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

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

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

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

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

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Bothell, WA-based Halosource, the developer of technology to purify drinking water, said today it has secured formal approval from the Chinese Ministry of Health. Halosource said it is the first developer of clean drinking water technology to get approval from Chinese authorities under a new set of regulatory standards. The company said its China subsidiary now plans to start selling replaceable cartridges, components, and other devices in China. Halosource has long had its eye on China, after its technology gained in popularity in India the past several years.

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In the 1880s, Thomas Edison was locked in a battle with the legendary inventor Nikola Tesla and the entrepreneur George Westinghouse.

Edison argued that alternating current was “impractical” and highly dangerous. He supported the demonstration of electrocution of numerous animals to show the press and the public the danger of alternating current. He even went so far as to commission the development of the electric chair as part of the campaign. Alternating current was also dangerous economically to Edison and his new company, General Electric, as they were set up to exploit direct current and they lost one of their core advantages if the world went to alternating current. It was the classic innovator’s dilemma.

Well, after a fact-based analysis, alternating current was chosen to be piloted for Niagara Falls in the 1890s, and it clearly worked and all the hysteria was swept away. History has shown it to be clearly superior to direct current for most applications. Later in life, Edison came to regret that he had made this clearly off-base calculation, as well as his tactics.

Fast forward to today. Last week on the front page of The New York Times an article titled “Gas Wells Recycle Water, but Toxic Risks Persist” (the title is different in the online version) was yet another example of the publicity campaign to warn people about the dangers of natural gas production if we are not careful. Is this a balanced fact-based dialogue on how to address the problems of a probable energy source that can so dramatically help our country on each of the three fundamental criteria that we should be making energy decisions today—economic security, environmental, and economic? Or rather are we falling into the same mistake that happened in the 1880s with alternating vs. direct current?

Much like the safety considerations of alternating current which were real and needed to be addressed, the concerns with water are legitimate and must be addressed. It is essential to our country that these issues are discussed in a rational manner to avoid a situation where FUD (Fear, Uncertainty, and Doubt) rules as opposed to a constructive, fact-based dialogue.

From what I understand speaking with people who are much more expert than I in this, the challenges for dealing with water and natural gas fall into three categories:

1. Misperception: The fact that people continue to think that natural gas drilling affects the aquifer, is a misperception. Once the facts are understood, this is not a serious consideration.

2. Process: The purification and disposal of water from the fracking (hydraulic fracturing) process—which is where the real issues are—relate to whether the companies and governments are … Next Page »

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It lives! Now that Xconomy Seattle has a full-time tech writer again (yours truly), we’re bringing back a weekly roundup to help our far-too-busy readers catch up with what’s been on our minds and percolating in the Seattle-area scene lately.

Highlights from the past week or so:

—Tippr, the Seattle-based group-deals site that emphasizes its intellectual property portfolio, made news for a pair of lawsuits it has going against competitors. A federal patent-infringement claim against both DealOn and BuyWithMe garnered focus, but there was more cloak-and-dagger in the state-court lawsuit against BuyWithMe and a former employee.

In a nutshell, Tippr’s parent company claims BuyWithMe’s founder solicited a bunch of proprietary information from a now-departed Tippr salesman who was job-hunting. A King County Superior Court judge agreed there was enough evidence on hand this month to issue an injunction against BuyWithMe to secure the information at issue. BuyWithMe answered by demanding a jury trial.

—Xconomy San Francisco’s Wade Roush weighed in with the second installment of his Seven Questions about the future of mobile. It’s a good read that gets you thinking, and is a great preview for our big Mobile Madness event next Wednesday at Microsoft’s NERD center in Cambridge, MA. Seattle-area folks from Clearwire, Swype and Ground Truth are participating in the program—keep an eye out for some interesting reports from what everyone there has to say.

— I unloaded some lingering government knowledge from my previous job at The Associated Press in a story that dissected how President Obama’s threatened ban on earmarked spending in the federal budget could affect innovation in Washington state. I was frankly impressed by the tons of cool-sounding projects and programs that were on the list of earmark requests for this fiscal year, but I had to narrow it down to 25 big items just to make it all fit.

—On the fun side, the Washington Technology Industry Association braved another threatened snowstorm to put on its annual Industry Achievement Awards. It was well-attended and a bunch of fun, even though I spent too much time hunched over my laptop. DocuSign and Isilon split Commercial Product or Service of the Year, and Swype nabbed Consumer Product or Service.

—A pair of companies with strong Seattle DNA were among the many making noise at the DEMO conference this week. Pioneer Square-headquartered PhotoRocket, helmed by Amazon and aQuantive alum Scott Lipsky, wants to be the indispensible utility for pushing photos to websites or e-mail contacts. San Francisco-based SocialEyes, with leadership from a pair of former RealNetworks Robs, is aiming for a higher-quality video chat service by blending it with the social graph on Facebook.

—On the cleantech side of things, we dropped by a Washington Clean Technology Alliance briefing with three companies focused on water: Hydrovolts, WaterTectonics, and Halosource. It was kind of a small-medium-large arrangement: Hydrovolts is a kinetic hydropower startup that’s still testing its technology and looking for big buyers, WaterTectonics is an established commercial water-cleaning company making moves in the oil sector, and Halosource is coming off last fall’s $80 million IPO

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

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

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

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

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

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

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

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

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The Cleantech Open Pacific Northwest regional finalists, out of a pool of 15 semifinalists, were announced at NW the Cleantech Open at the Bell Harbor Conference Center yesterday. Of the participants, who have gone through months of training, consulting, and business planning in preparation for the competition, three—Seattle-based Nanocel, Beaverton, OR-based Puralytics, and Eugene, OR-based Arcimoto—were named regional finalists, while a fourth, Seattle-based Hydrovolts, was given the sustainability award for the second year in a row. Nanocel, Puralytics, and Arcimoto each won prizes worth $30,000 each, and will progress on to the national competition—the self-proclaimed “Academy Awards of Cleantech”—in San Jose, CA in November. The winner will receive a grand prize worth $250,000.

Although only four startups were declared victors, every semifinalist will benefit from the last few months of grueling competition, according to co-chair Byron McCann. Once declared a semifinalist, startups are Pacific Northwest Cleantech Open alumni for life.

“The alumni is really like the cleantech mafia—once you become an alum, you can never leave,” McCann told the crowd that had gathered to hear the winners announced. “We like to think that we’re a really nice mafia with a common goal—there are very few business competitions where sustainability is a key element in making these companies profitable.”

This is the fifth year of the national Cleantech Open business competition, and year two for the Pacific Northwest regional chapter. Already, the growing competition has over 380 alumni nationwide, who have collectively raised some $280 billion in financing, $76 million of which was collected in 2010 alone, according to McCann. These numbers, he adds, speak volumes to the market potential that startups in the cleantech space have.

“What you see at the tip of the iceberg is a business competition. We’re having a lot of fun, but below the tip of the iceberg is a lot of work,” he says. “We’re a giant virtual accelerator with the common goal of getting these companies to market.”

To read more on the competition’s semifinalists and finalists, see our preview of the NW Cleantech Open, and check out highlights from the event in our image gallery.

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Today is the day many in the in the local cleantech community have been waiting for. The Cleantech Open, a national business plan competition for clean technology and energy startups, plans to announce the Pacific Northwest regional finalists at the Bell Harbor Conference Center at Pier 66 in Seattle this evening. This event will bring together 15 semifinalists with a variety of different cleantech ideas to improve energy efficiency, transportation, green building, renewable energy, water, and energy storage. The startups are competing for three regional prizes worth as much as $30,000 each, and a shot at progressing through to the national competition, for a grand prize worth $250,000.

While the headlines will go to the winners, the judges will get a lot of exposure all 15 companies throughout the day, as this year’s semifinalists will be on hand to present their ideas.

Though we’ve reported on a handful of these startups before, most of them are new to our radar screen. We thought we’d take this opportunity to take a look at each of the competing startups by sector, and what makes them an innovative contender for the Cleantech Open winners circle.

Efficiency:

—Aquapulser, Seattle, WA

Aquapulser is an engineering and power electronics startup that develops high energy plasma ignition systems for use in combustion engines. The startup won the MIT Enterprise Forum of the Northwest Startup Demo competition in December. Aquapulser will have a live plasma ignition display at the Cleantech Open.

—LaserMotive, Kent, WA

This startup is developing laser power beaming systems to transmit electricity without wires to things like unmanned aerial vehicles (UAVs), where wires would be a physical impossibility. LaserMotive won a $900,000 NASA competition to build a small prototype device in November 2009. The company hopes to use its technology to power “space elevators,” and UVAs in flight. The company will have a live laser transmission display at the Cleantech Open.

—Nanocel, Seattle, WA

Nanocel develops electronic liquid cooling technology based on a combination of microfluidics and plastic materials that remove heat from devices like computers, servers, and medical equipment. The company, spun out of the University of Washington by founder and mechanical engineering PhD student Dustin Miller and UW MBA graduate Daniel Rossi, won the UW’s yearly business plan competition in May 2009, for a $25,000 prize.

Transportation:

—Arcimoto, Eugene, OR

Arcimoto, founded in 2007, develops ultra-efficient electric vehicles. The company currently has three fully functional prototype vehicles, which it says it plans to bring to market. The three-wheeled vehicles are designed to support multiple range and battery configurations, and have zero tailpipe emissions. One of the startup’s prototypes will be on display at the Cleantech Open.

—Current Motor Company, Ann Arbor, MI

Current Motor Company is a joint venture between REVolution Electric Vehicles and Electric Vehicle Manufacturing.The goal is to produce an all-electric scooter for the consumer market. The company manufactures fully electric motorcycles, and currently has four product lines for sale in the U.S.

—viaCycle, Atlanta, GA

Atlanta-based viaCycle develops advanced bicycle sharing technologies, including an electronic locking system that uses GPS and wireless communications to allow bicycle sharing companies to provide services without expensive kiosks, or specialized bike racks. The startup, spun out of the Georgia Institute of Technology, was one of five finalists in the 2010 MIT Clean Energy Prize, where it won $15,000.

—Zebigo, Spokane, WA

Zebigo is a national, on-demand ride sharing community website that matches riders to drivers based on location and time. Signup is free, and members can be either riders, or drivers (who are paid through Zebigo to drive others to destinations on time), or both. The company rolled out its ride sharing network in Seattle in June.

Green Building:

—EnVitrum, Seattle, WA

EnVitrum develops environmentally friendly building materials by packing 100 percent … Next Page »

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If you looked at a map of IBM’s local operations and software acquisitions—17 in Massachusetts since 2003, out of a total of 60 worldwide—you might think the company’s headquarters was in Massachusetts, not New York. Between its recently opened Mass Lab in Littleton and Westford, MA (the firm’s biggest software development lab in North America), its research center in Cambridge, and its innovation center in Waltham, IBM certainly has been on the move in New England. And just last week, the company said it is acquiring Waltham-based OpenPages for an undisclosed sum.

So why is Massachusetts such a big deal for Big Blue? And what is the impact of all these local acquisitions on the firm’s growth and business? To get some answers, I spoke with IBM vice president of business development, Mike Loria, who’s now based in Westford after previously working out of Lexington, MA.

Loria is a former Lotus veteran who joined IBM in 2001. He has been part of the firm’s Rational software division, which sells products to software developers, since 2006. He leads the team’s mergers and acquisition strategy, which in recent years has led to IBM’s purchase of security software companies Watchfire and Ounce Labs in Massachusetts, as well as Sweden-based Telelogic, a large business process software firm.

In recent years, IBM has been held up as a model of how to achieve company growth through acquisitions, how to do the tough work of integrating new companies after mergers, and how to formalize that whole process. Loria is in charge of all that for his division, and he has a unique perspective on Big Blue’s acquisition strategy in his own backyard.

Loria says he puts a “four-legged stool” around why Massachusetts is “such a great place” for IBM acquisitions. One reason is the sheer number and quality of universities that produce smart, young developers. “That’s our natural resource,” he says. Two is the presence of a large and active venture capital community to support startups. Three is the proximity to lots of IBM customers, such as financial services firms. “Companies tend to resemble their customers in the area,” he says. And four is IBM’s existing footprint in the area—and the distinguished history of the state’s tech industry. “It’s a software-friendly environment,” he says.

None of those is particularly surprising. Perhaps the last one is most telling: once a big company makes a number of investments in a given geography, it gets more … Next Page »

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Was there a summer slowdown this year in the tech-business world? I’m not so sure (and neither are some other observers). In any case, let’s get ready for the craziness that is fall news and events in our industries. Here are three blog posts from around the Web—and around the country—that you might have missed over the holiday weekend:

—How to read a patent in 60 seconds, from Dan Shapiro in Seattle. Shapiro is a former Microsoft and RealNetworks guy who co-founded Ontela (now Photobucket) and is deeply plugged into the mobile and Internet startup sectors. I won’t steal his thunder, but let’s just say this is the kind of insight that tech entrepreneurs and investors can really use to save time, especially in this litigious day and age.

—How to ensure your e-mails are mobile friendly, from Shannon Suetos, a San Diego-based telemarketing expert, by way of BostInnovation.com. A good reminder that more and more techie types are reading their e-mail on mobile phones. Suetos gives five tips that are useful for dealing with images, newsletters, and regular old text. My favorite: “Not everyone has an iPhone.” Hear, hear.

—How stuff-sharing websites can save the planet, from Katie Fehrenbacher at GigaOm and Earth2Tech. This piece takes a considered look at how the trend of Internet sharing of “stuff” could help the world’s growing population manage its limited supply of energy, water, food, and goods. Fehrenbacher references the expansion of companies like Zipcar and Zimride in car-sharing (I’d add another “Z” company, Zebigo), and Airbnb in peer-to-peer apartment rentals. “When it comes to energy efficiency and sustainably managing resources, bits will be the answer to effectively allocating atoms,” she writes.

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Everyone has their own green environmental “a-ha” moment. Maybe it’s seeing birds drowning in oil, or paying $4 a gallon for gas, or reading about the plastic trash heap the size of Texas swirling around in the Pacific Ocean. For Susan Hunt Stevens, it was discovering her young son had serious food and environmental allergies, which prompted her to examine which ingredients and toxins were causing the health problems.

Her discovery came back in 2007, and it roughly coincided with Stevens and her family moving into a 19th-century Victorian home outside of Boston. So, in part to create a better living environment for her family, she decided to do a major “green renovation.” This effort has included generating electricity from waste energy (boiled water), using light-emitting diodes and compact fluorescent lamps for lighting, buying energy-saving appliances and plywood cabinetry made without formaldehyde glues, insulating the roof with healthy spray foam, installing bamboo shades and cork floors, using low-flow faucets and toilets, composting kitchen waste, and so on.

Along the way, Stevens decided to blog about the experience. She knows a thing or two about online media and consumer marketing, having been a longtime senior executive with The New York Times and Boston Globe, where she oversaw the news site Boston.com, among other things. [Disclosure: Stevens joined Xconomy’s board of directors last month---Eds.]

But when she originally started blogging about green issues, she got questions from readers about the industry that she couldn’t answer. That started her on the road to taking classes at the Boston Architectural College, where she learned cutting-edge green design.

Stevens is now the founder and CEO of Practically Green, a stealthy Web startup based in Boston that combines many of the things she has done in her career. I sat down with her last week to talk about the company and its significance to green sustainability issues, online business models, and technology trends like social networking and videogame mechanics.

The first thing to know about Practically Green is that it’s not just another “green content” site, or how-to blog about sustainability and the environment. Instead, think of it as being like Foursquare or FarmVille for the green lifestyle, mixed with WeightWatchers.com in terms of accessibility and support networks. And throw in a little Amazon.com and TripAdvisor for consumer reviews and e-commerce. The site uses social networks, gaming mechanics, and expert content to help consumers figure out “how green” they are, find reputable green products and services, and connect with other like-minded people so as to stay motivated to live a greener lifestyle. The big idea is to help consumers lead healthier lives, while also aiding the environment—and saving on their electric bill.

It’s also an intriguing example of the “gamification” trend we’ve been reporting on lately, whereby consumer websites and companies are trying to boost traffic, engagement, and customer loyalty … Next Page »

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Zensi, an energy monitoring startup co-founded by University of Washington assistant professor Shwetak Patel, has been acquired by Belkin, the computer hardware and wireless company based in the Los Angeles area. Financial terms of the cash deal weren’t given. The news was reported earlier today by CNET.

Patel co-founded Zensi in 2008 while he was in graduate school at Georgia Tech in Atlanta, but he has continued to develop the technology at UW as a faculty member in computer science & engineering and electrical engineering. The company’s technology includes sensors that you plug into a wall outlet to measure the amount of electricity used by each appliance or device in a home. Zensi’s similar systems for water, gas, and ventilation—and software to run it all—could help people keep better track of their home energy and resource use, and ultimately reduce it.

Zensi was based in Atlanta and Boston, but the technology was licensed from UW and Georgia Tech. To hear Patel talk, this is just the beginning for using software help consumers better conserve energy. “This puts UW on the map as a premier place for energy work in the residential space,” says Patel. He adds that Zensi is one of the first examples of a residential energy monitoring company getting acquired for cash. The acquisition should speed up the process of making Zensi’s technology widely available to consumers. Zensi was looking to close a round of venture capital earlier this year, but decided to go the acquisition route when multiple bidders appeared, Patel says.

Indeed, the residential energy monitoring sector seems to be heating up all around, with big companies like Intel, Microsoft, Google, and even Apple unveiling new products in the past year. (Intel’s most recent offering looks a lot like Zensi’s, in fact.)

Patel’s fellow co-founders include Gregory Abowd from Georgia Tech, Matt Reynolds of Duke University, and CEO Kevin Ashton, who was based in Boston and has joined Belkin as general manager of the company’s new Conserve business unit. Belkin says to expect some new energy management products later this year.

As for Patel (who’s in his late 20s), now that he’s made his “big splash” in energy, he says he’s working in other areas, such as health-monitoring technologies. An example might be a mobile phone that can do X-rays in the field, he says. Will he work on another startup? “I imagine I will again,” he says.

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1. Reinforce success — Our research and development ranks second in the nation behind Delaware, in part because of the massive amount of research done by the auto industry. In spite of the current problems, this research has allowed Detroit to lead the auto industry for almost 100 years. A great deal of this research has application in non-automotive sectors. We need to access it.

2. Focus on our strengths — Detroit is on the border of another country and 20% of the world’s fresh water. By focusing on its unique location and assets, it has an opportunity to become a leader in certain business areas such as water purification and use technology, homeland security, and international trade, including logistics.

3. Develop a package of support systems for new entrepreneurs that can be scaled and replicated throughout the region — Throughout the world there is recognition that business incubators can dramatically improve the chances of new business success. We need to figure out the right combination of services—and the ways in which those services can be delivered to the maximum number of pre-qualified potential entrepreneurs.

4. Alter the culture within universities — Universities, particularly research departments, have to be recognized for the value they bring through the transfer of intellectual property to locally established companies. Tech transfer departments have to become entrepreneurial in their approach to speeding technology from the lab to the marketplace.

5. Identify early stage finance for startups — Without early-stage financing new business activity will not happen. We need dedicated funds that make bets on early-stage enterprises and move companies to the point where they can qualify for more traditional financial support from venture capitalists, angel investors, and banks.

[Editor's note: To help launch Xconomy Detroit, we've queried our network of Xconomists and other innovation leaders around the country for their list of the most important things that entrepreneurs and innovators in Michigan can do to reinvigorate their regional economy.]

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1. Support the relevant state-regional-level infrastructures: favorable state capital gains tax, generous support for K-12, university education.

2. Develop professional, competent, adequately funded technology transfer offices in Michigan research universities. Develop some system for lowering cost of start-up capital (low-interest state loans, etc).

3. Pick *one* geographic area (probably Ann Arbor, since young professionals would like to move/live there) and continue to strengthen the start-up ecology there (University, tech-transfer office…)

4. Pick a few areas of technology (robotics, mobile communications for automotive, border security, inland water management, whatever…where Michigan might have an unfair advantage) and invest selectively in those.

5. Develop a mechanism for attracting, recruiting, and moving first-rate scientists/engineers from abroad (there are still lots who would like to leave Russia, Poland, etc., and come to the U.S.).

6. Use the large Detroit Middle Eastern community to establish ties to capital in the Middle East.

7. Have a state-level office reporting to the governor that partners with regional development groups in Boston, San Francisco, Seattle, Austin, etc.

8. Develop a program to pair experienced and aspiring entrepreneurs in apprentice arrangements of 3-4 years’ duration (inside or outside Michigan).

9. Develop a public education program to explain the entrepreneurial process, and its benefits (PBS, etc.).

10. Develop more programs with explicit emphasis on creation of jobs (all of Michigan) and technology for urban renewal (Detroit).

[Editor's note: To help launch Xconomy Detroit, we've queried our network of Xconomists and other innovation leaders around the country for their list of the most important things that entrepreneurs and innovators in Michigan can do to reinvigorate their regional economy.]

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The private equity operation of Boston-based Battery Ventures helped buy out Nova Analytics, a Woburn, MA-based maker of lab and field equipment for electrochemical measurements, in 2003. Seven years later, after a string of strategic acquisitions that helped to consolidate the analytic instruments market, Battery has sold Nova to White Plains, NY-based ITT, which says the acquisition will give it one of the world’s largest selections of sensors and instruments for monitoring wastewater and other substances. The financial terms of the deal weren’t disclosed, but Battery spokeswoman Karen Bommart says “this will be a very good outcome for us.”

Almost immediately after investing in Nova, along with Ascent Venture Partners and Commonwealth Capital Ventures, Battery sent the company on a buying spree, starting with the acquisition of Corning Life Sciences’ electrochemistry product line in 2003. Eight more acquisitions followed over the next six years; in many cases, the management team installed by Battery went after companies with “stable businesses but inefficient operations,” according to a case study on Battery’s website.

“This follows a typical platform strategy from our private equity team: buy a platform company in a market ripe for consolidation, work with a strong management team to acquire complementary and recognized companies within the market, and ultimately build a company of scale that meets broad customer needs,” says Bommart.

Nova has 725 employees in the U.S. and five other countries and earned pro forma revenues of $135 million in 2009. In a statement, Nova chairman and CEO Jim Barbookles called ITT “the perfect acquirer” for Nova, since it is is already has strong analytic instrument brands in the water, wastewater, food, beverage, and industrial process markets.

The Nova sale marks the second time this year that Battery has liquidated one of its major investments. Lawson Software (NASDAQ: LWSN) in St. Paul, MN, bought Battery portfolio company Healthvision Solutions last month for $160 million.

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[Updated 1/20/10, 10:10 am. See below.] Cleantech wireless networking firm Tantalus, based in Burnaby, BC, has raised about $13.5 million in new equity financing, according to a regulatory filing. The round was led by the Silicon Valley firm Redpoint Ventures, and other existing investors also participated, according to a press release issued by Tantalus after the initial publication of this story. The company says the new funding round is worth a total of $14 million. [Previous two sentences modified on 1/20/10 with new information from the company---Eds.]

Tantalus makes wireless communications and networking technology that helps electric, gas, and water utilities monitor consumption and manage their resources. The company’s wireless network is used in parts of North America, and is meant to help both utilities and consumers manage their electricity use more efficiently by connecting devices like smart meters and thermostats to utilities’ control systems.

Tantalus was founded in 1989 and originally focused on radio frequency engineering for industrial automation and process control. In 2000, the company shifted its strategy to develop a wireless communication network for utilities, according to a company analysis in GigaOm. In 2007, the report says, Tantalus raised more than $18 million from European investors.

In 2008, the company formed a partnership with Itron (NASDAQ: ITRI), the Liberty Lake, WA-based energy technology company that makes smart meters for electricity, gas, and water, and other data collection and communication systems. The partnership combines Itron’s meters with the Tantalus wireless network, to support smart-grid and energy-efficiency applications.

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Today at 4:30 at the Media Lab’s Bartos Theatre, the FCC will hold a public workshop to discuss net neutrality policy. What is the importance of net neutrality to the innovation community?

We can learn a great deal about this by examining the stories of the seven pipes going into most American homes. Most homes are connected to pipes that carry water, electricity, telephony, cable TV, sewer, gas and Internet. (You can think of the Internet as a separate pipe, anyway, even though it usually comes in over the cable or telephone line.) Yet only one of these pipes has historically offered everyone the chance to innovate on top of it. We should be able to learn something about the importance of open innovation by examining the “innovation histories” of these seven pipes.

Lets start with water, gas, and sewer. Perhaps Xconomy readers can point out some innovation in the last couple of decades in these areas. There sure aren’t many.

How about electricity, telephony and cable TV? These sectors often sport a degree of competition, usually with two to three players offering alternatives in each geographic market. But competition is not the same as open innovation. Electric utilities, for example, have struggled for years to broadly adopt a single modest innovation: the ability to pour power back into the grid. Telephony saw some minor innovations about 20 years ago—things like caller ID and *69—but nothing since. Cable TV saw the addition of a few more channels, and a few more pixels, but nothing that fundamentally expands what it does for us.

And then there is the Internet. Open competition on the Internet “pipe” has spawned so much innovation that industries are being turned upside down. Ask folks in the music, news, broadcast media, and telephony industries, to name a few. Have you been to a travel agency recently? How often do you physically walk into a bank? Many people believe the Internet changed the course of the most recent Presidential election. Oh, and it has placed the greater part of all the world’s knowledge at our fingertips. Enough said.

Some might say this comparison is unfair—that the other pipes could never have had this kind of impact. Of course, we’ll never know. But if you think that this level of innovation could have been achieved if the Internet were, like the other pipes, managed by a single large, benevolent service provider, one need look no farther than AOL to see what that really did look like.

In the early days, AOL was the Internet, except that it was under the aegis of a single, large, benevolent service provider. And AOL was great. We all remember chat rooms. But there is no comparison between the innovation AOL spawned and what the “open Internet” would later bring.

Companies providing Internet service would like to be able to control what flows on our Internet pipes, giving preference to their own services, and squelching others’ offerings. That would be a recipe for turning the Internet back into AOL. Recently, the FCC has started to put in place policies to prevent that. Let’s support this move. We don’t want a future in which the Internet pipe works like the other pipes.

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During the past decade, we have seen tremendous technological advances in the field of global health. These innovations promise to bring us closer to a world where health is within reach for everyone. However, realizing their full potential will require further investment to implement these breakthroughs within affordable product platforms. It will also require innovation in delivery systems to ensure access by those who need these technologies most.

Here are some of the most promising technologies we have seen emerge:

1. New vaccine technologies. Nearly every licensed vaccine today uses decades-old technologies that require expensive factories to produce a single vaccine. New recombinant, platform-based technologies may greatly speed vaccine production, decrease manufacturing costs, and increase production in developing countries. Such platforms will allow multiple vaccines to be produced in a single facility using scalable technology that is readily transferrable. They will also facilitate development of vaccines for specific regions of the world, such as affordable vaccines for viral encephalitis in Asia and bacterial meningitis in Africa. Innovations in manufacturing and vaccine approaches will broaden opportunities for combination vaccines—offering protection against several diseases in a single shot.

2. Point-of-care diagnostic technologies. A technique called isothermal nucleic acid amplification may dramatically simplify the processes and tools needed for diagnosing certain diseases in low-resource settings; and may eventually lead to instrument-free molecular infectious disease assays. By quickly and inexpensively identifying molecular markers of disease agents, this diagnostic innovation may enable highly specific treatments, displacing the “shotgun therapy” currently used in many cases. This approach will enable better patient care, as well as slow the emergence of antimicrobial resistance fueled by widespread use of broad-spectrum drugs.

3. Vaccine thermostability technologies. Spray drying, new liquid formulations, and alternative delivery techniques are helping to decrease the need for refrigeration of new vaccines. Given the number of new vaccines under development, these thermostability technologies have huge potential to decrease the burden on the cold chain infrastructure and facilitate delivery of lifesaving vaccines.

4. Telecom and IT infrastructure convergence. The growth of mobile phone networks, the underlying data systems, and the integration of these systems with existing commercial and health system infrastructure holds significant potential to improve health promotion and disease management. Patient management systems, improved supply chains, and remote treatment through telemedicine are examples of applications of this growing infrastructure.

5. Water, sanitation, and hygiene technologies. Low-cost water purification and new “plug and play” components for safe water and sanitation may make safe water available to millions. Innovations in business models for delivery of safe water are opening new distribution channels.

At PATH, we are enthralled with harnessing the potential of scientific and technological breakthroughs, transforming these advances into affordable health care products, and navigating the challenges of integrating these products into systems to improve health. Our goal is quite simple: to ensure that everyone around the world enjoys the reduced child mortality, extended life expectancy, and reduced morbidity from infectious disease that we in developed nations take for granted.

[Editor's Note: As the decade comes to an end, we've asked Xconomists and other technology leaders around the country to identify the top innovations they've seen in their fields the past 10 years, or predict the top disruptive technologies that will impact the next decade.]

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The constrained venture capital markets and difficult environment for IPOs, will make 2010 a big year for M&A transactions. The leaders in hot new software sectors will be swallowed up at a premium, along with entrepreneurs tired of running on the treadmill as they get closer to retirement, will drive more M&A transactions than ever. I see these theses trends emerging:

1. Emergence of “Social Commerce”—The continued propagation and expansion of social networks open a significant opportunity for new forms of online commerce. Expect to see integrated commerce applications embedded into the social networks that offer simplicity, security and a unique and integrated understanding of the social network participants. This will drive new forms of commerce with remarkable results in 2010 and beyond.

2. Greater Performance for Online Advertising—The downturn in gross online ad spending has “weeded out” many undifferentiated online advertising businesses, but has also stimulated ad technology companies that make a measurable difference in converting ads to sales. Expect to see breakthrough technologies in the areas of ad placement and dynamic creative that will improve relevancy and yield from the historical conversion rates.

3. Better Online Privacy Controls and a Move to Mobile Devices—Today’s myriad of online entertainment and productivity applications, combined with the move to greater “computing on the go” capabilities, have created a privacy conflict between web application providers and users. The application providers want to understand and expose data to improve online presence which, in many cases, is in conflict with individual privacy concerns. The situation is even more concerning for children and with mobile devices. Today’s litany of online games and social communities accessible through phones can result in personal information getting into the wrong hands. While some applications prevent this on PC’s, mobile devices are open terrain. Parents, parents, corporations and users will embrace new forms of privacy controls on mobile devices in 2010.

4. Broad Adoption of Energy Management Applications—The concentration on clean technology and green energy has resulted in a new class of applications driving energy efficiency. Buildings account for about one-third of all energy use. It is estimated that 30 percent of this is wasted. In order to control energy use, you must measure energy consumption. Many sensor-based monitoring applications will be developed for this purpose. In 2010 you should expect to see a new breed of energy-oriented analytic applications that will help improve efficiency in the home, office, and in energy-intensive locations like data centers.

5. Software to Manage Food Safety–There is a growing desire to get better information about what we are eating. Not just nutritional labels in the grocery store, but a complete history of food products covering the product from the farm to the kitchen. Consumers want to know more about the food we ingest, including where it comes from, potential exposure to pesticides, oversight of properly controlled transportation and more. To date we have relied on regulatory agencies for such oversight, but the system is far from perfect, as we witnessed with many food scares in 2009. Expect consumer-oriented applications on the web to play a bigger role in 2010 and beyond.

6. Technology to Manage Water Use—With only 1 percent of the world’s fresh water available as drinking water, water capture, management and retention will become a big focus in 2010. Again, this requires measurement and testing that involves sensor-based applications, collaborative systems among agencies and better storage facilities. Expect to see highly integrated and analytical web applications that will be facilitated by wireless and mobile computing.

[Editor's Note: As the decade comes to an end, we've asked Xconomists and other technology leaders around the country to identify the top innovations they've seen in their fields the past 10 years, or predict the top disruptive technologies that will impact the next decade.]

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Seattle-based Principle Power, a company focused on offshore wind energy, announced today it has received a $750,000 grant from the U.S. Department of Energy to develop water power technologies. Principle Power is working with the National Renewable Energy Lab and Marine Innovation and Technology on the project, which seeks to incorporate wave energy generation into the company’s floating support structures for wind turbines.

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On Tuesday, we reported that Pivotal Investments has led a $2 million financing round for Tuusso Energy, a solar power developer based in Seattle. Tuusso is an intriguing startup focused on developing and operating solar plants to supply renewable energy to utility companies; its first plant is slated to be built in the California desert by 2011. But the deal is worth a closer look through the lens of what Pivotal is doing.

Pivotal Investments is a venture capital firm that started investing in cleantech and sustainability companies out of its first fund in January. The firm, based in Portland, OR, is led by managing directors Gregg Semler, Brad Zenger, and John Miner. (Semler and Zenger previously were co-founders, along with Reference Capital, of the Sustainability Investment Fund 2007, which backed Northwest firms EnerG2, SeQuential Biofuels, Plas2Fuel, and RNA Networks.) Pivotal’s investment focus is primarily early-stage startups in the Pacific Northwest, often with first-time entrepreneurs. The firm’s areas of expertise include clean energy, water, air, green materials, and sustainable agriculture.

Semler confirmed via e-mail that Tuusso Energy is the first investment from Pivotal’s new fund. He says his team is excited about the solar company because of its strong team; it’s in a big market; it is capital efficient; it provides strategic insight into multiple facets of the renewable energy market; and it represents a “strong opportunity for investor returns with or without an IPO or acquisition.”

The Pivotal team says it has evaluated more than 250 companies since January. “This deal flow in quantity, breadth, and quality is a proof point that the Northwest is a great place for investing in sustainability,” Semler says. “It also validates the premise behind Pivotal Investments as the only venture fund in the Northwest completely dedicated to these opportunities.”

Earlier this summer, Semler and Zenger told me a little more about their investment themes. And what they said rings true with Tuusso Energy. “We get excited about investments that have systemic disruption in large markets that can be proven in the Northwest, and then scale to other markets like California and Asia,” said Semler, a cleantech entrepreneur himself who has led firms such as ClearEdge Power and PolyFuel over his career as an executive.

Yet if you ask Seattle entrepreneurs and investors alike, they’ll say alternative energy and sustainability are not in most local venture capitalists’ comfort zone. “We talked to most of the VCs in Portland and Seattle, and this is a new space for them—new markets, new technologies, and many times new teams,” Semler said. (A notable exception would be Rick LeFaivre of Kirkland, WA-based OVP Venture Partners, who notes that cleantech VCs should invest in the sweet spot between mom-and-pop companies and $100-million-upfront deals, like wind farms, that call for private equity or other means.)

Which is also why cleantech and sustainability can be such an attractive field—for the right firm. “This is bigger than the original Industrial Revolution,” said Zenger, a co-founder of Portland-based Pixelworks (NASDAQ: PXLW) and an expert in global technology markets. “The scale of these opportunities is just huge.”

Huge investments, however, are not what the Pivotal VCs have in mind. Their typical deal structure will be to contribute around $3 million, investing over multiple rounds—often with other investors—to ensure the company has the resources it needs to achieve its plan. I wondered how much you can really do with $3 million in a capital-intensive space like energy. Quite a bit, they said. “Entrepreneurs need to be creative and find ways to use less capital to make the same progress,” Semler explained, “especially in the current market environment.”

“While we’re a little concerned about the amount of capital pouring into the cleantech sector, we believe it’s a great time to be a cleantech investor in the Northwest,” Semler said. “Valuations are low, innovation is high. If you’re willing to do early-stage work, there is a great opportunity for reward.”

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