Just when I thought venture deals, especially for software and tech companies, had headed south for the winter (or longer), the Northwest erupted with a slew of financings in the past week.

—But first, some serious biotech. Kirkland, WA-based OVP Venture Partners led a $30 million Series B round for Fate Therapeutics, a San Diego-based stem cell company with ties to the University of Washington, as Luke reported. Existing investors Arch Venture Partners, Polaris Venture Partners, and Venrock Associates also participated in the funding, as well as three strategic corporate investors—Astellas Venture Management and Genzyme Ventures were named.

—Seattle-based DocuSign, a maker of software to automate and control the process of electronic signatures, received a strategic investment from Second Century Ventures, the VC fund of the National Association of Realtors. The funding amount was undisclosed, but the money will be used to accelerate and extend DocuSign’s efforts with real estate customers.

—Beaverton, OR-based Avnera pulled in an $8 million equity round from undisclosed investors, according to a regulatory filing. The company’s previous investors include Bessemer Venture Partners, Redpoint Ventures, Jafco Ventures, Intel Capital, and DAG Ventures. Avnera was founded in 2004, and designs novel chips for wireless audio applications.

—Seattle stealth startup Doxo raised $5.25 million in equity financing, according to a regulatory filing and media reports. The investors were not disclosed, but David Feinleib of Mohr Davidow Ventures was listed on the SEC form as a director.

—Bellevue, WA-based Enroute Systems, a developer of software that helps companies manage their parcel-shipping logistics, closed a Series A funding round worth $810,000 from Keiretsu Forum, Zino Society, Puget Sound Venture Club, and angel investors. Next up, Enroute is looking …Next Page »

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Seattle-based DocuSign announced today it has received a strategic investment from Second Century Ventures, the VC fund of the National Association of Realtors. The amount was undisclosed, but the cash will be used to speed up and extend DocuSign’s efforts with residential and commercial real estate customers. DocuSign was founded in 2003 and makes software to automate and control the process of electronic signatures.

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EvoNexus, San Diego’s free high-tech incubator, announced that it has enrolled three more startup companies during ceremonies yesterday that officially marked the opening of its new facility.

CommNexus, the San Diego wireless industry group, announced five months ago that it was leading the creation of the free and “no strings attached” startup incubator, to be headed by wireless industry executive Cathy Pucher. EvoNexus, which is structured as a nonprofit organization, plans to eventually house 10 to 12 technology startups; it named its first three startups less than two months ago.

CommNexus and EvoNexus have both moved their offices into part of a 25,000-square-foot commercial office building that was previously occupied by San Diego-based Leap Wireless, (NASDAQ: LEAP), which sells prepaid discount mobile phone service through its Cricket Communications subsidiary. By providing the office space to EvoNexus for one year at no cost, Leap made the largest single contribution of more than three dozen companies and individuals that donated in-kind services and cash to the incubator, according to Pucher.

“San Diego is an innovation economy,” Leap CEO S. Douglas Hutcheson told the crowd. “We’ve spawned more new companies in San Diego than I think anyone would have believed, and it’s vital that we support that.”

For the startups that are lucky enough to get selected, the incubator provides free office space, including utilities, Internet service, office equipment, and volunteer business mentoring for up to two years.

“Other cities don’t recognize the collaboration that we have here,” San Diego Mayor Jerry Sanders told a lunchtime crowd of roughly 150 people who attended a ribbon-cutting ceremony for the incubator. The mayor was joined by other local dignitaries and industry officials, including CommNexus board chairman John Major, the former chairman and CEO of two San Diego wireless companies, Novatel Wireless and Wireless Knowledge. “As we entered into the recession of recessions, a lot of non-profits hunkered down, and frankly that would have been the easy thing for us as well,” Major said. “But that’s not the way we operate.”

Pucher, the incubator’s executive director, told me …Next Page »

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Rapid7, the Boston- and El Segundo, CA-based startup that makes software to protect corporate networks, databases, and Web applications from hostile outsiders, said today that it has acquired the Metasploit Project, which has developed an open-source penetration testing system as well as a large public database of tested exploits against computer systems. HD Moore, the founder of the project, will join Rapid7 as chief architect and chief security officer, Rapid7 CEO Mike Tuchen said in an open letter. The terms of the transaction were not disclosed. Rapid7 obtained $7 million in financing from Bain Capital Ventures in September 2008.

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Kirkland, WA-based OVP Venture Partners has led a $12 million investment in San Mateo, CA-based RedSeal Systems, a security software firm. OVP managing director Mark Ashida has joined the company’s board. Existing investors Venrock, Jafco Ventures, Sutter Hill Ventures, and Leapfrog Ventures also participated in the deal, which brings RedSeal’s total funding to more than $43 million.

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The role of information technology in healthcare reform is such a huge, sprawling topic that it’s hard to make any real progress in just an hour or two of discussions. Yet that’s just what transpired at a stellar event last night called “Healthcare-IT—Innovations That Will Transform Healthcare Now and in the Future.” It all took place at the Herban Feast in Sodo Park, South Seattle, and it was organized by the Washington Technology Industry Association.

Over some fancy appetizers, a distinguished panel of technologists, executives, and entrepreneurs debated everything from the technical and cultural issues of privacy and security in electronic medical records to who’s going to get a piece of the $19 billion in federal stimulus funding for digital healthcare; everything from whether consumers really want e-health enough to drive regulatory changes to—and this was particularly interesting to Xconomy—what the real opportunities are for startups in the space. The panel showcased some of the first-rate expertise we have here in the Seattle and Portland regions.

Moderator Joel French, the founder and managing director of Nephalios Group, a management consultancy, kicked things off by saying the whole healthcare debate boils down to four things: a cost problem, quality variability, access and coverage, and wellness. In each of these issues, IT plays an important role. “You can’t really share information if it’s not digital,” French said.

With that, it was open season on the panelists:

—Henry Albrecht, CEO of Bellevue, WA-based Limeade, an online health and productivity startup making software-as-a-service for employers (we reported Limeade raised money in July).

—Carla Corkern, CEO and chairman of Bellevue, WA-based Talyst, a company that makes software and systems to help pharmacies manage medications in hospitals and long-term care facilities (we reported on Talyst’s broader strategy and funding in June).

—Luis Machuca, CEO of Hillsboro, OR-based Kryptiq, a maker of collaborative software that lets healthcare providers share information with patients, labs, and physicians (we’ve reported on some of Kryptiq’s deals and customers, including NASA).

—Mohan Nair, executive vice president and chief marketing executive of Oregon-based Regence, the largest health insurer in the Northwest (he has a background in tech entrepreneurship).

—Michael Raymer, global market strategist and general manager for Microsoft’s Health Solutions Group (we’re reported on HealthVault, the company’s Web platform for medical records).

For the next hour, some tough questions flew out from the audience, and among the panelists. Here are my takeaways from the discussion:

1. “The magic pill is data liquidity.” That was from Luis Machuca, who argued that patients need to be able to own and access their own digital health information and use it to get better healthcare. “Universal health will fail, everything will fail, if we don’t have data liquidity and digitization,” Machuca said.

2. An open market, human behavior, and connectivity are important too. Nair argued that the present closed marketplace for healthcare services encourages entitlement instead of earned rewards. Albrecht noted that we should pay more attention to behavior, and less to technology. Raymer added, “Data liquidity needs to be coupled with tools to empower people to make changes, and connect people together.”

3. If you want better healthcare, go to jail. “We see the best compliance for …Next Page »

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The DEMOfall 09 conference, billed as “the launchpad for emerging technology,” kicks off today in San Diego, with company presentations and new product launches officially starting tomorrow morning. The Seattle and Portland, OR, metro areas are well-represented in the mix, with three Seattle-area startups and one Portland company scheduled to present their stuff. That’s all according to VentureBeat, which co-produces the conference.

It’s a big deal in the tech industry, and a great opportunity for a select group of startups. Here’s a little bit about each Northwest company that will take the stage:

—Intelius, based in Bellevue, WA, provides background checks and identity theft protection for consumers and businesses. Back in May, we reported that the company acquired Spock, the Silicon Valley-based people search engine, for an undisclosed amount. Intelius was founded in 2003 and is led by CEO Naveen Jain, the founder of InfoSpace.

—Point of Wealth Systems, based in Portland, OR, has developed a method that allows employees who make their money in cash and tips (waitstaff at restaurants, for example) to deposit their earnings into a secure register for savings, retirement, or investment purposes. Point of Wealth was formed in March 2008 to bring financial services to this new market.

—Symform, based in Seattle, has been honing its cloud data-storage product in beta trials (and a pre-launch version) since the spring. We first profiled the company back in February, and in April, Symform announced it had raised a $1.5 million Series A round from OVP Venture Partners. Its basic idea is to offer cheap, efficient, and secure data storage and backup services to small and medium-sized businesses.

—Enroute, based in Bellevue, WA, is giving a sneak preview of its product—a unified system to help businesses find the most efficient way of shipping packages from A to B. Enroute is one of the finalists from the Zino Society investment forum, which took place last Thursday in Seattle. It is in the running for a $50,000 Zino investment prize, to be announced within the next few weeks.

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Tadayoshi Kohno spends his career looking at life through the eyes of a criminal, and he’s teaching University of Washington students to do the same. The UW computer science and engineering assistant professor studies computer security and privacy, which to Kohno means anticipating the bad guy’s moves before he does. I chatted with him recently to find out more about the “security mindset,” how you teach it, and what this mysterious bad guy could do using ingenious technology hacks.

“We’re seeing computers in all aspects of our lives, in medical devices, exercise equipment, cars, airplanes, utility systems, power lines, everywhere,” Kohno said. “One of my main concerns is that while we’ve thought a lot about security for our desktop computers, computing is much broader than that, and we need to address security for all of it.”

Kohno’s interest in security goes back to his teenage years, when as a 10th grader he won the Colorado History Day competition with an essay about the history of cryptography. During his doctoral work, Kohno revealed security flaws in the software of electronic voting machines. The machines, which were rising in popularity following the 2000 presidential election, could easily be hacked to manipulate votes or reveal people’s voting choices, Kohno said.

Since then, he and his graduate students at the UW have pointed out security holes in technologies such as implantable cardiac defibrillators, pacemakers, radio frequency identification tags (which are used, among other places, on many credit cards and Washington state’s new enhanced driver licenses), and the Nike + iPod sport kit (the workout tracker that fits inside running shoes). His group has also recently developed software that causes messages or data to self-destruct after a set period of time. The program, Vanish, is one step towards a security answer to the problem of putting all your information into the “cloud” of sites such as Facebook or Google, Kohno said, where it might be backed up and never fully deleted.

I found his group’s revelations about implantable medical devices especially chilling. Right now, devices such as cardiac defibrillators signal wirelessly only over short distances, to allow doctors to adjust them without surgery. But in the future, Kohno said, he can see technology advancing to the point where those wireless signals have a longer range, and that’s where the real danger to the patient comes in. Beyond just gleaning a patient’s medical and other personal information, a defibrillator hacker could send signals to shut off the device or send electric shocks to the patient’s heart. In 2008, Kohno’s group managed to perform these potentially fatal hacks on a real defibrillator (not in a person).

“This is a wake-up call for the industry and the FDA that these are serious issues, or could become serious in the future,” Kohno said. “I believe that providing the first concrete evidence is the first step toward having a broader impact.”

To figure out which piece of technology he’s going to hack into next, Kohno asks what the next big thing in technology is going to be over the next five to 10 years, that people might not have examined for security gaps. Then he tries to think of every damaging thing a devious person could do with that technology, if they hacked into it. “I think I have always liked to play the game of looking for holes in the system,” Kohno said, when I asked him how he first got interested in security.

Kohno, who is kicking off the Technology’s Alliance’s Science and Technology Discovery Series with a lecture this morning, also teaches undergraduate and graduate classes on computer security at UW, and is planning a security lecture or event for middle school and high school students sometime in the next year. Even though most of his students won’t go on to become security professionals, Kohno sees his courses on the “security mindset,” or how to think one step ahead of the hackers, as valuable for the computer industry, so that those working on new technologies will know when to call in the experts. “I want students have the habit of saying ‘what if’ when they see a new system,” he said. “The gritty details are much less important than having the mentality of asking, ‘What if something bad happens?’”

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Amazon Web Services announced it has launched Amazon Virtual Private Cloud, a Web service that helps big companies extend their IT infrastructure into the Internet cloud while addressing isolation and security concerns. Companies can use existing firewalls and security to create an isolated network, and then access the Amazon cloud within that network.

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The big news of the week was Microsoft’s sale of Razorfish to Publicis (see directly below), but there were a few other important deals in software, biotech, and energy.

—Microsoft’s online advertising subsidiary, Seattle-based Razorfish, was bought by French marketing firm Publicis for approximately $530 million, as Bob reported. The payment is expected to include cash and Publicis Groupe treasury shares. In addition, Microsoft and Publicis have entered into a five-year strategic alliance whereby Publicis clients can purchase display and search advertising from Microsoft on favorable terms. Microsoft (NASDAQ: MSFT) originally acquired Razorfish in its 2007 purchase of aQuantive.

—Bellevue, WA-based Confirma, a medical imaging software firm, has been acquired by Merge Healthcare, a Milwaukee, WI-based health IT provider, for about $22 million, as Eric reported. Merge will incorporate Confirma’s MRI software into its IT offerings for doctors.

—Vancouver, BC-based Tekmira (TSX: TKM) formed a two-year partnership with Cambridge, MA-based Alnylam Pharmaceuticals to develop new particles to deliver RNA-interference drugs to diseased cells deep in the body, as Ryan reported. Financial terms of the deal weren’t given. Alnylam is funding the research effort and has exclusive rights to new discoveries, while Tekmira can use the discoveries for some of its own RNAi treatment programs.

—Seattle-based EnerG2 won $21.3 million in federal stimulus funding from the U.S. Department of Energy to build a new manufacturing plant in Albany, OR. The University of Washington energy-storage spinout is developing nano-scale materials to make better ultracapacitors for electric and hybrid vehicles and other applications.

—A few more terms of the Microsoft-Yahoo search deal, in which Yahoo will use Bing as its search engine and will control ad sales for five years, were spelled out in a filing with the SEC. Microsoft (NASDAQ: MSFT) will pay Yahoo $50 million a year for three years to cover transition and implementation costs. It will also hire 400 Yahoo employees, plus another 150 to assist with the transition. Yahoo (NASDAQ: YHOO) can opt out of the deal if it isn’t approved within a year, or if Microsoft and Yahoo’s combined share of the search market dips below an undisclosed percentage.

—Seattle-based Oncothyreon (NASDAQ: ONTY), a developer of cancer drugs, raised $15 million by securing commitments from investors to buy new shares and warrants, as Luke reported. Last week, the company said a small group of lung cancer patients showed long-lasting responses after taking Stimuvax, the immune-boosting vaccine therapy Oncothyreon is co-developing with Germany-based Merck KGaA.

—Seattle-based WatchGuard Technologies, a network security company, acquired Toronto-based BorderWare Technologies, an e-mail and Web security firm, as Eric reported. Financial terms were not given. WatchGuard plans to use BorderWare’s technology to make its security software more comprehensive and competitive.

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WatchGuard Technologies, a Seattle-based network security company has acquired Toronto-based e-mail and Web security developer BorderWare Technologies, according to a press release sent out today. Financial details were not disclosed. WatchGuard, which has hundreds of thousands of businesses in every part of the world as clients, plans on using the technology gained from BorderWare to make its product more comprehensive and thus competitive among computer security providers.

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IBM announced today that it has acquired Waltham, MA-based security and compliance software firm Ounce Labs for an undisclosed amount. The move could help Big Blue meet its clients’ growing need to reduce the costs and risks associated with increasingly complex security and business regulations and policies.

Corporations constantly struggle with security and compliance issues, especially as enterprise systems increase in sophistication and complexity. Ounce Labs technology could help nip the problem in the bud by scanning the source code of an application and identifying potential sources of compliance or security trouble early on in the software development process, when it is presumably easier and less costly to fix, according to a press release. The technology can also help assess the risks posed by legacy software.

The Ounce deal comes on the same day that IBM announced it has agreed to buy business analytics software firm SPSS for approximately $1.2 billion in cash. Ounce is the technology behemoth’s 13th Bay State acquisition since 2003, joining the ranks of Rational, Ascential, Cognos, Diligent, and a host of others. We will be updating our map of IBM’s Massachusetts purchases soon.

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From Amazon to Zappos, it was an exciting week for deals in the Northwest. A lot of the news was dominated by Amazon’s biggest acquisition to date ($920 million), but there was plenty of other action in energy, biotech, software, and gaming.

—Xconomy broke the news that General Fusion, a Burnaby, BC-based clean energy company, raised $9 million out of a $12.5 million equity offering. The investors were undisclosed but include a syndicate from the U.S., U.K., and Canada, as Luke reported. The company’s board of directors includes members of GrowthWorks Capital and Chrysalix Energy in Vancouver, BC, Braemar Energy Ventures in New York, and Entrepreneurs Fund in London. General Fusion is developing a novel method of energy production called magnetized target fusion, and is currently working on a four-year, $50 million demonstration project.

—Bellevue, WA-based Limeade, a health-IT company, raised $2.4 million out of a $3 million equity offering, as Eric reported. The investors were not announced. Limeade makes software to help companies encourage their employees to reach wellness goals like losing weight or quitting smoking.

—Seattle-based Calypso Medical Technologies formed a partnership with Varian Medical Systems of Palo Alto, CA, to develop products that incorporate Calypso’s radiation-pinpointing technology into Varian’s software and devices for cancer treatment. Financial terms of the deal were not disclosed.

—Amazon (NASDAQ: AMZN) made its biggest acquisition to date, buying Henderson, NV-based online shoe retailer Zappos for some $920 million, as Eric reported. The blockbuster deal is expected to close this fall, and most of the money will come from about 10 million shares of Amazon stock. Meanwhile, Wade contributed an interesting (and surprising) take on how the deal affects a Boston-area robotics company, Kiva, that works with Zappos. Finally, Xconomy provided some more context for …Next Page »

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Bellevue, WA-based Finsphere, a security and authentication startup, has closed $9 million in equity funding, according to a regulatory filing. The investors were not disclosed, but the form lists Paul Bialek of Frazier Technology Ventures, William Ericson of Mohr Davidow Ventures, and Ravi Mohan of Shasta Ventures as directors. Finsphere is trying to help banks and their customers fight identity fraud.

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The idea that a computer authentication system might be watching not just for the content of your username and password, but to the way you type them—that is, the exact amount of time your fingers linger on each key, measured to the millisecond—may sound a little spooky. But that’s the premise of Delfigo Security’s new “DSGateway” software, introduced today. The company says its biometric verification and fraud detection technology could transform the way large organizations manage computer access, perhaps permanently eliminating such awkward contrivances as the one-time password tokens that many corporate employees must carry everywhere in their pockets or on their keychains.

In a second announcement today, Boston-based Delfigo also revealed the identity of its first paying customer: the cardiology department at Boston’s Children’s Hospital. The department will use the system to control access to a new patient record management system that it plans to extend to a number of partner hospitals and clinics, according to Ralph Rodriguez, Delfigo’s founder and CEO. James Lock, the chair of cardiology at Children’s, said in the announcement that Delfigo’s technology meets the department’s needs for security and compliance with privacy regulations “while integrating into our current technology.”

Indeed, the whole point of Delfigo’s system is to provide what computer security professionals call “multi-factor authentication”—identity verification measures that go beyond the traditional username and password—without forcing users to adopt additional technologies such as tokens, fingerprint scanners, and the like. The Children’s cardiology department “experimented with everything from physical tokens to digital certificates to proximity cards, but they all broke down for a variety of reasons, one of them being ’supply chain’ issues when someone loses their token or card,” Rodriguez tells Xconomy. “We went in and showed them that we could, in fact, tell two things: one, we can know that it’s you logging in, but we can also know if someone else tries to use your password.”

Delfigo opened last fall with venture backing from Stage 1 Ventures in Waltham, MA. Rodriguez is an inventor and serial entrepreneur who was formerly chief security officer at Burlington, MA-based Excellon Corporation and chief technology officer at Chelmsford, MA, semiconductor automation firm Brooks Automation. He says he’s been developing the company’s proprietary keystroke measurement technology for several years, putting on the finishing touches while working as a research fellow at the MIT Media Lab under renowned artificial-intelligence expert Marvin Minsky.

Here’s how Delfigo’s system works: Delfigo adds a bit of Javascript code to the Web page for an organization’s login screen that listens to the electrical signals coming from a computer’s keyboard. The code measures both the “dwell time” (the amount of time your fingers spend on each key) and the “flight time” (the amount of time between keystrokes). When you hit the return key or the login button, the timing information is first transmitted to Delfigo’s servers via HTTP, the standard Web data transfer protocol. Delfigo’s software then compares the incoming timings to historical information stored for each user. (Users have to train the system before it kicks in, Rodriguez says, by typing their usernames and passwords six to 10 times.)

Using sophisticated neural-network algorithms, the software calculates a “confidence score”—in essence, the likelihood that the person who’s trying to log in is the real account owner. It’s all a matter of statistics, Rodriguez explains, since the timings of each new login attempt will never match the training information exactly. If the confidence score crosses the threshold set by the organization, Delfigo …Next Page »

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The private e-mail addresses of several hundred customers of Waltham, MA-based Pixily were accidentally shared with other customers Saturday in the aftermath of an Internet routing snafu that left many users unable to reach the document-scanning service for several hours.

The breach, in which names intended for the “bcc” line of a customer service e-mail explaining the routing problem were put into the “cc” line instead, was the result of “human error,” according to Pixily co-founder and chief product officer Anand Rajaram.

The shared data included e-mail addresses only, and involved only a small fraction of Pixily’s customer list—not the entire list, as Fidelity Ventures’ Larry Cheng posted on Twitter today.

“We view customer security and privacy extremely seriously, and we have a level of trust with the people who use us,” Rajaram told Xconomy. “Our customers have been pretty supportive [about the problems] so far.”

In his own tweet this afternoon, Pixily CEO Prasad Thammineni said the e-mail system used to send out the customer service alerts was not the same one used to communicate with customers about their confidential scanned documents. “[The] entire management is in the office to address this issue and to make sure it does not happen again,” Thammineni wrote to Xconomy.

Update 10:45 pm 7/11/09: Pixily has posted an entry on its company blog (and a comment on this story, see below) apologizing for the e-mail error. The post says that the company will automate customer service communications in the future to eliminate the possibility of human error, and it is offering affected users one envelope’s worth of free document scanning.

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The activity in the Northwest picked up a little bit around the holiday weekend. In the past week, we’ve seen some interesting deals in alternative energy, healthcare, and software.

—Seattle-based Qliance Medical Management raised $4 million in venture capital led by Second Avenue Partners, with participation from New Atlantic Ventures and Clear Fir Partners, as Luke reported. Qliance provides basic healthcare to patients without involving health insurance companies, with the idea of paying doctors to spend more time with fewer patients. The company was founded in 2006 and has raised a total of $7.5 million. Luke first profiled the firm, which is led by CEO Norm Wu, back in December.

—Xconomy reported that Prometheus Energy, a Redmond, WA-based producer of liquid natural gas, raised $10 million from Shell Technology Ventures (managed by Netherlands-based Kenda Capital), with $10 million more coming down the road if Prometheus meets certain milestones. It’s a big deal for Prometheus, which has developed a novel method of producing alternative fuel from waste gases at landfills, coal mines, and other facilities. It’s also a big deal for Seattle cleantech and for the alternative fuels industry, which needs support from big oil companies.

—R.W. Beck, a Seattle-based engineering and business consulting firm, has been acquired by SAIC (NYSE: SAI), the San Diego government contractor, as Eric reported. Financial terms weren’t given. SAIC performs research and services for U.S. intelligence, defense, and security agencies. R.W. Beck was founded in 1942 and focuses on the energy and infrastructure sectors.

—Seattle stealth startup Ground Truth raised $2.6 million in equity funding, according to an SEC filing. The investors include venture capitalists Tom Huseby and Erik Benson of Voyager Capital in Seattle, and Beau Laskey of Steamboat Ventures in Burbank, CA. Ground Truth is led by executives Sterling Wilson and Michael Libes.

—Burnaby, BC-based Ballard Power Systems (NASDAQ: BLDP) has teamed up with Bend, OR-based IdaTech to sell 310 hydrogen-fueled generators to ACME Tele Power, a wireless infrastructure company in India, as Eric reported. Terms of the sale weren’t disclosed. The generators will help ACME produce backup power to maintain wireless networks during outages.

—The Financial Times reported that Microsoft (NASDAQ: MSFT) is in the process of selling Razorfish, its Seattle-based online advertising subsidiary. The report, which has not been confirmed by Microsoft, claims Morgan Stanley has been appointed to find a buyer, and that Publicis, a French marketing firm, is a possible bidder. Microsoft acquired Razorfish in 2007 as part of its $6.4 billion purchase of aQuantive in 2007.

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It’s no surprise that the president of RSA, the security division of Hopkinton, MA-based information management giant EMC (NYSE: EMC), has strong views about the need for better security practices within corporations and government agencies. But Art Coviello, who joined RSA in 1995 and helped engineer its 2006 acquisition by EMC, says the problem isn’t that companies aren’t aware of today’s cyber security challenges—it’s that they often aren’t doing the right things to address them.

Companies try too hard to protect the machines that data live on, rather than the data itself, Coviello told me during an interview earlier this month. They dive into faddish new technologies like cloud computing and social networking without investigating the new kinds of security risks they pose. And they focus too much on achieving technical compliance with government regulations, rather than on minimizing the risks those regulations are meant to address.

Coviello spoke with me shortly after RSA issued the latest report from the Security for Business Innovation Council, a group of 10 security executives from companies like Motorola, JP Morgan Chase, Time Warner, and Novartis. RSA assembled the council to draw attention to ways that businesses can continue to innovate—a process that often involves adopting untested new technologies—without exposing themselves to new waves of fraud, data breaches, and other cyber attacks.

Coviello was eager to share the recommendations in the report, which range from suggestions about specific security policies and technologies that companies can adopt to ideas for broad industry cooperation on ways to thwart cyber criminals. But I also asked him for his perspective on the recent increase in the number of New England-area companies offering so-called “governance, risk, and compliance” software, and for his views of the Obama Administration’s performance so far on cyber security issues. (See page 3. A preview: he’s reserved, but optimistic—and has some specific suggestions on who President Obama should name as the new cyber security czar.) A condensed version of our interview follows.

Xconomy: What’s the main purpose of this latest report from the Security for Business Innovation Council?

Art Coviello: One of the things we tried to establish early on is that security doesn’t have to be viewed as an inhibitor of innovation. It can be viewed as an enabler of innovation. This is the fourth in a series of reports that does just that. It gives tips and advice on how [security] can not only not get in the way, but how it should give people confidence to do more things online.

But one part of what we’re bringing out here is that when it comes to things like cloud computing and social networking, people are just jumping ahead, and saying we’ll take care of the security later. That’s a bad idea.

X: Forgive me if this question sounds cynical, but cloud computing and certain forms of social networking are among EMC’s services and software these days—and so, obviously, is security. Wouldn’t almost any report coming from a group convened by the security division of EMC be recommending more adoption of security software?

AC: I can see how you could be cynical about almost anything that gets produced by a technology company. But the guys who are part of this study are independent. We facilitate it, we don’t pay them for it. You’ve got people like Bill Boni from Motorola, Anish Bhimani from JP Morgan Chase, David Kent from Genzyme, Craig Shumard from Cigna. You have a cross section of people, and they’re not making any money from cloud computing or social networking.

Having said that, the fact is that the horse is out of the barn, and people are going to be adopting these technologies, because they improve productivity and communication. You are not going to slow it down, but you can expose yourself to risks that you would feel fairly sorry about if you don’t …Next Page »

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Clear, a five-year-old biometric passenger identification service intended to speed air travelers’ passage through security checkpoints, shut down last night. According to the service’s website, parent company Verified Identity Pass of New York, NY, was unable to obtain credit to continue operations. Boston’s Spark Capital led a $44.4 million Series C venture funding round for Verified Identity Pass last August. Syncom Venture Partners, Lockheed Martin, Baker Capital, GE Security, and Lehman Brothers also joined that round, which brought the company’s total funding at the time to $116.4 million.

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I spent yesterday pounding the pavement in Portland, OR, enjoying a burst of warm sunshine and a weird, creative vibe. It offered a great contrast from the last time I tried to travel there for work meetings, back in January when I-5 was underwater and Amtrak wasn’t running. This visit was enough to make me fully appreciate why solar-cell companies from around the world might have descended on Oregon in droves (well, besides the tax breaks—Portland has at least as many cloudy days as Seattle). Not to mention why there is a burgeoning tech startup scene there.

But first, here’s a sampling of strange things said to me as I walked the sunny streets between meetings with startups and investors:

—”Sir, can you spare a dollar for marijuana?” (The locals are honest, at least. Entrepreneurs might want to try that line on their VCs.)

—Silence. That was the sound from the other end of the intercom when I buzzed Vidoop’s office from the street. The online image-based security and authentication startup, which moved from Oklahoma last September, has fallen on hard times and has closed up shop. Vidoop had moved to the Northwest to be closer to the OpenID software community, which started in Portland. The latest example of bad things happening to a good startup.

—”My wife thinks you’re hot. Would you like to have a threesome?” (OK, this is only “innovation” in the broadest sense…so what if the guy didn’t look like an entrepreneur. Where are these people in the Seattle community? Don’t answer that.)

Speaking of hot, I found a definitive list of the “hottest Portland tech startups.” It has recently been compiled by AboutUs, itself a Portland startup backed by Voyager Capital and Capybara Ventures. AboutUs makes collaborative wiki software to help people discover and share information about companies and other entities online. The startup list is a work in progress, but it already has lots of good info on the local tech community. Another top resource for the Portland innovation scene is the Silicon Florist blog by Rick Turoczy.

I’ll be filing stories from my visit later this week. Stay tuned.

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