind.

We hope to see you there. Register here.

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I spent an enlightening week in Tokyo earlier this month participating in the Kauffman Fellows Japan Summit. This summit was the brainchild of three visionary Kauffman Fellows who are on a mission to instill entrepreneurship into the Japanese culture. During the three days we heard about the current (dismal) status of venture capital and entrepreneurial success in Japan—especially in the life sciences—in contrast to the unbelievable track record of Japanese engineering and precision manufacturing, as well as the country’s output of patents, which rivals that of the U.S.

Walking around Tokyo and interacting with the many smart minds at the summit, I had to scratch my head—at first blush, the ingredients of great entrepreneurship in life sciences are there. But why is there no soup? One of the most staggering statistics presented at the meeting was that just $200M was invested in local life science companies in 2008, with one pharma spin-out venture taking half the total!

And then it started to sink in how privileged we are in the Boston area, where the next successful or aspiring entrepreneur, scientist, engineer, venture capitalist, IP or venture lawyer, skilled technician, teaching hospital, pharmaceutical company, or device company is just a door away. We are steeped in this culture of entrepreneurship and have been so for many years now. This Boston life science ecotope is as unique as Silicon Valley is for the techies, and it behooves us to make sure we take full advantage of this incredible competitive edge.

People outside of our unique Boston ecotope understand how powerful our “soup” is—Japanese investors searching for attractive opportunities in private equity and venture capital are looking first to the U.S., then checking out Europe and China, only to search their own home market last. How discouraging that must be for the few life sciences pioneers in Japan! I will make it a habit now to remind folks in our industry, as well as local government officials, that we should cherish what we have and work hard to keep things intact and healthy.

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Newton, MA-based enterprise software firm Rocket Software has raised $91.9 million in equity financing, according to an SEC filing. PeHUB reports that that the filing comes on the heels of private equity firm Court Square Capital Partners’ investment in Rocket, but that neither firm would talk about the financing. The SEC filing does not indicate the source of the financing.

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Fundraising by U.S. venture capital firms continues to lag. A survey released overnight by Dow Jones Private Equity Analyst shows that 26 VC funds raised about $3.5 billion during the three months that ended September 30—down about 51 percent from the same quarter last year.

The findings nevertheless represented an improvement over the previous quarter, when VC fundraising was down by almost two-thirds compared with the second quarter of 2008. While fundraising was down for all types of VC firms over the past three months, those that invest in late-stage startups were hit hardest.

In a statement, Jennifer Rossa, the managing editor who oversees the survey, says, “The venture industry hasn’t been able to escape the turmoil affecting the rest of private equity. But brand-name firms and emerging managers with strong stories are still able to raise capital.”

The survey noted that Khosla Ventures was the biggest closer, raising $1.06 billion for a pair of funds that are focused mostly on cleantech investments. Star power also may have helped Andreessen Horowitz, the venture firm launched by Netscape founder Marc Andreessen, raise $300 million from limited partners that typically include college endowments, pension funds, and other institutional investors. The survey also noted the $500 million raised by Domain Associates, which specializes in life sciences investments, was short of the firm’s $700 million goal.

So far this year, 83 funds have raised $8 billion, or 42 percent of the $18.9 billion that 141 VC firms raised during the first nine months of 2008. The survey reported that all private equity firms, including VC funds, have raised $79.9 billion in 265 funds so far this year—a 59 percent decline from the same period last year.

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It’s always good to hear about another small Seattle startup that’s bootstrapped and already profitable. Yesterday it was Appature, today it’s AppBank. They may share the first three letters of their names (and bootstrapped profitability), but after that they’re about as different as two Internet software companies can be.

AppBank is a six-person company focused on developing software to help Facebook users create social entertainment applications—and get paid for them. The company is rolling out the public beta version of its site today. The world of Facebook apps is very crowded, of course, but what AppBank is trying to do is give average Facebook users easier ways to make simple apps like quizzes, surveys, and games in their spare time, and more effective ways to make money from them by providing targeted advertising. “It’s the first time a company has paired relevant ads with crowdsourced social entertainment,” says Fred Hsu, AppBank’s founder and CEO.

Hsu started the company in April of this year, together with chief operating officer Joyce Chang. Hsu is the co-founder of Oversee.net, a Los Angeles company that holds Internet domain names and does domain marketing for the search, display, and lead-generation industries. Oversee did $200 million in revenue last year, and Hsu sold a minority stake in the company to private equity firm Oak Hill Capital Partners for $150 million. Chang, for her part, came from Seattle-based Tracento, which implements Facebook applications like Friend Hugs, Kisses, and Send Flowers. Both UCLA computer science grads, Hsu and Chang are based in Seattle, and the rest of the company’s employees are in the Los Angeles and San Francisco areas.

What AppBank offers is a quick way to create a Facebook quiz, for example—”What type of underwear are you?” or “Are you left-brained or right-brained?” or some such—and then free tools to …Next Page »

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As the world digs out from under the effects of one of the greatest economic crises in history, there are few people who can survey the financial landscape and provide experience, perspective, and wisdom the way Peter Brooke can. The chairman and founder of Advent International and before that the founder of TA Associates, Brooke is one of the pioneers of New England venture capital and perhaps the first to successfully introduce the venture capital and private equity models globally— accomplishments that helped earn him the nickname “the Johnny Appleseed of venture capital.”

We are extremely pleased that Brooke will share his knowledge with Xconomy’s audience in an intimate private chat to be held on October 21 at the offices of WilmerHale in downtown Boston. And we are doubly fortunate that the person interviewing Brooke is another legend in venture capital—Terry McGuire, co-founder and managing director of Polaris Venture Partners and chairman of the National Venture Capital Association.

Peter Brooke

I caught up with Brooke yesterday and asked for a few thoughts he hopes to expound on at the forum.

—On impending government efforts to increase regulation of private equity:

“The big concern I have is that because of the transgressions of a few of the managers in private equity, we’re inviting some regulations that might be very restrictive to what has been a productive industry,” Brooke says.

“I don’t think the actions of a few are representative of most of the people who have been adding real value in private equity,” he says. “I would hate to see that good work derailed.” Therefore, he says, “I think that our objective should be to make as good a case as we can for the constructive role [of private equity] in building companies.” That, he says, will hopefully avoid the worst. “But I think we’re going to have to count on some form of regulation increase anyway.”

—On the role of private equity in recovery:

“It’s the key to a more efficient operation of existing business units,” Brooke says. “The more you increase the efficiency of a company, the more jobs you’re going to add over the long run, and the more competitive your investee companies are going to be. And so I think it has everything to do with recovery, as does venture capital, in creating new businesses.”

This special Xconomy Forum will begin at 6 pm on October 21, in a spectacular setting on the 26th floor of WilmerHale’s downtown Boston offices. The conversation between these two legends of New England investing will be followed by a networking reception. Seating is limited, and tickets are going fast. You can learn more and register here.

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Nexus Biosystems, a four-year-old biotech tools maker in Poway, CA, has raised $5 million in venture funding from Telegraph Hill Partners, a private equity firm based in San Francisco, according to a regulatory filing. Nexus CEO John Lillig, who declined to comment on the filing, told me the company specializes in making automated sample storage and retrieval systems capable of holding millions of compounds. In a statement, Nexus says the funding will be used to accelerate the commericalization of several new products, including a family of machines that store samples at minus-80 degrees Celsius.

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On Monday we learned that Rob Day, a former principal at @Ventures in Wilmington, MA, and one of the dynamic young leaders of the energy investing scene in New England, has taken on a new assignment. He’s become a partner at Black Coral Capital, a Boston-based private equity fund formed in 2008 to build a cleantech investment portfolio for an unnamed high-net-worth family.

I’ve known Day ever since mid-2007, when I wrote about the nearly simultaneous decisions that he and Advanced Technology Ventures principal Andrew Friendly made to leave energy-related jobs in California and take jobs in New England cleantech investing. Both Day and Friendly have helped bring new vitality to the Boston-area energy innovation community, setting up an East Coast branch of the California-based Renewable Energy Business Network and participating in numerous local events. Most recently, Day was part of a panel on bringing energy innovations to market at Xconomy’s XSITE summit on June 24.

I caught up with Day by phone Tuesday morning, and asked him to tell me about Black Coral, which had been more or less in stealth mode until Day circulated a note about his job switch. Here’s the transcript:

Xconomy: What’s Black Coral all about?

Rob Day: It’s a new family office, with a broad mandate to invest in private equity in clean energy and related technologies.

X: What family is behind it?

RD: We have to maintain privacy about that.

X: But they’ve decided to put some of their money specifically into clean technology—why?

RD: They’ve got good strategic assets in related areas of energy, and they’re looking to put some money into the clean energy side of it. So we know we have some good assets we can bring to bear in our investments, but we also have a pretty broad mandate to develop an investment strategy with new things that make sense. We are going to be investing directly, and also indirectly, as limited partners in venture funds. We are looking across all sorts of private equity classes—capital projects, buyouts, early stage companies, growth stage, later stage. We’re really starting from a blank slate, which we think makes sense in this interesting time, economically.

X: When you talk about bringing strategic assets to bear, does that mean you’re going to be leaning away from new energy-generation technologies toward things that fit with the existing energy infrastructure?

RD: As much as anything else that reflects that the folks around the table are pretty pragmatic. We are investing to find good investments, we’re not making investments just in the latest cool technology.

X: Do you think too much venture capital in the cleantech industry has gone into blue-sky ideas?

RD: To be clear, at the places I’ve worked in the past, there has always been a shared pragmatic approach around the table. That’s why I’ve always invested in things like energy efficiency myself, in addition to other things. But if you look at where the money has gone in the cleantech venture structure, a lot of it has yet to come to market in terms of commercialized products. That, by itself, should tell you that there has been a lot of emphasis on funding breakthroughs, what some people have called the “black swan” technologies, where as the folks around the table at Black Coral are going to be really focused on …Next Page »

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Kirt Montague is the Comeback Kid of the Seattle cleantech community. We saw the fire in his eyes back in March when he rocked the room with a killer presentation on waste-to-energy at Xconomy’s cleantech forum in Seattle. And we see it again now that his company, Redmond, WA-based Prometheus Energy, which produces liquid natural gas from waste, has just closed $10 million in financing—with another $10 million to come upon reaching certain milestones—from Shell Technology Ventures Fund, which is managed by Netherlands-based Kenda Capital, a division of the Dutch oil giant.

Prometheus Energy, and Montague, have been through some rough patches. The company was founded in 2003 and raised more than $20 million in venture funding through the alternative fuels heyday of 2006. That year, Montague took Prometheus public on London’s Alternative Investment Market (AIM). The move didn’t work out, and the company was de-listed in 2008. Prometheus went through layoffs, personnel changes, and slumping revenues. Last September, the assets of the company were acquired by Black River Asset Management, a large private equity firm based in Minnetonka, MN, and San Mateo, CA.

“We’ve hung in there, we’ve weathered the storm,” says Montague (pronounced “Mon-tag”), Prometheus’s co-founder and CEO. “It hasn’t been easy. It’s been painful. But we’re still here, and we’re growing. Having Shell [Technology Ventures and Kenda Capital] close this deal validates a lot of what we’ve done.”

Indeed, it’s a big deal for Prometheus Energy, for Seattle cleantech, and for the future of alternative fuels. It also highlights some broader and more globally important business trends. One is that big oil companies are starting to invest heavily in alternative energy technologies, even in the midst of the recession. Another is that the capital for these deals in the U.S. increasingly is coming from overseas. “You’ve got a situation where the market for this technology is not just domestic, it’s global,” says Michael Butler, CEO of Seattle-based Cascadia Capital, the investment bank that brokered the Prometheus deal. “Kirt went to Shell [Technology Ventures] because of the value they bring.”

Gaining a strategic partner like Shell Technology Ventures appears to be quite …Next Page »

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Boston-based financial giant Fidelity Investments plans to close its private equity unit next month due the unit’s inability to raise funds through debt financings, Reuters reported this morning. The closure of the two-year-old private equity unit, which is called Fidelity Equity Partners and manages $500 million in assets, will have no impact on Fidelity Ventures, the venture capital arm of Fidelity that invests in early-stage technology firms, according to Reuters.

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We may have similar names, but we come from different worlds. Greg Huey, the new program director of Seattle-based Alliance of Angels, has a business background and more than 10 years of investment and corporate development experience. He bears little resemblance to a certain Xconomy Seattle editor, besides having an avid interest in the local innovation community, a love of coffee, and a slight aversion to British food.

This is Huey’s first month on the job. He succeeds Rebecca Lovell, who became executive director of the Northwest Entrepreneur Network in February. Huey says his responsibilities at Alliance of Angels now include spreading the good word about the not-for-profit investor organization, attracting early-stage companies to present to the angel network, and positioning his group as “entrepreneur-friendly.” He also wants to coach companies on their business plans and presentations, and help angel members “feel more comfortable to step up” and lead investment deals. “Angel investing can be shoot-from-the-hip,” Huey says. “We want to provide a more systematic process in which to evaluate investments and portfolios.”

Before this job, Huey handled mergers and acquisitions and other corporate development for Hewlett-Packard in London for a year and a half. He focused on deals in Europe, Africa, and the Middle East. Prior to that, he spent six years as an investor at Frazier Technology Ventures in Seattle (2001-2007), and also worked at GTCR, a private equity firm in Chicago. He did his MBA at the University of Pennsylvania’s Wharton School, where he was a classmate of BuddyTV’s Andy Liu, a prominent entrepreneur and investor in Seattle. Huey is a native of Portland, OR.

I was particularly interested to hear how the economic doom and gloom of the past eight months has affected Huey’s outlook on early-stage investing, and what he sees in Seattle after being away from it for a little while. He noted that Alliance of Angels is coming off a strong year in which it made 36 investments, and five of its portfolio companies were acquired (including Insitu, which was bought by Boeing for some $400 million—Alliance of Angels’ biggest exit to date). And two weeks ago, the organization announced a new $4.25 million seed fund.

“We will focus on any growth opportunity,” Huey says, whether it’s in software, wireless, hardware, devices, or non-technology fields like coffee or nail salons. “We’re open for business. We have our first investment committee meeting next week.” And the first investment deal on Huey’s watch may very well come out of that meeting (which is for the new seed fund).

Here are some other highlights from our conversation:

Xconomy: Given your international perspective, what are your thoughts on Seattle as an innovation cluster? How does it compare to other regions?

Greg Huey: The U.S.—and Seattle—has got an entrepreneurial zeal and risk-taking [culture] and optimism that leads the world by leaps and bounds. In Israel and Europe, success is defined …Next Page »

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One of the great pleasures of being a journalist is listening to influential leaders discuss where they come from and how it affects their strategy. Luke and I recently sat down with Tom Alberg, co-founder and managing director of Seattle-based Madrona Venture Group. In addition to sharing his thoughts on the future of newspapers and online media, Alberg spoke extensively about his career and how he has witnessed, and participated in, the rise of the technology industry in Seattle.

Let’s take a big step back here. At Xconomy, we’re about delivering the most important breaking news and in-depth analysis of tech and life sciences innovation. But it’s hard to fully appreciate all the latest trends unless you understand the perspectives of the top players. In our interview, Alberg touched on the early days of his career as a lawyer at Perkins Coie in the late ’60s, his later stints as president of LIN Broadcasting and executive vice president of McCaw Cellular, and the birth of Madrona in the mid ’90s. Along the way, he built notable relationships with leaders in wireless, medical devices, and e-commerce—people like Craig McCaw, Jeff Bezos, and Gordon Kuenster of ATL (and more recently, Asemblon).

Maybe you know all the history already, maybe you don’t. Certainly the story of Madrona’s involvement with Amazon has been told many times. But I bet the broader story of Alberg’s career and his observations from the local scene will give people a deeper understanding of Seattle-area innovation and Madrona’s role in the business community.

Here is an edited account of our conversation:

Xconomy: So tell us about your early days in Seattle.

Tom Alberg: My career has paralleled, a little bit, the growth of the technology industry. I started off as a young lawyer in 1967. In those days, there were a few high-tech companies. There was Fluke Manufacturing, and Physio-Control was about to start. There wasn’t much. Seattle had Boeing, and it would go through phases of being less about airplanes, more about computer services and other things. But there were little companies, and there was starting to be more entrepreneurship. When I joined Perkins, I’d been in New York a couple of years, so I was an expert, I thought, in securities law and raising money. But I’d been dealing with hundreds-of-millions-of-dollar deals, not startups. For some reason, I always had a technology interest.

One of the early things that happened was a guy came in named Gordon Kuenster. He’d been a Boeing executive and had been hired to run this startup called ATL [Advanced Technology Laboratories], an ultrasound company out of the University of Washington. He comes into Perkins because Perkins handles The Boeing Company. I’m the low man on the totem pole, so the partner in charge of Boeing has me come and meet with this guy. The partner said, ‘I don’t know, we don’t really do startups.’ I had to plead, ‘Let’s try it!’

X: How did ATL play a role in the rise of the Seattle tech scene?

TA: ATL became a major success at the same time as Physio-Control. Physio went public, and ATL got bought by Squibb for $60 million—big money in those days [1979]. And then what happened was, Hunter Simpson at Physio-Control and Gordon Kuenster at ATL, they invested in some other companies. People who made money in those companies invested in some companies. And then the biotech thing started. I represented Immunex when it first started [in 1981]. It went public, the stock crashed, it survived all those years somehow. So on the biotech side, a bunch of stuff started happening. There was quite a bit of activity, but nothing like it is today.

And then, of course, there was Microsoft. So in 1990, I was still at Perkins. It was a good technology practice. I went over to McCaw Cellular, partly because I was interested in technology. McCaw was sort of a secret company in Seattle. It was in the cell phone business; nobody had cell phones. There was that phone in some people’s cars, sort of like a radio phone or something. Nobody knew much …Next Page »

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Boston- and San Francisco-based Sverica International, a private equity fund that invests in service-oriented businesses and light manufacturing companies, said today it surpassed its $250 million target for its third fund, closing the fund at $265 million last November. The company said its current areas of investment interest include wind energy, enterprise software, and healthcare services.

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We all know that just about every type of financial performance index for the last year showed a sharp turn downward. This definitely held true for venture capital. The National Venture Capital Association and Thomson Reuters today released Q4 2008 venture capital performance numbers showing that VC funds as a whole—early, balanced, and later stage combined—tumbled some 21 percent last year.

But if you dig deep enough into any pile of data, or go back far enough in time, you can usually find some good news. In this case, all you have to do is go back and average returns over the last three years to make the numbers come out positive. Compare that to, say, the NASDAQ or S&P 500, which doesn’t even generate a positive return when you go back 10 years—and there is the silver lining in the venture cloud. It was bad, the NVCA said, but not as bad as it could have been.

Here’s the table.

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Xconomy reported yesterday that Bellevue, WA-based Ignition Partners has split into separate management organizations with the formation of downtown Seattle-based Ignition Capital, which is focused on growth-stage and private equity investments. Reached by e-mail, Ignition Partners co-founder Brad Silverberg says that Ignition is still one firm, with three complementary funds.

That’s despite the fact that on its website, Ignition Capital calls itself “a premier private equity firm located in Seattle, Washington driven by the mission of building and expanding a select group of highly profitable, long term businesses that occupy significant positions in their industries.” (Ignition Capital has not responded to e-mails and a phone message.)

“Ignition Capital is part of Ignition,” Silverberg said via e-mail. “Like many firms, we have multiple funds to focus on different opportunities. At Ignition, we have three affiliate funds: venture, growth (capital), and China. All the growth partners who were part of venture funds 1-3 continue to be part of those funds and manage their fund 1-3 companies. Their new investments are in later stage, growth opportunities, while venture focuses on early stage deals.”

Silverberg elaborated a bit on the origin of the growth-stage fund, which looks to invest in companies that have been around for a few years and need more capital to grow from venture-backed startups into mid-sized, established companies. “During our fund 3, we raised an annex fund to be able to pursue growth stage investments. That worked out well so a few of the partners decided to focus on such opportunities. In the latter half of 2007 we concurrently raised venture fund 4 and a growth fund. So there’s no news here. There is a common management company, while each fund then manages its own investments. One firm, multiple funds, each focused on a complementary opportunity, similar to other firms.”

According to Washington’s Secretary of State website, Ignition Growth Management incorporated as an LLC in September 2007, listing governing members as Richard Tong, John Zagula, Jon Anderson, and Robert Headley. At the same time, Ignition Ventures Management incorporated as a separate LLC, listing governing members as Headley, Silverberg, Steve Hooper, and Cameron Myhrvold. The first Ignition-related entity listed on the site, Ignition Corp., was incorporated in March 2000, and included the names of nine governing members (including Tong, Anderson, Silverberg, Hooper, and Myhrvold).

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Xconomy has learned that three venture partners from Bellevue, WA-based Ignition Partners have formed a separate management company called Ignition Capital, and are working from new offices in downtown Seattle on private equity and late-stage investments. Jon Anderson, Rich Tong, and John Zagula are managing directors of Ignition Capital, whose fund is “focused on profitable mid to late stage companies,” according to the new firm’s website.

The move appears to be part of a reorganization at Ignition, according to a source familiar with the situation. The nine-year-old company, which collectively has more than $2 billion under management, has split into Ignition Venture Partners (Bellevue), Ignition Capital (Seattle), and Qiming Venture Partners (Shanghai). Qiming was formed in 2006 and focuses on companies in China. Ignition Capital’s fund itself is not new either: Ignition Partners announced the formation of a $275 million “growth capital” fund in October 2007. But the separate downtown office and management firm is a more recent development. Xconomy has not yet been able to speak with Ignition about its overall strategy, but multiple e-mail messages have been sent to partners at Ignition Capital and Ignition Venture.

In recent months, Ignition Partners has been rocked by developments at a couple of its portfolio companies— most notably Seattle-based Entellium’s fraud court case and bankruptcy, and the closing of Bellevue-based Sotto Wireless. But in the past month, the venture firm has also announced investments in software startups Skytap (Seattle), Enclarity (Aliso Viejo, CA), and Zenprise (Fremont, CA).

Anderson, Tong, and Zagula are former senior Microsoft employees and Ignition co-founders who have been with the firm since its inception. They are best known for making early-stage investments, but now seem to be focusing on growth-stage tech deals as well as non-tech buyouts. They are joined at Ignition Capital by managing director Robert Headley, a former Starbucks vice president who is also an Ignition Venture partner and acting managing director of Qiming Venture Partners. The Ignition Capital website lists six other employees in Seattle, including operating partners Shawn Bohnert, Rennie Coit, and Ty Graham, bringing its total headcount to at least 10.

The site also lists seven portfolio companies: SeaMobile (wireless for ships, based in Miramar, FL); wireless and satellite communications firms MTN (South Africa), WMS (Florida), and Geolink (Australia); clinic developer Liberty Dialysis (Mercer Island, WA); and Chinese firms Oriental Cambridge Education Group (Beijing) and eHi Car Rental (Shanghai). Ignition Partners originally invested in SeaMobile in 2005 and Liberty Dialysis in 2007, while the two Chinese companies are also in Qiming’s portfolio.

In terms of its investment philosophy, Ignition Capital’s website says, “These are very challenging times for any investor and any business, where sources of capital are limited, growth is uncertain and where the ruling dynamics of many industries are undergoing massive change. At Ignition Capital we believe that with an unwavering focus on business fundamentals, the few companies forged and tempered under these most demanding circumstances can take advantage of these shifts and earn both exceptional ongoing returns and the dominant positions in their markets.”

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Huntington Capital, San Diego’s boutique private equity and venture lending firm, says it has made four investments so far from Huntington Capital Fund II, after raising $78 million in capital for the second fund it formed last May.

Partner Tim Bubnack told me in October the privately-held firm was seeing a lot of prospects, as companies sought alternative sources of capital amid the U.S. credit crisis. As a newcomer that specializes in venture lending and equity financing, Bubnack said Huntington had no exposure to subprime home loans or troubled financial instruments.

Despite the recession, Bubnack says Huntington is still arranging financing for private companies with strong management teams, increasing sales growth and industry-leading products or services. Huntington did not disclose the size of its deals, but Bubnack told me in October his firm looks for small-to-mid-size companies that need less than $6 million. All four investments from Huntington II have been in Southern California companies, including two in San Diego:

— Anakam, an Internet security firm that was founded in San Diego to combat online fraud through innovative, software-based authentication and identity management technologies.

— DR Technologies, a San Diego-based employee-owned aerospace and defense engineering company that uses advanced composites to design and make structural components and subsystems for NASA, the Department of Defense, and major aerospace companies.

— LifeModeler, a San Clemente, CA-based software developer that enables orthopedic surgeons to use computer-based modeling to help guide joint replacement surgeries.

— Environment Furniture, an environmentally friendly Los Angeles-based business that uses reclaimed hardwoods and lumber from sustainable forests to make “eco-chic” furniture.

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It was another busy week for deals in the Northwest, with a steady drumbeat of fundings, acquisitions, and partnerships in software, biotech, mobile, and energy.

—Puget Energy, the Bellevue, WA-based public utility company, completed its $7.4 billion purchase by a syndicate of private investment firms, and was de-listed from the New York Stock Exchange. The new entity, called Puget Holdings, is owned by Macquarie Infrastructure Partners, Macquarie Capital Group, CPP Investment Board, British Columbia Investment Management, Alberta Investment Management, and Macquarie-FSS Infrastructure Trust.

—Portland, OR-based FreeRange Communications was acquired by mobile media firm Handmark, which is based in Kansas City, MO. Financial terms were not disclosed. FreeRange makes mobile publishing software and works with companies like The Wall Street Journal, Associated Press, and CBS.

—Luke reported on how Bothell, WA-based Seattle Genetics’ underwritten stock sale for $55.8 million went down on January 27, and what has happened to the company’s stock since. It’s an intriguing tale of how to raise money in biotech in a very difficult time.

—Redmond, WA-based Mobui, a mobile software firm, teamed up with Nickelodeon to deliver an iPhone application based on the SpongeBob cartoon character. Terms of the deal weren’t announced. It is Nickelodeon’s first foray into iPhone apps.

—Bothell, WA-based Snowblind Studios, a maker of role-playing video games, was acquired by Warner Bros. for an undisclosed price. Snowblind will team up with Warner Bros. Interactive Entertainment, the publishing division, to produce new games.

—Coaxis, the Portland, OR software company, has sold off its Insight Distribution Software business to Eden Prairie, MN-based High Jump Software, a provider of supply chain and logistics services. Financial terms were not given. Insight Distribution specializes in software for the food and beverage industries.

—Portland, OR-based RNA Networks, a memory virtualization software firm, said it had raised $7 million in Series A funding, led by Menlo Ventures. The round closed in April 2008, but had not been reported previously. RNA Networks develops software that makes memory in servers and data centers faster and cheaper for customers in the financial services, content delivery, and gaming industries.

—Seattle-based Mixpo, an online video-advertising startup, raised $4 million in a Series B round of funding, led by Seattle’s Madrona Venture Group. Other investors included Yaletown Venture Partners and Growthworks Capital. Founded in 2005, Mixpo has raised a total of $10.5 million in venture funding.

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Private equity powerhouse Warburg Pincus will buy 17.4 million shares, or $175 million worth, of Nuance Communications (NASDAQ: NUAN) common stock, Nuance announced today. The Burlington, MA-based speech and imaging technology company said it will use the funds to support M&A activity and general corporate purposes. Warburg Pincus will also acquire a warrant to purchase approximately another 3.9 million shares that is good for four years. The common stock deal is expected to close in February.

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