[Corrected 2/9/12, 9:05 a.m. See below.] A few weeks ago, Dan Gilbert and the Detroit Venture Partners (DVP) crew welcomed reporters for a tour of the newly renovated Madison Building in downtown Detroit. Gilbert had recently spent $12 million to turn the former theater into a sort of fantasy workspace for budding entrepreneurs, and the results of his makeover didn’t disappoint.

The building features plenty of walls that function as whiteboards, a 150-seat auditorium that seems the perfect place to host an investor pitch meeting, and a stunning rooftop kitchen and deck that overlook Comerica Park, home of the Detroit Tigers. Little flourishes, like the exposed brick and the fact that some of the graffiti found in the building during renovations has been preserved, give the space a young, slightly edgy feel. All of it is meant to transform the Madison Building into a destination for startups across the nation—and if the story of Quikkly‘s Shawn Geller is any indication, it’s working.

Geller, a native of Pennsylvania, graduated from Temple University in 2009. While in school, he was bothered by what he saw as a disconnect between the small mom and pop stores surrounding the campus and the students they sought as customers.

“It wasn’t just local stores, but even the national brands would only come on campus one day a year with student ambassadors,” Geller says, noting the cost and inefficiency of that strategy. “It wasn’t a good model whatsoever.”

Geller worked with local merchants in need of promotion to create a simple landing page where students could find coupons and send them to their phones via text message. They would then claim the coupon by showing the text message at the store offering the discount.

Word of mouth quickly spread, and Geller built up a database of about 3,000 Temple students. He then went around to different restaurants and stores and asked them what their slowest times and days were. Armed with that information, he created his first “flash deal,” where he sent a text out to his database offering the first 150 people who responded within a certain amount of time a large pizza for $5. When close to 100 students went in to the pizzeria to claim their coupons, Geller knew he was onto something.

“It was a very cool way of testing the market,” Geller says. “Groupon was less relevant then, so it was exciting to be able to drive student interest in such a short amount of time.”

Geller began incorporating Facebook social gestures into his platform and named his startup Student Coupons. Soon, friends who didn’t attend Temple were noticing the Facebook posts and asking how they, too, could take advantage of the coupons.

Geller starting working with Jason Lorimer, another Philly entrepreneur, to refine and scale up his business model. Lorimer had just begun spending time in Detroit first as a tourist visiting a friend, and then as an entrepreneur scouting for opportunities. Lorimer connected Geller with Josh Linkner, DVP’s managing partner, after he saw some common ground between the national brands Geller hoped to snag as clients … Next Page »

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Plans for IPOs and venture funding dominated the New England deals news this week.

—A new seed fund, backed by venture firm New Enterprise Associates and hosted by Harvard, came out of the woodwork last week. The Experiment Fund will invest up to $250,000 in seed funding in selected startups, with a focus on technologies that come out of Cambridge, MA. The news broke just a few days ahead of Facebook—the one that got away—revealing its plans to go public.

—Radius Health, a Cambridge-based startup working on treatments for osteoporosis, filed paperwork indicating its plans to raise as much as $86 million in an initial public offering.

—A PricewaterhouseCoopers and National Venture Capital Association report shows a mixed picture for life sciences investing in 2011, my colleague Arlene reported. Biotech companies raised $4.7 billion, showing a 22 percent increase over 2010, but the deal volume for the sector dropped 9 percent to 446 transactions. Medical devices companies also showed an increase in funding dollars but a drop in number of deals.

—Cambridge-based Brightcove set the price range of its initial public offering at $10 to $12 per share, according to an amended filing with the SEC. The video hosting startup plans to sell 5 million shares, and give underwriters the option to purchase another 750,000 shares. Brightcove first filed paperwork last August indicating it intended to raise $50 million in an IPO.

—Synchroneuron of Waltham, MA, nabbed $6 million in Series A funding from Morningside Technology Ventures. The startup is developing treatments for movement disorders such as tardive dyskinesia.

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Applied Proteomics hasn’t exactly been operating in stealth mode since it was founded five years ago. Co-founders David Agus, a cancer specialist at USC, and Danny Hillis, the MIT-trained computer scientist, gave TedMed talks about the startup’s technology, which provides a 40-gigabyte snapshot of all the proteins circulating in a drop of blood. By pure coincidence, I watched John Stewart’s Feb. 2 interview with Agus last night on “The Daily Show.”

“Danny and David had the foresight to build the tool before trying to use the tool,” says John Blume, a molecular biologist who joined API in 2008 as chief scientific officer. “Although the company wasn’t in stealth mode, the first several years were spent in taking the time to make it right, and then to use it and avoid some of the stumbling blocks.”

Now Applied Proteomics is raising the curtain on several steps that mark its progress beyond a seed-stage startup that was incubating at Applied Minds, an industrial think tank that Hillis founded in Glendale, CA, with a colleague from Disney Imagineering. After moving the headquarters to San Diego late last year, Applied Proteomics is today naming a new CEO—Peter Klemm, a veteran in molecular diagnostics and the former CEO of Lexington, MA-based Predictive Biosciences.

Danny Hillis

The company known as API says it also secured $22.5 million last June in Series B funding from Domain Associates (San Diego partner Jim Blair joined the board), Seattle’s Vulcan Capital, and returning angel investors. Klemm tells me the company raised $4 million from angel investors (who prefer to go unnamed) in what amounted to API’s Series A round in 2007.

David Agus

API’s goal, Klemm says, is nothing less than to “elevate molecular diagnostics to another level beyond the genome” by measuring the proteins made by genes—a long-sought technology that is expected to help doctors improve medical care for individual patients. Because proteins carry out most cellular functions, the company says a snapshot of all the proteins circulating in the body at a given moment represents “the most powerful source of information” in terms of understanding a patient’s health status.

Quantifying all the proteins in the body, Klemm says, can help doctors optimize the course of treatment for individual patients by making it easier to identify the specific drugs that would have the greatest effect on blocking specific proteins or signaling pathways, which can vary dramatically from person to person.

In a statement from the company, Hillis says, “For the first time, we can look at all the proteins in the body with remarkable specificity and sensitivity and use proteomic technology to create … Next Page »

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We’re starting to see fresh signs of life among the Internet software startups in San Diego. Check out this news.

—During a visit last week, TechStars CEO David Cohen talked with the leaders of San Diego’s grassroots Web startup community about the factors that help to create and sustain entrepreneurial communities. One crucial issue confronting San Diego is a crying need for savvy and experienced Internet entrepreneurs who are willing to “pay it forward” by mentoring a new generation of startups.

—A dozen seed-stage companies moved into the new EvoNexus incubator in downtown San Diego. EvoNexus, which was founded by the CommNexus non-profit industry group, will continue to operate its original incubator in University City, where eight startups are taking root. In both locations, EvoNexus provides office space, utilities, and other services free of charge and with no strings attached.

—Sigma Partners led a $10 million round in venture funding for San Diego-based MOGL, a Web startup that has developed a comprehensive customer loyalty program for restaurants and bars, to fuel its expansion into San Francisco and New York. San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures joined in the round.

—San Diego’s MicroPower Technologies named two new board members after raising $6.5 million in Series C funding in a deal that was led by Motorola Solutions Venture Capital and joined by an undisclosed private fund. MicroPower Technologies, which uses wireless networking technologies to create low-cost surveillance capabilities, named PacketVideo CEO Jim Brailean and former DivX CEO Kevin Hell to its board. Hell, who is now chairman of San Diego’s EvoNexus incubator, will join as MicroPower chairman.

—San Diego’s StockTwits said it has established a partnership with Toronto’s Q4 Web Systems, which provides … Next Page »

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When it comes to tech startups—especially in Internet software and app development—San Diego has been adrift in the horse latitudes. That’s the term Spanish mariners had for the waters where the trade winds died out for days and even weeks at a time. Becalmed sailors desperate to gain some headway would heave their horses overboard to reach the New World.

It hasn’t reached that point yet in San Diego, but you would never know that software was once a thriving entrepreneurial community here. Even now, the software sector accounts for more than a third of San Diego’s private technology companies. But as I’ve written previously, it feels as if the local software companies speak different languages. In contrast to the flourishing tech hubs in Seattle, Boston, and New York—not to mention Silicon Valley—San Diego’s software scene is sleepy and indifferent.

Still, there are signs of a freshening breeze.

David Cohen last week at UC San Diego

Scores of new seed-stage startups have begun to emerge throughout the region, including a dozen that just moved into the new EvoNexus incubator in downtown San Diego. These emerging companies are led by young entrepreneurs who view San Diego’s innovation establishment as old-school and irrelevant. They are turning out instead for informal “hackathons” and “meetups.” They tell me they’re yearning for real mentoring by real tech entrepreneurs, and for access to real tech investors who are really investing.

Last week, more than 200 people turned out to hear David Cohen talk at U.C. San Diego about TechStars, the early stage fund and accelerator program for Internet startups that he co-founded with three partners in Boulder, CO, six years ago. Cohen is the CEO, and by any measure, the startup program has been wildly successful.

TechStars enrolled its first 10 Internet startups in 2007, providing as much as $18,000 in seed funding and an intense, three-month mentorship program for each company in exchange for a 6 percent stake. Since then, TechStars has expanded to … Next Page »

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Don’t know about you, but I’m less interested in Facebook’s IPO than I am in the efforts of people trying to find the next Facebook out of Boston/Cambridge. One such effort is the new Experiment Fund, based at Harvard University, which I wrote about earlier this week.

Turns out there’s more to the latest seed-stage fund in Boston than initially meets the eye. I had a chance to speak with the Experiment Fund’s co-founders, Hugo Van Vuuren of Harvard and Patrick Chung, a partner at Silicon Valley-based New Enterprise Associates (not that Patrick Chung, that Patrick Chung).

They clarified the goals of the new fund and provided some more context around how it plans to distinguish itself from other similar efforts. I’ve also talked with a number of other early-stage investors around town and have gotten a better sense of how the Experiment Fund is being received locally (more on that below).

First, some mechanics of the fund, which has been in the works for about two years. Harvard has no financial stake and will have no say in the fund’s investment decisions, but it has provided support and office space, Van Vuuren says. He declined to specify the projected size of the fund, but he said it plans to make four to six new investments over the next two years, each in roughly the $100,000 to $250,000 range.

The Experiment Fund has already invested in four companies: Rock Health (see my colleague Wade’s stories here and here), Omada Health, Punch Media, and Tivli. Interestingly, only Tivli is based in the Boston area. Rock Health and Omada are in San Francisco, and Punch Media is in the DC area. They all were started by Harvard students—the key ingredient for now—but the fund intends to invest in teams from other schools around Boston and the East Coast, as well. So I’m guessing its next four investments will be pretty different from its first four, at least geographically.

“We want to meet them here,” Chung says. “We want to help you right here in Boston where the ideas were first born, where the team was put together.”

One issue they wanted to address was the notion that the fund is … Next Page »

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Cambridge, MA-based Flagship Ventures, a $900 million fund known for its successes with companies such as Accuri Cytometers and Acceleron Pharma, is planning to open an office in Michigan in the next six months, says Sean O’Donnell, VP at Credit Suisse’s Michigan office.

The move comes after Venture Michigan Fund II (VMF II), a fund-of-fund which is managed by Credit Suisse, made a $15 million investment commitment in Flagship Ventures Fund IV, which invests in early-stage companies. As part of the agreement, Flagship will invest that $15 million in Michigan companies. Flagship has already found success in local companies with Accuri Cytometers, which is based on technology spun out of the University of Michigan.

“Flagship Ventures is a much larger fund than is typically involved in our program,” O’Donnell says. “We hope they’ll exceed that amount.”

The Venture Michigan Fund II was established in February 2011. Like the first Venture Michigan Fund, VMF II exists to primarily invest in early- and seed-stage Michigan companies. VMF II has $120 million in capital to invest in funds that target high-growth and emerging industries. The commitment to Flagship was the fourth investment it has made.

And what can we expect Flagship to invest in? O’Donnell admitted that Michigan continues to feel the effects of a difficult national fundraising environment, though he says there is actually an increased amount of capital available to Michigan companies compared to years past thanks to programs like VMF II. He pointed to the success of homegrown entities like Arboretum Ventures and HandyLab as helping to persuade investors that Michigan is a viable place to invest.

O’Donnell also says that, though Michigan’s life science sector will remain robust, he predicts movement away from therapeutics and devices in favor of anything that saves money. Where he expects to see increased investment is in the IT sector, particularly in software development, mobile apps, and social media, and the reason is simple: Those kinds of companies are cheap to start.

“I feel Michigan is on the right track,” O’Donnell says. “We’re always going to have gaps, but good deals will still be able to find capital.”

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This week’s deal news covered a breadth of sectors: biotech, medical devices, mobile applications, software, and robotics. Not to mention a major venture capital fund raise.

—Waltham, MA-based drugmaker Avila Therapeutics was bought by New Jersey-based Celgene (NASDAQ: CELG) for $350 million, with as much as another $575 million available in milestones. Avila is a maker of “covalent” drugs that are designed to shut down the activity of disease-causing proteins for a prolonged period of time.

—Verastem, a young Cambridge, MA-based biotech working on drugs targeting cancer stem cells, completed its initial public offering, led by UBS and Leerink Swann. The IPO (5.5 million shares sold at $10 apiece) represented a strong showing among investors, as Verastem originally indicated it planned to sell 4.5 million shares priced between $9 and $11 each. The underwriters have a 30-day option to buy another 825,000 shares.

—Burlington, MA-based ConforMIS, a maker of knee implant systems, raised $89 million in a Series E funding from private equity investors and government investment funds abroad. The company said it will put the money toward sales, manufacturing, and expansion of its technology.

—Co3 Systems, a maker of data loss management software, received new funding from Fairhaven Capital. The Cambridge, MA-based startup said it will put the money (whose sum was undisclosed) toward sales, marketing, and engineering.

—Malborough, MA-based medical device startup Navilyst Medical will be acquired by Albany, NY-based AngioDynamics (NASDAQ: ANGO) in a transaction valued at $372 million, based on the company’s $14.20 per share closing stock price Monday. Navilyst, which focuses on … Next Page »

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There’s a new player in the seed-stage investment game in Boston. As of this week, the Experiment Fund is open for business at Harvard University, backed by the Silicon Valley venture firm New Enterprise Associates (NEA). The startup investment fund is being hosted by Harvard’s School of Engineering and Applied Sciences in Cambridge, MA.

The new fund is led by Hugo Van Vuuren (see photo above), a Harvard graduate student and entrepreneur, and two venture capitalists from NEA, Patrick Chung and Harry Weller (both Harvard alums). David Edwards, a Harvard professor of biomedical engineering, serves as an advisor to the fund. Van Vuuren and NEA did not respond to requests for comment in time for this article.

The basic structure of the Experiment Fund is that selected startups—mostly student-led teams from Cambridge—will receive up to $250,000 in seed funding over the next two years, presumably in exchange for a sizable equity stake in the companies. The fund is based out of Harvard but says it will operate independently of the university and will look at teams from other local schools—and, more broadly, from the East Coast. The sectors targeted are pretty broad as well; they include information technology, healthcare, and energy.

No word yet on the size of the fund or how many companies it will invest in. But Van Vuuren, a recent fellow at Harvard’s Berkman Center for Internet and Society, said in a press release that he and his partners are looking for “smart and resourceful people, zealous full-time teams, and experiments in need of seed funding and hands-on help to get off the ground.”

Not to beat a dead Zuckerberg, but the overarching goal here is to keep the next Facebook in Boston—and, preferably, affiliated with Harvard. “It’s continued growth of the ecosystem for Harvard and beyond,” says Gordon Jones, director of the Harvard Innovation Lab, which is collaborating with the Experiment Fund to provide office space and resources, but is separate from the new fund. Jones calls the Experiment Fund “extremely complementary” to the i-Lab.

One of the first Harvard teams to receive an investment from … Next Page »

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When Long Island, NY-based Kemp Technologies revealed on its blog on January 24 that it had raised $16 million in venture capital, it might have been easy to overlook the funding as just another sign of the latest tech boom. But this was no ordinary funding: Kemp is an 11-year-old company with revenues and profits that’s entering the venture capital market for the first time. The company, which makes equipment to help small and medium-sized businesses manage traffic on their computer servers, was funded by Edison Ventures, with participation from Kennet Partners, and Orix.

Why did Kemp’s founders jump into the VC game now when their company was fully self-sustaining and on a fast growth path? Peter Melerud, Kemp’s co-founder and executive vice president of product management, got on the phone recently with Xconomy to explain the reasoning behind the funding round and to provide insight to other business owners who are weighing an entry into the VC game.

Xconomy: As a profitable, self-sustaining company, why did you feel you needed to raise venture capital?
Peter Melerud: We started the company in 2000, and in 2003 we launched our very first product. Our revenues and profitability started to happen not too long after the time we launched our first product. We were able to quickly start re-using the profits for seeding growth. But obviously it was slow and deliberate, with an eye towards the bottom line, because we were self-funded.

Over the past three years, we experienced dramatic growth. In 2011 we saw 116 percent growth in revenues and we have 8,000 deployments worldwide. We realized that in order to take advantage of that growth and keep up with it, we needed to aggressively step up every area of the company, from R&D to tech support, to marketing and sales. To do that, we realized, we needed external funding.

X: What made you optimistic it was a good time to raise capital?
PM: The relative environment for VCs and fundings didn’t really have a big impact on our decision. We are a New York-based company—not a Silicon Valley-based company. Even though there was VC activity happening in this area, we were a little off the beaten track. We got engaged in the process with the current investors a pretty long time ago—almost a year and a half ago. It was definitely a getting-to-know-you process between us and the investors. We needed to be comfortable that we were really going to be working with good partners, not just VCs.

X: What will your group of VCs bring to the table, beyond the money, of course?
PM: Our roots are in product R&D and marketing. That’s what our expertise is. What the investors bring to us is more of a strategic growth-management capability that we’ll certainly be able to leverage.

We’re planning significant international growth. In the past, we relied on developing a channel network internationally. In 2010, we established a subsidiary in Ireland. We’re definitely looking to staff that up, but also to expand into other European territories, perhaps Central and Eastern Europe. We’re also going to be growing our support infrastructure. Support is a very key element of our business model—we don’t outsource it. We have to grow support capabilities internally, and we can do that more aggressively now. We’re going to be increasing our marketing and sales capabilities, too.

X: The poor IPO market makes exit strategies difficult, but now that you have VCs on board, it’s something you have to think about. How are you looking at the exit strategy at this point?
PM: Looking forward, we see our technology as becoming more and more core to a lot of other parallel areas, certainly in the cloud space. Being in the position to take advantage of those opportunities as they come up makes sense.

Looking at potential exits, I think there’s a broader set of options than just an IPO. It’s not something that we’re looking at short term though. It’s more of a three-to-five year plan. How will the market look at that stage? No one has a crystal ball, but certainly everybody thinks it can only get better.

X: What advice would you pass along to other late-stage companies thinking about raising venture capital for the first time?
PM: My first suggestion is to be clear with yourself as to why you’re doing it. There are lots of reasons to bring VCs in, so you need to understand the market, the opportunity, and where you fit within your space. How will the additional capital help the organization grow, assuming growth is driving the decision? Having that clarity is very important.

Also you have to match yourself to the right investor. Investors can vary dramatically based on their investment criteria. Make sure there’s a match, and make sure there is a match in personalities, as well. An investor is someone you’ll work very closely with, so you need to be sure that’s something you can do. Hopefully the two of you together will make a much stronger entity.

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San Diego’s StockTwits is developing a bit of a Canadian accent, eh, through a partnership being announced today with Toronto-based Q4 Web Systems, which provides online investor relations services for publicly traded companies throughout North America.

StockTwits is an online social media network that enables traders and shareholders to share their market insights, ideas, charts, and news in real time via Twitter. The startup structures financial and investor-related information from its Twitter feed by stock, user, reputation, and other criteria. StockTwits also enables users to save the stocks they follow to their own portfolios and to limit the comments tweeted about each stock to trusted sources.

As I reported last summer, the four-year-old startup has determined that its chief source of revenue also lies with the investor relations and public relations units of publicly traded companies.

By introducing a ticker tag symbol for publicly traded stocks, $(ticker), StockTwits makes it possible for public companies to sign up for a higher level of StockTwits’ Web service and to “claim” their stock tickers. Once claimed, a company’s IR and PR teams can use the ticker tag to distribute corporate information over the Web in real time.

By partnering with Q4, StockTwits plans to integrate its services with the subscription-based services that Q4 provides its corporate customers. Q4 says its website services include more than 30 IR “best practices” modules that help companies properly provide information and other services to investors and shareholders.

“We’re working with them to make it easier for people to use both of our products,” says Francis Costello, StockTwits’ chief operating officer. He tells me StockTwits has more … Next Page »

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San Diego’s MOGL, a Web-based customer loyalty and rewards program for restaurants and bars, says it has raised $10 million in venture funding to fuel its expansion into San Francisco, New York, and other markets.

The Menlo Park, CA, office of Sigma Partners led the Series B round, which was joined by San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures. That brings total funding for MOGL to $12.4 million, according to a statement from the company. Entrepreneurs Jon Carder, Jarrod Cuzens, and Jeff Federman started MOGL in 2010.

The Internet startup offers its customers multiple incentives for returning to member restaurants and bars, using a mixture of technology, games, and psychology. The incentives include a 10 percent cash back each time a customer returns to eat at participating restaurants. A contest  offers monthly cash prizes to the top three most-frequent customers at each locale. Customers also can automatically donate a meal to someone in need every time they spend $20.

MOGL Homepage Screenshot

MOGL says it provides customer analytics and return-on-investment data for participating bars and eateries. In a statement from the company, Sigma partner Peter Solvik says, “The MOGL team has generated an explosive response from both consumers and restaurant partners, while effectively positioning itself as the most innovative loyalty platform of its kind.”

Since it was launched last April, MOGL has signed up nearly 350 Southern California-based eateries and bars, donated more than 27,000 meals to Feeding America, and has rewarded its members with more than $350,000 in cash back to date.

The company also offers a location-based mobile app for iPhone and Android, so MOGL members can easily locate participating restaurants while on the go. The mobile apps also help customers track their cash rewards and jackpot opportunities, as well as the number of meals donated in their name.

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

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

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

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

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

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

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The unsolicited $5.7 billion offer that Roche made for Illumina will no doubt dominate San Diego’s biotech news for weeks to come. We have it and more.

—Switzerland’s Roche offered $5.7 billion, or $44.50 a share, for San Diego-based Illumina (NASDAQ: ILMN in a hostile bid disclosed yesterday. Roche’s bid to stake a claim in genetic diagnostics by acquiring the market-leading maker of DNA sequencing instruments would be the Swiss pharma giant’s biggest deal since its $46.8 billion buyout of Genentech almost two years ago. Roche is the world’s biggest maker of cancer drugs, which suggests its quest for Illumina represents a significant move to base cancer treatments on each patient’s genome.

—Venture capital investors sank $4.73 billion into 446 biotechs nationwide in 2011, according to the MoneyTree report from the National Venture Capital Association, PwC, and Thomson Reuters. But as Luke pointed out in his BioBeat column, there is an alarming drop in support for early stage life sciences startups. Only 153 biotech and medical device startups got their first round of financing in 2011, the lowest amount of seed investment activity in 15 years.

—At an Xconomy dinner discussion, former Amira Pharmaceuticals CEO Bob Baltera said insufficient access to capital is the biggest driver for decision-makers on both sides of biotech-pharma partnerships. So what are some other key factors? We asked some of San Diego’s life sciences leaders to explore the question in an “on the record” dinner discussion late last year.

—San Diego’s Sequenom (NASDAQ: SQNM) completed its secondary public offering, raising roughly $62 million in gross proceeds (before underwriting costs) in the sale of 14.95 million shares, including additional allotments granted to underwriters. Sequenom said it plans to use the net proceeds for … Next Page »

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An acquisition and startup financings made up the New England deals news this week.

—Waltham, MA-based marketing software firm Constant Contact acquired the Boston startup CardStar, the developer of a mobile app for customer loyalty and rewards programs. The deal, whose terms were undisclosed, enables Constant Contact (NASDAQ: CTCT) to expand its marketing offerings for small businesses.

—My colleague Greg rounded up the top 10 venture deals in the Boston area from the fourth quarter of 2011. Rapid7, Warp Drive Bio, and Agios Pharmaceuticals were at the top.

—Hewlett-Packard has spent more than $10 million to set up a new office near the Alewife train station in Cambridge, MA. The office serves as the new headquarters for Vertica, the big data company HP acquired last winter (previously based in Billerica). The new facility will also serve as a center for technology development and local outreach.

—Bluefin Labs, a Cambridge-based startup focused on understanding social media conversation surrounding TV, nabbed $12 million in Series B financing. The deal was led by Time Warner Investments, and included new investor SoftBank Capital and return backers Redpoint Ventures and Lerer Ventures. Bluefins says it will put the money toward sales and client services, as well as its social analytics technology and further R&D.

—Mevion Medical Systems, a radiation therapy company based in Littleton, MA, announced it had pulled in $45 million in funding from ProQuest Investments and existing investors Caxton Heath Life Sciences, Venrock, and CHL Medical Partners. The money will go toward development of its proton beam radiation therapy system, which is designed to be smaller and less expensive than existing X-ray radiation therapy devices.

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They say the first casualty of war is the truth. Based upon recent events in the U.S. presidential elections, it looks like the truth is a casualty in politics as well. Whether out of desperation, ignorance, or political convenience, current and former contenders for the Republican presidential nomination have been questioning the long-term economic value of venture capital and private equity, which has been wrongly and unfairly labeled “vulture capitalism.”

First, let’s be clear. Venture capital and private equity—while related in that they both involve pools of private capital striving to generate returns for their investors (typically non-profit pension funds, foundations and university endowments)—follow very different approaches in achieving their goals. But neither seeks to undermine employees. In fact, venture capital typically creates jobs over the long term and private equity minimizes job losses.

Venture capital—a key component of the financial foundation for Silicon Valley—is focused on leveraging creative talent, capital, the hard work of employees and entrepreneurial experience to create and grow new businesses based on disruptive ideas. When successful, new businesses and industries are the result—creating new jobs for employees and wealth for investors and contributing to the competitive posture of America. When unsuccessful, the venture capital investors involved and their employee partners bear the costs of the failed effort. There are no government bailouts here—unless the politicians become involved a la Solyndra, the clean tech startup that fell into bankruptcy despite a $535 million federal loan guarantee. A situation like Solyndra is rare, however.

Venture capitalists and entrepreneurs don’t always win in the marketplace, but they don’t quit, either. In many instances, the same investors and talented engineers who failed will form new teams and pursue new dreams—always looking to create value and opportunity from ideas. The innovation flywheel is often successful and very lucrative: According to a 2011 Global Insight study, venture-backed companies accounted for 11.9 million jobs (11 percent of U.S. private sector employment) and $3.1 trillion in revenue in the U.S. in 2010—21 percent of the total US GDP–all based on an annual investment equal to less than 0.2 percent of GDP.

By and large, these are jobs at the higher end of the spectrum with solid, innovative companies—and often those that become global industry leaders, such as Intel, Apple, Google, Genentech, Facebook, Twitter, to name but a few. Ironically, while countries around the world are replicating the U.S. venture capital model and working overtime to encourage innovation and support venture capital ecosystems, U.S. politicos, themselves devoid of any new or creative ideas, have chosen to attack the engine of U.S. technology leadership.

Private equity also plays an important, though different, role in the U.S. economy. It builds and restores established but usually faltering companies. While colorful robber baron images of Gordon Gekko, acquiring functional businesses and breaking them apart for pure financial gain, may still be a popular reference point in today’s media, it is an inaccurate analogy in the vast majority of cases. Like venture capital investors, most private equity investors are paid for building real value, for themselves and their investors, not simply to make a quick buck. They do this by investing in under-performing companies, often in or on the verge of insolvency, in hopes of … Next Page »

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There’s a new big tech company in town. In fact, it’s arguably the world’s biggest technology company (by revenue), and it’s joining the ranks of IBM, EMC, Microsoft, Google, and, most recently, Amazon, in expanding to the Boston-Cambridge area.

Palo Alto, CA-based Hewlett-Packard (NYSE: HPQ) has set up a new office in Cambridge, MA. The operation will serve as a center for technology development, licensing, and outreach to local startups, investors, and researchers. The 37,000-square-foot facility at 150 CambridgePark Drive, near the Alewife subway station, is spread over two floors. The building serves as the new headquarters for Vertica, the Boston-area big-data analytics firm that HP bought last winter. Vertica is in the process of moving its 150 employees from its offices in Billerica to the Cambridge facility this month, and it is currently hiring.

HP already had a sizable presence in Massachusetts, with its campus in Andover. But the new Cambridge office represents an unprecedented investment by HP in outreach and partnerships with local entrepreneurs, venture capital firms, and the academic research community in the Boston area. The company hasn’t specified a firm commitment of future dollars, but just setting up the new space—including a state-of the art lab and all its associated infrastructure—has cost more than $10 million, says Chris Lynch, the chief executive of Vertica. (His HP title is vice president and general manager.)

Lynch, who is leading the new facility, calls it a “big-data center of excellence” for HP. The idea is it will be a technology hub for the firm, a bit like HP Labs in Palo Alto—but different. (Lynch wouldn’t go so far as to call it “HP Labs East.”) The center will be a base from which HP could make deals to license its technology or invest in early-stage startups alongside venture firms, he says. The center also plans to bring in students and early-stage entrepreneurs for hackathons and other tech-themed events. And it will serve as a base for other types of outreach, such as to local K-12 schools, Lynch says.

So why Alewife instead of, say, Kendall Square? “We wanted to bridge the gap between getting access to the younger people living in Cambridge … Next Page »

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—Venture capitalists invested $269 million in 23 deals in the San Diego area during the last three months of 2011, according to the MoneyTree Report from the National Venture Capital Association, PwC, and Thomson Reuters. That was almost a 20 percent gain in dollars, but a 28 percent slide in deal count from MoneyTree data for the fourth quarter of 2010. For the full year of 2011, the MoneyTree VC survey said $829 million was invested in 104 deals in San Diego, a 5 percent decline in dollars and a 17 percent slide in deals from the $871.7 million sunk into 126 San Diego deals in 2010.

—What should students study now to be prepared for the workplace 10 years from now? We asked that question of 22 Xconomists, including San Diego Xconomists Ramesh Rao, Duane Roth, Drew Senyei, Larry Bock, and Robert Noble. We’ve compiled all 22 answers in an Xconomy special report on education, which you can find here.

—San Diego Gas & Electric hosted a grand opening of its new Energy Innovation Center, which is designed to serve as an energy innovation showcase and education facility, and to meet the U.S. Green Building Council’s requirements for a platinum LEED (Leadership in Energy & Environmental Design) certificate. The center includes a full commercial “food service demonstration kitchen” where San Diego chefs can test their recipes on energy efficient appliances and restaurant owners can learn about the advantages of new and more energy efficient equipment. Utility officials said Commercial kitchens are particularly energy intensive.

—San Diego-based Tealium raised $1.1 million in Series A financing from private investors, and plans to use the funding to expand development of the tag management technology the company created to help enterprise customers manage their online marketing. Tealium said the investors include Limelight Networks CEO Jeff Lunsford, former Visual Sciences CEO Jim MacIntyre, Collective CEO Joe Apprendi, EyeWonder CEO John Vincent, and eValue Group CEO Thomas Falk.

—After previewing their plans last year, the X Prize Foundation and San Diego-based Qualcomm Foundation officially unveiled the Qualcomm “Tricorder” X Prize, a competition offering $10 million to the team that can develop new wireless diagnostics technology. The winning entry must be able to accurately diagnose a set of 15 diseases across 30 consumers in three days, capturing real time, critical health metrics such as blood pressure, respiratory rate, and temperature, and providing information in a consumer-friendly way.

—Qualcomm’s leadership has been talking for several years about the anticipated competition between its ARM-based semiconductors and the CPUs developed for desktop computing in the expanding market for smart devices. Now some of those skirmishes are beginning. Illinois-based Motorola Mobility (NYSE: MMI)  said recently it would use Intel’s (NASDAQ: INTC) latest low-power x86 Atom processor in a number of future Motorola products, marking Intel’s opening move into the smartphone market. A Motorola spokeswoman told me by email, “We will continue to use multiple chip set vendors.” Qualcomm (NASDAQ: QCOM) already has hundreds of mobile devices using its Snapdragon processor, and has been working with manufacturers on hundreds more.

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Here’s our weekly roundup of San Diego’s life sciences news.

—Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health (CDRH), briefed reporters in San Diego on his efforts to make the regulatory review of new medical devices more predictable, transparent, and efficient. Shuren is undertaking reforms at a time when eight out of 10 biomedical CEOs say they “agree or strongly agree” that the FDA regulatory approval process has slowed the growth of their organizations.

—More than 500 people turned out Monday evening for the open house that Johnson & Johnson’s (NYSE: JNJ) new Janssen Labs startup center. The first four startups to be inducted are Diomics (diagnostics, integrated DNA analysis); Neurolixis (drugs for schizophrenia, Parkinson’s and other CNS disorders); Tem Systems (comprehensive blood test for anti-coagulants); and Yolia Health (optometry device company).

—San Diego-based Auspex Pharmaceuticals, which is developing deuterium-based drugs, has raised $3 million of a $6 million round of debt and convertible promissory notes, according to a regulatory filing. Previous investors include CMEA Ventures, Costa Verde Capital, and Thomas McNerney & Partners. Auspex uses deuterium to replace metabolically sensitive hydrogen atoms in compounds to create new versions of existing drugs.

—BrainCells, a San Diego developer of neurological drugs, raised $2 million toward an $8 million round of debt, rights and securities, according to a regulatory filing. BrainCells previously raised $77 million from Alexandria Real Estate Equities, Bay City Capital, MedImmune Ventures, Mitsubishi UFJ Capital, Mizuho Capital, NeuroVentures, New Enterprise Associates, Oxford Bioscience Partners, Pappas Ventures and Technology Partners, according to VentureWire. The company says it is developing novel therapies for treating central nervous system (CNS) diseases, based on the principal of blocking select metabotropic glutamate receptors (mGluR).

—To have the skills needed in 2022, San Diego Xconomists Robert Noble and Larry Bock recommend that students should “learn how to learn.” Drew Senyei says students should study anything they are passionate about; Duane Roth would like to see a new major that encompasses engineering, biology, chemistry, physics, law, business, humanities and communications; and Ramesh Rao would emphasize studying new techniques for sensing data, as well as data analysis. They all offered their views for an Xconomy special report on education, and what students should be studying today to be prepared for 10 years from now. Their comments are available online here.

—In a talk with Sanofi CEO Chris Viehbacher, Luke explained the company’s strategy since it acquired Cambridge, MA-based Genzyme, and cut back on its internal research and development.

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Chris Rizik is one of Michigan’s most important and successful venture capitalists. He’s the CEO and fund manager of Renaissance Venture Capital, a fund of funds that is perhaps best known for its early backing of the medical device company HandyLab, a University of Michigan spinout that was later purchased by New Jersey’s Becton Dickinson & Co. for $300 million.

In addition to having a reputation as a shrewd investor and a champion of Michigan’s economic growth, Rizik has a longstanding passion for soul music. He’s the owner and operator of SoulTracks.com, a website dedicated to the music genre. (More on that later.)

Rizik, a Flint, MI, native who grew up in a musical family, says his appreciation of soul music began early. He was the youngest of six brothers who counted the Four Tops, Donny Hathaway, and the Spinners as favorites.

“The best concert I ever saw was in 1972 at the Whiting Auditorium,” Rizik says. “The Spinners opened up for the Temptations and just stole the show.”

Rizik wrote music reviews for the State News while pursuing an accounting degree at Michigan State University. He later picked up a law degree from the University of Michigan and landed his first job at Dickinson Wright, a top Detroit firm. He was there for 13 years as a pension attorney, but, he says, he always knew he wanted to do something more entrepreneurial. He started a new group within the firm to assist entrepreneurs and, a few years later, he got a call from his old buddy Rick Snyder (who was later elected Michigan’s governor in 2010).

“He had been at Gateway, but he was moving back to Michigan and wanted to start a VC fund,” Rizik says. “We picked up right where we left off and I helped him start [Avalon Investments].”

Rizik, who started out as an attorney for the firm, says that he suspects Snyder always had it in mind that he’d recruit Rizik to be his partner, but, “as is his way,” he waited patiently for about a year for Rizik to warm … Next Page »

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