San Diego’s tech sector got some money and glory during a week that was overshadowed by news from two life science conferences: TEDMED and the annual Biocom Investor Conference. Get your tech news now while it’s still hot.

—To stay connected with open-source development for smart phones, San Diego’s Qualcomm created a subsidiary, the Qualcomm Innovation Center, that is focused on making sure the chipmaker’s technology works smoothly with Android, Symbian, and other open-source wireless platforms. Qualcomm (NASDAQ: QCOM) also joined the Symbian Foundation and is supporting the open source systems used by Nokia and others.

—One of the big selling points for algae-based fuels is that algae absorbs a lot of carbon dioxide before it gets harvested and turned into biofuels. Yet San Diego-based Sapphire Energy and other algae biofuel companies say they are having a hard time getting enough carbon dioxide at an affordable price to support their research and development efforts.

—Federal stimulus funds will help cover almost half the cost of a new $60 million wireless communications system that San Diego Gas & Electric is developing as part of its smart grid program. The $28.1 million grant is part of $3.4 billion to be allocated nationwide.

—Carlsbad CA-based Verdezyne, which is applying advanced biotechnology tools to the development of industrial chemicals and biofuels, raised nearly $3 million of a planned $15.2 million round of venture capital.

—JMI Equity, the venture firm based in San Diego and Baltimore, led a $5 million investment in Axeda, the Waltham, MA-based startup that makes a cloud-based system for wireless tracking of company assets. Axeda also raised $4 million in venture debt from MMV Financial of Toronto.

—TechAmerica San Diego, the local chapter of the industry group previously known as the AeA, issued nine awards at its 16th annual high tech awards luncheon. The group named winners in nine categories: MadCap Software (Software); InterKnowlogy (Internet); Verari Systems (Hardware); Quake Global (Communications); SeaBotix Inc. (Defense); Peregrine Semiconductor (Integrated Circuits); OneRecovery (Medical Device) IPS Group (Cleantech); Legend Films (Emerging Growth).

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[Updated 10/27/09 12:55 pm. See below.] The Department of Energy has released a list of utilities that are getting federal grants to spur energy innovations under the $787 billion economic stimulus package, and San Diego Gas & Electric is getting $28.1 million to help build out its “smart grid” system.

Additional details are expected to follow President Obama’s speech at a solar facility in Florida, where he is expected to announce grants totaling $3.4 billion—the largest award made under the stimulus package in one day. The grants, which range from $400,000 to $200 million, are intended to help utilities build smart grid systems (which help consumers save money by providing real-time monitoring of their energy use), upgrade local power grids to reduce blackouts, and boost use of renewable energy.

The $3.4 billion is being allotted through 100 government grants in 49 states that will be matched by $4.7 billion in private investments.

[Updates below with new information from SDG&E and clarifies that the utility formed the coalition as part of a second grant application] SDG&E, a utility operated by San Diego’s Sempra Energy, said in September it has formed a coalition with the non-profit group Cleantech San Diego, UC San Diego, and major companies like Qualcomm, IBM, Cisco, and Intel. The coalitions was formed as part of a separate grant application that seeks $100 million for a regional demonstration system to help SDG&E manage the increasing demands on its power grid from electric vehicles as well as fluctuations in energy supplied to the grid by wind, solar and other renewable energy sources.

“It’s all part of the broader smart grid funding that the federal government has put aside,” says Chris Baker, a senior vice president for shared services and chief information officer for SDG&E and its sister utility, Southern California Gas. “You can’t do a smart grid without an enabling communications infrastructure.”

Baker says the $28.1 million DOE grant will enable the San Diego utility to address a variety of wireless communications needs with a more comprehensive plan. For example, while the utility has installed about 130,000 smart meters so far, Baker says the grant will enable SDG&E to establish a dedicated 700 megahertz “takeout point” for transmitting data from the smart meters’ wireless mesh network. The $28.1 million grant to SDG&E from the DOE will cover almost half of the $60 million project. The funding also enables the utility to install high-bandwidth wireless capabilities at its substations and certain corners of its grid.

SDG&E is working to integrate 1.4 million wireless “smart meters,” which the utility has been installing, with an advanced IT system that will allow increased monitoring, communication, and control of a regional power grid that spans 4,100 square miles.

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Sapphire Energy has tried to maintain a relatively low profile since it established its headquarters in San Diego—especially since last fall when the media seized on reports that Bill Gates’ Cascade Investment had joined a $100 million secondary round of venture funding for the algae biofuels startup.

So when Sapphire opened its San Diego headquarters for a public tour during the Algae Biomass Summit that was held here earlier this month, I jumped at the opportunity. The venture-backed company maintains a 70,000-square-foot facility on La Jolla’s Torrey Pines Mesa, and now has about 120 employees. The company’s labs look like a lot of other biotech labs in San Diego, aside from all the gyrating machines with flasks full of gently swirling emerald-green fluid. But there were two particularly interesting factoids about Sapphire that I learned during the tour.

The first was ironic: Sapphire officials explained that algae consumes 13 to 14 kilograms of carbon dioxide to produce a gallon of green crude oil, which is roughly equivalent to conventional petroleum-based crude—and just as suitable for making gasoline, diesel, or jet fuel. This is a good thing, as the fast-growing algae helps reduce atmospheric CO2.

So what’s ironic? Sapphire and other algae biofuel companies have to pump carbon dioxide into the algae they grow in their laboratories. Moreover, Sapphire spokesman Tim Zenk says one of the big problems that Sapphire is facing these days is getting enough CO2—at an affordable price—to support the company’s algae biofuels research and development efforts. The greenhouse gas is so crucial that Zenk says it limits the growth of algae if it’s in short supply.

Once algae-based crude is refined into a fuel like gasoline, though, it produces CO2 as a byproduct of combustion—just as any engine that burns gasoline, diesel, or aviation fuel produces greenhouse gases. Nevertheless, the argument is that algae biofuels are better for the environment because algae absorbs so much CO2 while it is growing, Sapphire officials estimate that algae-based fuels represent a 70 percent reduction in CO2 gases on a life-cycle basis compared to gasoline, diesel, or aviation fuel made from petroleum-based crude oil.

In the laboratory environment, however, CO2 gas is a valuable commodity. “You can buy carbon dioxide on the market,” Zenk says. “It’s heavily refined and used mostly by the food and beverage industry.” (The beverage industry uses dissolved CO2 to put the bubbly fizz into carbonated sodas.) But algae doesn’t need purified CO2. In fact, Zenk says the gas that goes up the smokestack at most utility power plants is 10 to 15 percent CO2—which is ideal for algal growth. As a result, some startups developing algae-based biofuels intend to …Next Page »

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San Diego Gas & Electric, a public utility operated by San Diego-based Sempra Energy (NYSE: SRE), says it is planning an 18-month field demonstration of a solar power system that floats in a shallow pool of water. When operational later this year, the 20-kilowatt system developed by San Diego’s Pyron Solar is expected to generate electricity at higher efficiencies and lower costs than conventional flat-panel photovoltaic systems. Pyron’s technology uses a dual-tracking system and acrylic lenses and to concentrate the sun’s energy on a proprietary glass optic. Pyron says its system could produce nearly twice the electricity of conventional flat-panel photovoltaic systems.

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Seattle-based McKinstry, the construction, consulting, and energy firm, announced today it is developing an innovation center for new and emerging cleantech and green energy startups. The 24,000-square-foot incubator will be housed at McKinstry headquarters in Seattle’s Georgetown neighborhood, and is slated to be finished in the spring of 2010.

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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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‘Tis the season for startup-pitching events. Last week, it was the Zino Society’s investment forum in Seattle. Today it’s the DEMOfall09 conference in San Diego, where four Northwest companies are presenting. And tonight there is nPost’s networking and demo event for tech startups at the Columbia City Theater in South Seattle.

But there is also a notable newcomer to the scene. Alibaba, the Hangzhou, China-based Internet commerce firm, and Inc. magazine announced today the semifinalists in their U.S. entrepreneur competition, called “Newpreneur of the Year.” Thirty entrepreneurs will compete in six cities across the country, including Seattle, for 12 spots in the next round of competition, where the public will vote for the businesses they think have the most potential to revive the economy. (The other cities are New York, Chicago, Miami, Dallas, and Los Angeles.) The final round will take place on Nov. 18 in San Francisco, where one winner will take home $50,000, and four others will split another $50,000.

The Seattle semifinalist event is on Oct. 20 at the Edgewater Hotel. Five local entrepreneurs will pitch their companies and ideas, ranging widely from alternative energy, medical devices, and retail, to the decidedly low-tech world of kitchen and fashion accessories. The winners will move on to the final 12 in the nation. Here’s a snippet on each of the Seattle contenders:

—Jessica Aceti will be pitching Cap-sac, a modern line of convertible accessories, including a fanny pack for your head. The product folds into itself and can also be used as a purse. (This I have to see, though it’s safe to say I’m not the target audience.)

—Steven Bohannon from Bainbridge Island, WA, will pitch Feed Your Mind, a vending machine company focused on providing healthy, nutritious, and entertaining alternatives to traditional vending offerings. Its product mix includes crossword puzzles, games, new and used books, playing cards, maps, and nutritious snacks. Machines will be placed strategically where consumers get stuck waiting—at hospitals, airports, bus and ferry terminals, and so forth.

—Burt Hamner of Seattle will pitch Hydrovolts, the renewable energy company we’ve profiled before in Xconomy. Its key technology is a hydrokinetic turbine that can be placed in a water current (like a canal or stream) to provide electricity for up to a dozen homes. Hamner is no stranger to pitch competitions; Hydrovolts won the “audience favorite” prize at the Northwest Entrepreneur Network’s First Look Forum last March, and took home the $50,000 prize in the Zino Society Green Investment forum in May.

—Cindy Sawyer of Bothell, WA, is pitching ToweLocs, a locking device that keeps kitchen and hand towels secured, and prevents them from falling to the floor. It may sound mundane, but it’s the kind of simple, stylish home accessory that might just take off if it solves a real problem for people.

—Joel Smith of Edmonds, WA, will pitch Forward Mobility, a line of medical mobility products to help disabled customers maintain their independence. The company is looking for funding to finish the production tooling of its new walking leg brace, the Freedom Leg, which allows a person to walk on an injured leg with zero weight put on the knee and below.

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Four companies from Washington state have been selected to a list of the world’s 100 most promising private cleantech firms. That’s according to a report released yesterday, in a joint effort by The Guardian (the UK-based newspaper) and the Cleantech Group, a global company that provides research, data, and advisory services for the clean technology industry.

The Washington results are not too shabby—especially for a state that has been perceived as trailing other parts of the country in terms of cleantech venture investment, alternative energy policy, and expertise. We’ve been hearing a lot about those issues from experts like Jesse Berst of Redmond, WA-based Global Smart Energy and Michael Butler of Seattle’s Cascadia Capital. While the latest news won’t do much to stem any criticism (nor should it necessarily), it does provide some recognition for the local cleantech scene.

The Global Cleantech 100 list “recognizes companies at the forefront of cleantech innovation offering solutions to some of the planet’s most pressing environmental challenges,” according to the Cleantech Group’s website. The companies were selected by a process involving hundreds of international experts on cleantech innovation, venture capital, and entrepreneurship (check out the methodology here). Cleantech, by their broad definition, spans the fields of energy generation, storage, infrastructure, and efficiency, as well as transportation, water and wastewater, air and environment, materials, manufacturing, agriculture, and recycling and waste.

The four Washington companies span energy generation (solar and geothermal), energy efficiency, and software. We’ve covered all of these companies this year at Xconomy, and here’s a bit about each one:

—AltaRock Energy, based in Sausalito, CA, and Seattle. This geothermal company was founded in Seattle in 2007, and plans to artificially engineer reservoirs of hot water deep underground and extract steam energy as it rises to the surface, as we reported last summer. AltaRock hit a snag in recent weeks when it had to suspend drilling of a well in Northern California due to geological problems, but says it is continuing to develop its technology and look for alternate drilling sites. The company is backed by Vulcan Capital, Kleiner Perkins Caufield & Byers, Khosla Ventures, Google.org, and others.

—Infinia, based in Kennewick, WA. This solar power company makes devices that capture and focus sunlight, and then harness the concentrated heat (using a Stirling engine) to generate electricity, as Luke reported in a recent company profile. The strategy is complementary to traditional solar cells and photovoltaics. Infinia has been around since the 1960s, but has focused on solar since 2005. It is backed by Vulcan Capital, Khosla Ventures, Idealab, and other prominent investors.

—Powerit Solutions, based in Seattle. This energy-efficiency company, originally from Sweden, has been in Seattle since 2002. It makes hardware and software to reduce energy consumption and costs in industrial facilities like steel mills and manufacturing plants, as Rachel reported this summer. In May, Powerit raised $6 million led by Siemens Venture Capital and ArcelorMittal’s Clean Technology Fund, with @Ventures and Expansion Capital Partners also participating. Some of its customers include Ikea, Benton Foundry, Stockholm Airport, and the San Jose Mercury News.

—Verdiem, based in Seattle. This cleantech software firm, founded in 2001 and backed by Kleiner Perkins and other investors, focuses on energy efficiency and management in the corporate IT world. Its personal computer power-management software has been installed on more than one million desktops, and its customer base has doubled in the past year to include more than 300 corporations, government agencies, and universities. We’ve reported on Verdiem’s progress in demonstrating energy and cost savings to companies, as well as its broader strategy in cleantech-meets-IT from CEO Jeremy Jaech.

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Qualcomm technology that’s being incorporated in a new line of small and lightweight netbook computers—which Qualcomm calls smartbooks—could make the wireless devices one of the hot gift items for consumers this Christmas. Read on as we unwrap that news and more.

—Qualcomm CEO Paul Jacobs says a lineup of “smartbook” computers that are set for launch in coming months will be powered by the wireless giant’s Snapdragon processor—and also will include Qualcomm’s satellite-based TV technology that broadcasts to mobile devices. In an interview with the San Diego Union-Tribune, Jacobs says Qualcomm’s MediaFLO technology also will be used to rapidly cache data onto smartbook computer screens “so when you open it up, there’s already live data on it.”

—San Diego’s Sapphire Energy plans to build a 300-acre “integrated algal bio-refinery” in Southern New Mexico. Sapphire, which is developing processes for harvesting green crude oil algae to produce gasoline and other biofuels, says the project is expected to take three years to build out. Sapphire also is co-sponsoring a 3,000-mile cross-country road trip by Algaeus, a Toyota Prius hybrid electric vehicle that is using a blend of algae-based fuel and gasoline when it’s not running on electricity.

—EvoNexus, the startup incubator formed by the San Diego industry group CommNexus, has enrolled its first three startups. The companies, chosen from 45 applicants, are Medipacs, which is combining new intravenous infusion technology with wireless monitoring capabilities; IO Semiconductor, a wireless chip design startup; and Pixon Images, which is developing real-time video enhancement technologies. The three startups get business coaching, furnished office space for up to two years, and other help at no cost.

—Sean Barr, the Canadian consul in San Diego, says the job of the five-person Canadian consulate in San Diego is to help facilitate collaborations between technology companies in San Diego and Canada. One example of such collaborations is that San Diego’s Isis Pharmaceuticals has been working with OncoGenex Technologies of Vancouver, BC, on an experimental drug for prostate cancer. As Barr put it, “The Canadian government has sort of recognized that the opportunities here are significant enough to warrant a full-time presence that’s focused on the life sciences and biotechnology, cleantech, ITC (Information Technology and Communications), and defense and homeland security.”

—Carlsbad, CA-based MaxLinear, a fabless semiconductor company, has focused its business on making it possible to watch TV on any mobile device. The company introduced its latest tuner-and-demodulator designs to provide a single-chip solution for all broadcast TV applications.

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AltaRock Energy, a geothermal startup based in Sausalito, CA, and Seattle, announced earlier this week it has suspended drilling of a deep well in Northern California because of “geologic anomalies.” The well is part of a Department of Energy-funded demonstration project for AltaRock’s engineered geothermal system, which would create reservoirs of hot, subterranean water artificially. AltaRock said it is continuing to develop its technology and evaluating alternative well locations. AltaRock has raised about $30 million in venture funding from Vulcan Capital, Google, Khosla Ventures, Kleiner Perkins Caufield & Byers, and Advanced Technology Ventures. (See more coverage in the New York Times, PE Hub, CNET, TechFlash, and others.)

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It was a fairly quiet week for deals in the Northwest, with just a trickle of activity in software, computing, cleantech, and life sciences. But there was a hint that the IPO window may be about to open.

—Seattle-based Cray (NASDAQ: CRAY), the supercomputing company, acquired some assets from SiCortex, a Maynard, MA-based computing firm that shut down in May. Financial terms weren’t given, but Cray purchased compiler technology that could help it improve its own products and gain new customers.

—Luke reported that Seattle’s Infectious Disease Research Institute, a global health nonprofit, licensed technology from Israel-based NanoPass to use “microneedles” to stimulate immune system cells just below the skin surface, which might make new vaccines more protective. Financial terms were not released.

—Hillsboro, OR-based ClearEdge Power raised $15 million in equity financing, according to media reports, which cited a regulatory filing. The investors were not disclosed, but ClearEdge Power has been backed by the Kohlberg family, Big Basin Partners, and Applied Ventures. ClearEdge develops fuel cell systems for homes.

—Seattle-based Trubion Pharmaceuticals signed a global partnership with Redwood City, CA-based Facet Biotech to co-develop and market an experimental treatment for leukemia, as Luke reported. As part of the deal, Trubion (NASDAQ: TRBN) will receive a $20 million upfront payment, and Facet (NASDAQ: FACT) has agreed to buy another $10 million worth of Trubion stock. The news sent Trubion shares up more than 40 percent, to $5.45, about six minutes after the opening bell on Friday morning.

—Seattle-based Tuusso Energy, a solar power plant developer, has raised a $2 million financing round from Pivotal Investments, a Portland, OR-based venture capital fund focused on cleantech and sustainability. Tuusso’s first solar plant is scheduled to be completed in the California desert in 2011. The deal represents the first investment from Pivotal’s new fund.

—Omeros, a Seattle-based biotech firm, is preparing a renewed push for an IPO this fall, as Luke reported in an Xconomy exclusive. The offering, which could happen as soon as this month, would be the first IPO from a Washington company in more than two years (since Kirkland, WA-based Clearwire went public in March 2007). Omeros, which is developing a treatment to help people recover faster from knee surgery (among other products), previously tried to go public in January 2008.

—Xconomy broke the news that Seattle-based Marketfish, an online marketing startup, has raised an undisclosed amount of funding from private investors led by the Alliance of Angels. Marketfish, which was founded in July 2008, has developed a Web interface for connecting marketing agencies with list owners.

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Hillsboro, OR-based ClearEdge Power, a developer of fuel cell systems for homes, has raised $15 million in equity funding, according to PE Hub, Northwest Innovation, and others, which cite a regulatory filing. Investors in the current round were not disclosed, but ClearEdge was previously backed by the Kohlberg family, Big Basin Partners, and Applied Ventures.

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[Corrected 9/03/09, 7:20 am. See below.]

It felt almost anti-climactic when retired Vice Adm. Dennis McGinn arrived in San Diego last week to meet with some of San Diego’s leading algae biofuels scientists and tour a local biofuel research facility.

McGinn, a former commander of the Navy’s Third Fleet in San Diego, is a member of a blue-ribbon panel warning that continued U.S. reliance on fossil fuels (as well as the nation’s strained electric grid) pose significant threats to U.S. security. As a result, the retired admiral represents an unanticipated ally in efforts by San Diego’s emerging cleantech community to rapidly advance algae-to-biofuels technologies. The blue-ribbon panel, actually the military advisory board of CNA, a non-profit research group near Washington D.C., is urging the Pentagon to bolster its national-defense strategy by boosting energy conservation and by embracing alternative energy technologies as a way to end U.S. reliance on unfriendly foreign sources of crude oil.

McGinn’s support was welcomed, of course. But San Diego’s biofuels industry has gained so much momentum in such a short time, it’s not like McGinn was bringing badly needed reinforcements to a desperate struggle for survival.

Lisa Bicker, who heads the non-profit industry group Cleantech San Diego, marks the dawn of San Diego’s “green crude” revolution in mid-2008, when local scientists and industry officials first met to discuss their various efforts in algae biofuels research. The implications were obvious at the time, because U.S. gasoline prices were skyrocketing beyond $4 a gallon nationwide. Since then, news concerning San Diego’s advances in algae biofuels technology has been flying fast and furious.

One of the more significant developments occurred last September, when it was disclosed that San Diego’s Sapphire Energy had raised $100 million in venture capital to develop algae biofuels—and the investors included Bill Gates. Then there was a flurry of news in April surrounding the formation of SD-CAB, the San Diego Center for Algae Biotechnology, and the formulation of a $10 million Algae Fuel Prize competition organized by Del Mar, CA-based Prize Capital. All that, however, seemed to be eclipsed in July, when Exxon Mobile said it was investing $600 million to develop algae biofuels through a partnership with San Diego’s Synthetic Genomics, and the intense J. Craig Venter.

Even since July, much has happened. So what McGinn had to say to Bicker and local scientists wasn’t nearly as interesting to me as the update he got from the front lines of algae biofuels development in San Diego.

McGinn met with Bicker, Stephen Mayfield, an expert in algae genetics at The Scripps Research Institute (and who broke the news that he is moving to UC San Diego San Diego in November), Greg Mitchell, a marine biologist at UCSD’s Scripps Institution of Oceanography, and Robert Knox, the oceanographic institute’s deputy director for research. Here are some of the insights I gleaned from their briefing:

—Mayfield told McGinn that federal funding to …Next Page »

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Last week, we reported that Prometheus Energy, the Redmond, WA-based liquid natural gas producer, closed a $10 million investment from Shell Technology Ventures in a deal that is still resonating in the local alternative energy community. Prometheus, led by co-founder and chief executive Kirt Montague, has gone through many ups and downs since its formation in 2003. Now, through a strategic partnership with Big Oil, the company is looking to go global with its technology for taking methane gas from landfills and other waste sources and converting it into relatively clean-burning liquid natural gas fuel.

I heard from a couple of Northwest cleantech venture capitalists who commented on the significance of the deal. To me, their reactions help underscore the importance of finding the right partner at the right stage in a company’s life, especially in the tricky world of alternative fuels.

From Gregg Semler, co-founder and managing director at Portland, OR-based Pivotal Investments:

“I think it is an important deal from many perspectives. It not only validates the business opportunity for waste to energy deals but it demonstrates how important startups can be to the innovation cycle for global companies like Shell. As you know, a lot of cleantech is disrupting very large, global markets where the major competition is already well established. It can be challenging for startups to break in to an existing market. This demonstrates that companies like Shell are strongly motivated to do deals with innovative companies like Prometheus. As part of the aligning of interest, often times they will provide the necessary capital to get to the next stage of validation. Often times this kind of relationship is compelling to venture investors and helps if you are trying to raise additional venture capital. There are many other waste to energy companies in the Northwest as well as other startups where corporate partnering makes a whole lot of sense. It is not an easy time to be raising capital. This deal should motivate other early stage clean tech companies to source strong strategic corporate partners that can make a difference to achieve their goals.”

From Rick LeFaivre, managing director at Kirkland, WA-based OVP Venture Partners:

“I applaud Kirt for hanging in there and landing a strategic investor. Alternative fuel ventures quickly become ‘project build out’ deals that require lots of capital to build plants. They typically aren’t early-stage venture deals, which is why we tend to steer away (which is not to say they won’t be good investments for someone—just not us). Bringing in a strategic partner who can invest the capital required to scale the business is exactly the right way to go. This differentiation is important: I continue to hear discussion about ‘the lack of early-stage venture capital in the [Pacific Northwest] for cleantech ventures.’ The reality is that firms like OVP are actively looking for early-stage ventures in this space, but that typically means a leveragable technology platform that leads to profitability on a modest amount of investment with significant upside potential, vs. large project finance opportunities that require hundreds of millions of dollars to scale the business. It’s not that one model is ‘better’ than the other, but rather they are different kinds of investments, requiring different kinds of investors.”

“Bottom line: great to see another Seattle-based cleantech deal get funded, and it sounds like the funding came from the right kind of investor.”

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

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

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

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

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

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

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

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Redmond, WA-based Prometheus Energy has closed a $10 million financing from Netherlands-based Kenda Capital, which manages the Shell Technology Ventures Fund that’s part of the Dutch oil giant. A second tranche of financing, worth an additional $10 million, will be part of the deal if Prometheus meets certain milestones.

Chief executive Kirt Montague co-founded Prometheus in 2003 with the idea of converting waste gases from landfills into liquid natural gas for clean-burning fuel. After raising more than $20 million in venture funding, the company went public on London’s Alternative Investment Market (AIM) in 2006, but was de-listed in 2008.

Last September, Prometheus was bought by Black River Asset Management, a private equity firm based in Minnetonka, MN and San Mateo, CA. Black River used the placeholder name “Heracles Energy” for the company when it acquired its assets. (Which is why Prometheus Energy’s SEC filing for the deal is under the name Heracles Energy—but the company’s operating name is still Prometheus Energy.)

With the new investment, Prometheus Energy is part-owned by Shell, the world’s largest liquid natural gas producer.

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SpectraWatt, a Hillsboro, OR-based maker of photovoltaic cells, received a $500,000 contract from the National Renewable Energy Laboratory yesterday.  Part of the American Recovery and Reinvestment Act, the contract is for the company to develop ways of improving solar cells without changing current manufacturing processes.  SpectraWatt was one of 13 companies to receive money from NREL, the ultimate goal being to speed up the commercialization of solar energy technologies.

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When renowned genome scientist J. Craig Venter spoke at San Diego’s Connect’s Innovation Summit two months ago, he focused mostly on creating genetically engineered microbes that consume coal to produce natural gas. But a review of Venter’s recent presentations and other information suggests that Synthetic Genomics, the San Diego startup he co-founded, also has a major biofuels initiative underway, as well as other revolutionary projects.

So when Venter said in April, “we’re not too far away from making an announcement to scale this up,” it’s possible he was just speaking generally about an industrial-scale project based on a synthetic organism, and not about the coal project in particular.

Either way, such an announcement could represent the first time a synthetic organism created from transplanted genes moves from the research laboratory to an industrial-scale operation. “Over the next 20 years, synthetic genomics is going to become the standard for making anything,” Venter said in a 2007 article in NewScientist magazine. He says it will become possible to add different characteristics, to or take them away, from almost everything. In the future, Venter says one DNA-based species (human) will be able to sit down at a computer to create another.

As a result, the first commercialization project that Synthetic Genomics undertakes with a major corporate partner may well involve algae that have been genetically engineered to produce biofuels. Synthetic Genomics’ team already has genetically optimized an algae species so that almost half of the organism’s mass consists of lipids, a broad group of naturally occurring molecules that include fats, waxes, sterols and other energy storage compounds. Now the team is enhancing the organism further to make even more lipids. Such algae would serve as a biofuel feedstock.

Venter has described “the new algae” as a kind of biochemical factory. In his Joint Genome Institute keynote speech in March, Venter said “the new algae” is something that “secretes whatever lipid size we want to engineer. This changes algae from what everybody’s been looking at as a farming problem into a manufacturing problem. So we are trying to get algae to go into a continuous production mode, pumping up these lipids, that come out in a pure form.”

Two years ago, Synthetic Genomics struck a long-term research and development deal with BP, the global energy conglomerate previously known as British Petroleum to develop cleaner energy production.  BP has also been a strategic investor in Synthetic Genomics—even though Venter has stated that he wants the company to replace the petrochemical industry in ten years.

Many aspects of Venter’s algae project seem fanciful. He has described a future where people produce their own biofuel in their backyards, a self-sufficiency scenario he sees as a major source of future fuel production. He envisions possibly millions of “algae micro refineries,” in neighborhoods throughout the United States and beyond. Genetically engineered algae needs sunlight and carbon dioxide, and then secretes a liquid that “can basically be used right away as biodiesel,” according to Venter. The only hardware needed would be stuff like sinks, filters, barrels and pipes.

In a Popular Mechanics magazine interview last year, Venter said the goal at Synthetic Genomics is to have “multiple things on the market within five years.” In a TED speech in February 2008 he estimated that the team would have “the first fourth-generation fuel out in about eighteen months.”

Privately-held Synthetic Genomics was founded in 2005 by Venter, who serves as chairman and CEO, Nobel Laureate Hamilton Smith, who serves as scientific director, and former General Counsel David Kiernan. Its board includes Biotechonomy CEO Juan Enriquez, Draper Fisher Jurvetson managing director Steve Jurvetson, Pulsar CEO Alfonso Romo, and Raydiance CEO Barry Schuler. In 2005 Draper Fisher Jurvetson provided $30 million in Series A round of venture funding. Last year it was reported they were in the process of raising another round, in the range of $100 million to $200 million.

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[Updated with comments from Kelly Jo MacArthur on page 2]
In recent years, we have seen an explosion of alternative energy devices, yet most of these technologies remain out of the reach of the average homeowner. To outfit your roof with solar panels, you’d probably be out $10,000 to $20,000 as an initial investment. Clarian Technologies, a brand new, three-employee Seattle startup, wants to change all that. With its products slated to hit the market in 2010, the company aims to bring affordable wind and solar energy devices to the masses. I spoke with Clarian founder Chad Maglaque to find out more.

The two products that he hopes are coming to stores near you soon are the Jellyfish (wind turbine) and Sunfish (solar panels). Maglaque’s vision is that an ecologically-minded but not necessarily wealthy homeowner could pick up one of these at Home Depot, Best Buy, or Costco, set it up on their roof or in the garden, plug it into a regular power outlet, and start generating electricity—without having to bring in a contractor, electrician, or inspector.

The cost? The starting price for the Jellyfish is $399, and the Sunfish is $899. Clarian is already talking with Costco about stocking the devices, Maglaque said.

In currently available wind and solar technologies, a device called the inverter is a big cost hurdle, Maglaque said. That’s the part of the technology that converts DC to AC current that can be used in your home, and adds at least $3,000 to $4,000 to the price tag. “We wanted to tackle that with the view that smaller is better,” Maglaque said.

So Clarian’s products don’t actually need the inverter. This isn’t a new concept, Maglaque said. Large industrial wind turbines don’t use inverters either.

When Maglaque explains how few obstacles there are to a plug-and-go wind or solar energy generator, it seems like there’s a huge hole in the alternative energy market. The existing plugs in your house are coded to take an appliance up to 1,500 watts. But a 1,500 watt solar panel array would normally cost $15,000 to $20,000, Maglaque said. “There are not many people who can afford to do that,” he said. “That’s where there is this disconnect in the market.”

Enter the Jellyfish, which is three feet tall and can be mounted on a roof …Next Page »

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It was a relatively light week for deals in the Northwest, perhaps owing to the holiday weekend. But there was still action in biotech, marketing software, and alternative energy.

—Kennewick, WA-based Infinia raised $14.1 million in debt financing out of a $50 million offering. The company, which is backed by Vulcan Capital, Khosla Ventures, and other investors, develops solar power generation technology that uses free-piston Stirling engines and power systems.

—Luke reported on the story behind Vulcan Capital’s investment in BiPar Sciences, the Brisbane, CA-based cancer biotech firm that was recently sold to Paris-based Sanofi-Aventis for $500 million. Vulcan led the seed financing round for BiPar back in 2005, and pumped $13 million in capital into it through its lifetime. The sale will earn Vulcan more than $100 million in cash, which managing director Steve Hall says has helped put the firm in the top 10 percent of all U.S. venture funds over the past five years. BiPar’s drug, BSI-201, could be a fundamental advance against breast cancer, ovarian cancer, and other tumors.

—Bellevue, WA-based Visible Technologies, a startup that makes software for online brand reputation management and customer service, raised $6 million in debt financing. Visible Technologies was founded in 2003, and is backed by Bellevue-based Ignition Partners and New York-based WPP.

—Seattle-based Survey Analytics, a marketing and customer relations software startup, scored a partnership with the White House to power the Open Government Dialogue website, which seeks to solicit ideas from the public on how the government can be more transparent, participatory, and collaborative. Financial terms of the deal were not given. Survey Analytics, which has been bootstrapped since 2004, has developed a software platform for hosting and managing feedback communities called IdeaScale.

—Luke reported that Seattle-based Uptake Medical, which is developing minimally invasive technology to treat emphysema, raised $3.1 million in a debt financing. Uptake makes a device that seals off access to diseased parts of the lung where air gets trapped. The technique does not leave an implantable device behind. The latest funding adds to the $3 million bridge financing the company raised for its clinical trials in December.

—HealthUnity, a Bellevue, WA-based maker of software for connecting healthcare IT systems, raised $2 million out of a $4 million equity financing, Luke reported. The company was founded in 2004 and is led by CEO Prem Urali, a former group manager in the BizTalk Server division at Microsoft.

—Luke also reported that Oncothyreon, a Seattle-based developer of cancer drugs, received commitments from several investors to buy new shares and warrants for $11.1 million. The deal was underwritten by Boenning & Scattergood. Oncothyreon (NASDAQ: ONTY) has been diversifying its pipeline, and has gotten renewed interest from investors in its cancer immunotherapy program, since Seattle-based Dendreon has had recent success in that field.

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