Seattle-based venture capital firm Maveron has been in the news a lot this month. There have been reports about its latest stealth startup, which is a new type of e-commerce play. Another report from VentureWire said Maveron will be selling its shares in Motley Fool—a deal that will generate cash for Maveron, which led a $26.5 million financing of the online investing website in 1999. And then, just yesterday, I got a press release about Maveron expanding to San Francisco and Silicon Valley.

The VC firm, co-founded by Howard Schultz of Starbucks fame, is used to this sort of attention. But the San Francisco news was a bit confusing to me, because Maveron has been active in the Bay Area for a long time. As usual, the interesting stuff is in the follow-up. I had a chance to connect yesterday with Dan Levitan, a fellow co-founder of Maveron and the mastermind of the firm’s consumer-focused investment strategy. Besides the new San Francisco office, I also asked Levitan about the Seattle e-commerce startup his team is currently building; his outlook and themes in the consumer tech space; and his first fateful meeting with Schultz back in the early 1990s.

First, some basic stats. Maveron was founded in 1998 by Levitan and Schultz, and is best known for its early investments in eBay, drugstore.com, Shutterfly, and Cranium. Its current portfolio companies—there are 22 active around the U.S.—include Potbelly Sandwich Works, Pinkberry, LiveMocha, and Altius Education. The venture firm has about $750 million under management.

Levitan explained that opening Maveron’s San Francisco office has been a two-year process, but it doesn’t signify any shift in the firm’s geographic focus. “I don’t see this announcement as anything more than opening an office where we’ve already done business,” he said. “We’re one firm with two offices.”

The San Francisco office is headed by Amy Errett, a veteran of Olivia.com and E*Trade, who was announced as a Maveron partner last year. She is joined by new principal Ben Choi, who was previously with Storm Ventures, In-Q-Tel, and RRE Ventures. As Levitan puts it, instead of Errett flying up to Seattle four times a month, she’ll fly up three times a month (and the Seattle team will fly down the fourth week).

But Levitan emphasized that he’s looking in his own backyard for new investments as much as ever. “Seattle is an economy and region that’s very rich with groundbreaking, innovative consumer companies,” he said, pointing out obvious examples like Starbucks, Nordstrom, Amazon, and Costco. One less obvious company he mentioned was online real estate broker Redfin, which isn’t in …Next Page »

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It’s been just over a year since we first catalogued the iPhone apps originating from our fair city (and environs). Back then, mobile applications like Urbanspoon, Whrrl (from Pelago), and Jott were relatively new and just starting to take off, letting iPhone users do things like discover restaurants and events and dictate e-mails and text messages—can you believe it’s only been a year?

Now it’s almost impossible to keep up with the volume of iPhone apps coming out of the Seattle area, just on a weekly basis. Here are five that have caught my eye as of late, in no particular order—it’s not a comprehensive list, so if you know of any good ones I missed recently, please drop me a line at gthuang@xconomy.com or post a comment at the bottom of this story. Just from what I’ve gathered lately, it looks like a good mix of indie developers and corporations are creating new products:

iGlasses ($0.99)
A digital magnifying glass that helps you read fine print on things like restaurant menus and medication bottles. The app was developed by Brian Ward of Windward Partners (a real estate broker and attorney) and Jack Breese of the Washington Advisory Group (formerly a director of Microsoft Research).

Best Camera ($2.99)
A smash-hit photography app that lets you edit pictures (applying digital filters and effects) taken on an iPhone, and upload them to a communal online gallery or social site, as Wade reported last Friday. Developed by Seattle photographer Chase Jarvis, it’s going a long way towards making the iPhone the only camera most people will ever need.

DateCheck (free, though the services aren’t)
A background-check app that lets you gather information about your date, or any person—things like criminal records and data from social networks. Bellevue, WA-based Intelius rolled out this app at the DEMO conference in San Diego last week.

Learn That Name ($1, soon to be $2)
A quiz-style game to help you associate names and faces in your LinkedIn contacts. It was developed by a 14-person team assembled at last month’s Startup Weekend in Redmond, WA, and was introduced for sale early last week.

myStarbucks and Starbucks Card Mobile (both free, though lattes still cost an arm and a leg)
A store locator and mobile payment card, respectively. The Seattle Times and many other outlets reported on these, the first iPhone apps from the coffee giant, last week. The payment app is currently being tested at Starbucks stores around Seattle and Silicon Valley.

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My favorite limerick of all time came printed on the bottom of a coffee cup:

All hail the goddess Caffeina!
She hangs out by the coffee machina.
We’re all on the run
But we get more work done
Since coffee came onto the scena!

Yes, this anonymous ditty breaks the rules of limericks, principally by mangling the meter and using made-up words like “machina” and “scena.” But it’s the sentiment that appeals to me. I do get more work done because of coffee. If the sprightly elixir was good for Voltaire, who is said to have consumed 50 cups a day, I figure it must be good for me.

I also get more work done because of e-mail. And because of the Web, and RSS feeds, and Google, and Twitter, and my iPhone and my MacBook and my Kindle—all of the tools, in short, that are melting our brains and impoverishing our communications, according to a circle of naysayers who have been very busy lately publishing books and articles with titles like Digital Barbarism and The Cult of the Amateur and “Is Google Making Us Stupid?” Technology criticism is an invaluable strain in our culture that stretches back to such brilliant writers as Lewis Mumford, Rachel Carson, Marshall McLuhan, and Jane Jacobs. But to tell the truth, I don’t give much more credence to the recent anti-digital jeremiads than I do to the periodic warnings—always swiftly overturned by medical authorities—that caffeine is bad for your health.

The latest addition to the curmudgeon’s club is John Freeman, the acting editor of the UK-based literary quarterly Granta, who published a so-called “manifesto for slow communication” in the August 21 Wall Street Journal. The essay, which was adapted from Freeman’s forthcoming book The Tyrrany of E-Mail, argues that living in such close and constant proximity to our e-mail inboxes stresses us out, cuts us off from the physical world, and undermines our communication skills. Freeman thinks that spending all day writing and answering e-mail amounts to “simulated busyness” rather than genuine productivity. And he believes that the only way to restore sanity is to “step off this hurtling machine,” jabber less, and think more. “We need to learn to use [e-mail] far more sparingly, with far less dependency, if we are to gain control of our lives,” Freeman writes.

There are certainly days when I’d love to ignore my e-mail. Thursdays, for example, when I’m supposed to be writing this column. As Freeman rightly notes, “We need time to shape and design and filter our words so that we say exactly what we mean,” and it would be wonderful, on those days, to have a few uninterrupted hours to take his advice. But I know that closing the e-mail tab in my browser would be as unwise as …Next Page »

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If you really want to keep your finger on the pulse of the Seattle business scene, go get your shoes shined. That’s the advice Todd Dean gave me recently. Dean is president of Keiretsu Forum Seattle/Northwest, the local chapter of the world’s largest angel investor community. He took me to see a couple of the top shoeshiners in town. Even though I don’t really own shoes worthy of a shine, I hope to become a regular customer and soak up their wisdom. You might call them shoeshiners. I call them oracles.

Morgan Perkins runs the family shoeshine business at Nordstrom downtown. Their clientele includes lawyers, judges, investors, business people, and, that morning, the superintendent of Seattle public schools. Perkins has been a fixture at Nordstrom since 1974. Perkins, who is African-American, came up as a railroad porter from Salt Lake City in an era of Jim Crow laws, and he has seen it all. For the past 35 years, while he and his family have shined customers’ shoes, they’ve told him things—about business, jobs, the economy, whatever’s on their mind. (See this profile in the P-I for more on the Perkins family.)

“People want five minutes of peace, they want to relax,” said Morgan’s wife, Patricia, as she meticulously gave new life to my dress shoes.

I asked how their shoeshine business has been doing during the recession. Sunny, the Perkins’ daughter, was working next to us. She said business has actually improved. Instead of buying new shoes, people are keeping their old shoes longer, she said, and they need to be polished. Especially for all those job-seekers out there. (The familiar refrain of doing more with less, among techies and non-techies alike.) Her customer, sitting next to me, was a former Washington Mutual employee who just got a job running security for the Sound Transit light rail system in Seattle.

Mr. Perkins had some sage advice for entrepreneurs and startups. “What I’ve learned in my life is, people do things for people they like,” he said. “It doesn’t matter whether you’re selling cars, shining shoes, or you’re the head of this company. If your initial meeting with that person is not positive—it only takes the speed of light for me to figure out if I’m going to like you. And that’s the whole idea right there.”

As Perkins explains, it’s all about building a sincere relationship with customers. “When a person comes into contact with you, it is your duty to create a situation where that person’s going to like you. And that’s not really hard. We want to like other people,” he said. “When I stand here at the door, it’s a smile, ‘Hello sir, how are you doing today?’ And I got you. I’ve seen it happen so many times, a person comes with her husband, I’ll catch the eye of the wife, and he’s looking down. Wife will look down at his shoes, they look at each other, and here he comes. See what I’m saying?”

“You develop a relationship that way,” Perkins continued. “You have to always recognize another’s presence on the face of the earth, no matter what your station in life is. That’s what I’ve always …Next Page »

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Xconomy has learned that MicroGreen Polymers, an Arlington, WA-based developer of technology to recycle plastics into cheaper, environmentally friendly coffee cups among other things, has raised $1.6 million for expansion from WRF Capital and local angel investors (Northwest Energy Angels, Alliance of Angels, and Atlas Accelerator), out of an ongoing round the company expects will net $3 to $4 million later this month.

The money will be used to build up MicroGreen’s commercial manufacturing capacity, and boost its payroll from 9 people to as many as 30 over the next year, says CEO Tom Malone. The company is also scouting new locations, likely to be in Everett, WA, he says.

MicroGreen got started in 2002, when it spun out of the University of Washington. The basic idea from founders Greg Branch and Krishna Nadella, a pair of graduate students, was to see if they could develop a technique to squeeze high-pressure liquid carbon dioxide into plastics, to heat them up and expand them while in a solid state. This process creates billions of tiny microbubbles that allow manufacturers to maintain most of the properties of regular plastic, while using a lot less of the regular plastic that is made from oil. The MicroGreen technique also creates a handy insulating layer of air inside the plastic, which can protect your hand from getting burned while holding that hot morning coffee. But plastics are everywhere in the modern world, and MicroGreen Polymers sees plenty of opportunities to stick its recycled product into markets that are worth billions.

“We can use less plastic to do the same work,” Malone says. “It’s a less-is-more story.”

The technology, which MicroGreen calls “Ad-air” does just that—it adds air bubbles into recycled PET plastics (like the stuff from water and soda bottles), which makes the subsequent product lighter, uses less material, and makes it cheaper, Malone says. It retains many, but not all of the same properties as the original plastic, so it can’t be used for everything, he says.

The initial applications of the MicroGreen technology have been for a reflector plate that a Japanese manufacturer used to make liquid crystal display TVs appear brighter, and for a contract with Northrup Grumman to help make some electronics equipment lighter, Malone says. These aren’t huge clients, generating revenue of about $1 million last year, and almost $2 million this year, Malone says.

Bigger opportunities lie ahead in disposable coffee cups, food packaging such as …Next Page »

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Coffee is so last year. Just ask Rob Grady, the former Starbucks executive who joined Seattle-based social publishing startup Wetpaint as senior vice president of marketing earlier this month. OK, Grady still enjoys a triple tall Americano or a double tall nonfat caramel macchiato from time to time—his new favorite Starbucks is in the Wells Fargo building in downtown Seattle—but he’s moving on to a different kind of challenge now, and last week he told me why.

Grady was Starbucks’ vice president of global beverage (one of the best titles ever, in my opinion). His team was nearly 100 strong and produced several billion dollars in revenue. But the past year or so has been a time of great change at Starbucks, what with declining sales, the economic downturn, and Howard Schultz’s return as CEO. Grady didn’t point to any of those as reasons for leaving, but it sounds like he wanted to move on to bigger challenges.

“Two things have threaded my career,” Grady says. “Working for a company that can make a difference in the world from a social perspective. And creating a great consumer experience.”

Which is where Wetpaint enters the picture. It’s a startup, backed by $40 million in venture capital, that helps customers generate all sorts of new online content to turn business websites into Web 2.0 social-networking beehives (among other things). “Social publishing is the largest content-creation platform going forward,” says Grady. “Anyone on the Internet with a passion has a way to organize and galvanize around a cause…Online social publishing has great economic promise because it enables content creation that has much lower cost, but has great value.”

Matt Hulett, the chairman and CEO of Mpire (maker of Widgetbucks), has some valuable outside perspective on Grady’s move. He worked with Grady at RealNetworks back in the 1990s, and has known him for 14-plus years. “Rob is a powerful mix of analytic thinking, strong leadership, and a real passion for building creative products and solutions,” Hulett says. “If a guy like Rob is going to Wetpaint, …Next Page »

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I recently had coffee with a venture capitalist at the Starbucks across the street from Biogen Idec’s (NASDAQ:BIIB) headquarters in Kendall Square, and he asked me what I thought were the biggest life sciences deals of 2008. The question is really tough to answer, both because the answers are somewhat subjective and I didn’t want to forget to mention a big M&A event. (Full disclosure: I was also distracted by the uncanny sweetness of my eggnog latte.)

So I turned the question over to him (a good technique for avoiding a question without avoiding a topic). Naturally, he mentioned deals that involved his venture firm as an investor or stockholder. Similarly, I mentioned the deals that Xconomy had covered. The result of our conversation was an incomplete recollection of the most important deals of the past year, but it inspired me to research the topic further.

It was indeed a big year for life sciences deals in the Boston area, despite the lack of IPOs. Instead of tallying the “biggest” deals of 2008 in terms of dollars, I’d rather talk about the “most memorable” deals. (To look at the biggest of the big, check out this fun post from the In Vivo Blog.) Why look at this differently? Because there are some deals that didn’t boast the largest sums but were still meaningful because of the giant leaps of faith investors made in an emerging field of science.

So let’s reminisce about the deals (listed here in no particular order):

Concert Pharma Jammed with VCs

—Concert Pharmaceuticals is working on a method to retool the chemical composition of existing drugs to make new pharmaceuticals. The Cambridge, MA-based startup, which swaps the hydrogen atoms of existing drugs with deuterium atoms to form new treatments, raised $37 million in a Series C round of private equity financing in the first half of 2008. Luke wrote about the company’s lead drug candidate, a form of antidepressant paroxetine (Paxil) that has undergone the firm’s deuterium-for-hydrogen makeover, to treat hot flashes.

ProteoStasis Launches With Big Cash Stash

—Here’s one exception to the issue of scarce financing for newly hatched biotech firms—also known as the valley of death. Cambridge-based ProteoStasis Therapeutics pretty much leapt from the gates last year with …Next Page »

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OK, I’m not usually a big fan of end-of-the-year lists. But given that Xconomy Seattle has been up and running for almost exactly six months (since June 16), Luke and I thought it would be fun and informative to share our site’s top 10 most-read stories so far—and why we think they were important or special.

The list is an interesting mix of stories that captures the spirit of what we’re doing here at Xconomy, and it also gives a pretty balanced retrospective on the events of the past half-year. The stories represent our commitment to cover all sorts of innovation in the Northwest, spanning technology, life sciences, breaking news (both good and bad), and in-depth features and analysis.

So, without further ado, here are the 10 most-read Xconomy Seattle stories of the past half-year:

10. Microsoft’s BizSpark Reaches Out to Startups

This piece covered how Microsoft relates to the startup community, through a review of the first 30 days of its BizSpark program.

9. It Came From the Hutch

The untold story of how Tysabri, the most effective multiple sclerosis drug on the market, was invented in a lab right here in Seattle.

8. Immune Design Raises $18M to Build Vaccine Company

Readers were excited to hear about one of the bigger venture financing deals of the year in Seattle, led by a team of superstars in immunology.

7. Heller Ehrman Dissolves

This was bad news based on a layoff filing from Washington State’s Employment Security Department. A global law firm with a large Seattle office, known for its work in the tech and life sciences community, has left the scene.

6. Amgen Scientist Vs. Bone Cancer

The story of a 13-year quest: how the persistence of a Seattle scientist at Amgen may pay off in the coming year, through a new drug for bone loss called denosumab.

5. Nathan Myhrvold Holds Court

An exclusive, in-depth interview with Nathan Myhrvold of Intellectual Ventures. The former Microsoft chief technology officer and founder of Microsoft Research covered everything from ping-pong with …Next Page »

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From the minute he took the job as Washington state’s biotech ambassador, Jack Faris had a dream of making this mysterious business a little less intimidating, a little more embraceable, for the general public. Faris, a career ad man who helped Boeing airplanes capture the public imagination, wanted to do the same thing for an industry that aspires to create more effective new medicines.

Now Faris, 62, is retiring after almost four years since taking the job as president of the Washington Biotechnology & Biomedical Association. So it’s a good time to look back on how he performed. He officially hands over the group’s leadership job to Chris Rivera on Wednesday.

The biggest accomplishment on Faris’s watch came when Gov. Christine Gregoire jawboned the legislature to establish a 10-year, $350 million fund to spur more commercialization of basic biomedical research in the state. The idea, which took years of industry lobbying, was to strengthen the region’s competitive standing versus the world leaders in Boston and the San Francisco Bay Area. But as Gregoire herself reminded the industry at its annual meeting in October, she put a lot of her political capital into this initiative, and it passed the state Senate by just one vote. Nobody could argue that biotech in Washington has amassed anything close to the clout of the aerospace giant Boeing, which has proven it can get new laws written when it threatens to move out of the state.

“With Boeing, there’s an understanding of the economic significance of it to the region, and a civic pride,” Faris says. “We’re building progress on both fronts with the life sciences sector.”

Faris is the first to admit he doesn’t have much data to back up this assertion. But he pointed to a couple examples that he finds encouraging. One is from a statewide poll of 507 voters in June. They were asked two questions related to the biotech industry. The first was simply whether people agree or disagree that Washington state has an extraordinary opportunity to be a world center for global health innovation—89 percent agreed. The second question asked people to rank, on a scale of 0 to 10, how important the life sciences sector is to the future of the region, with 0 being unimportant, and 10 being extremely important. People gave life sciences an 8.2 score, he says.

There is no comparative data to say whether this is improved from when Faris took the job, or to say how this stacks up with other industries, like aerospace, software, coffee, or retailing.

Even so, Faris said he senses progress in raising the profile of the life sciences industry. He was one of the people who pushed the idea that the movers and shakers at the Seattle Chamber of Commerce build their 2008 annual leadership retreat around the theme of strengthening the region as a …Next Page »

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In a great food town like Seattle, it’s no surprise there are so many food-related startups. But lately we’ve been hearing even more about tech companies and food than expected—big successes, wacky products, major projects—so we figured it was time to round up (and update) our recent coverage of said companies. Plus, what better time than the holidays to think about the interplay between technology and food? OK, on to the entries, I’m getting hungry…

—Urbanspoon launched its restaurant review sites in every U.S. city over Thanksgiving (it had previously been in 71 cities). The company’s iPhone app has gotten around 2.2 million downloads and 70 million “shakes” so far. Co-founder Ethan Lowry says he’s going to Thailand over the holidays, and may sample “curry for Christmas.”

—BigOven keeps climbing the charts of the Seattle 2.0 startup index, recently cracking the top 10 for November. Steve Murch created the social site for sharing recipes and planning meals. It now has more than 2 million unique users a month, and passed one million downloads of its iPhone app this month.

—Foodista launched its social cooking site this week. Former Amazon vets Barnaby Dorfman and Sheri Wetherell are running the wiki-style encyclopedia, which includes information on recipes, techniques, and tools of the trade.

—Intellectual Ventures is working on a major book project about the modern science and technology of cooking. The authors are IV co-founder Nathan Myhrvold and Christopher Young, from the renowned Fat Duck restaurant in England. (In the past, Myhrvold has been a guest chef at Rover’s in Madison Valley, and once won the world barbecue championship.) The book is slated to be published in about a year. It will include cutting-edge kitchen techniques as well as some recipes. I recently had lunch with Patrick Ennis, IV’s global head of technology, and we both had turkey sandwiches.

—Bacon Salt founders Justin Esch and Dave Lefkow say they are out of Lite Baconnaise until January 2, and that today is the last day to get orders in to ensure delivery by Christmas. Don’t ask. Just try it, trust me.

—OK, this one is not quite food, but I would argue that coffee counts. Here at Xconomy, we’ve made some additions to our Greater Seattle Coffee Cluster, an interactive map of cafe hotspots where the area’s innovation leaders like to gather and work. Randy Schatzman, president and CEO of Alder BioPharmaceuticals, wrote in this week to say that Victor’s Coffee in Redmond “should have been on Seinfeld,” because it has The Coffee Nazi. “It’s the kind of place you want to stay at but they don’t let you,” says Schatzman.

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Heading into the holiday season, it was a fairly slow week in the Northwest for deals. But there was still some substantial activity in software and biotech—and some activity about the activity (see immediately below).

—Bellevue, WA-based software and services firm Bsquare (NASDAQ: BSQR) acquired TechQuest, a test-automation software maker in Minneapolis, MN, for $2.2 million. The news spawned some spirited discussion by Bsquare founder Bill Baxter (now at Seattle-based Cozi) and current CEO Brian Crowley over the deal’s significance.

—Luke reported that Geospiza, a Seattle bio-software firm, acquired the “Genesifter” technology developed by Seattle-based VizX Labs, which helps researchers analyze massive amounts of genomic data. Terms of the purchase weren’t announced.

—Seattle-based Datacastle closed a $5.3 million Series A financing round led by the Australian venture firm CM Capital Investments. No other investors were disclosed. Datacastle, founded in 2005, makes data-protection software for businesses.

—Not a deal per se, but Beaverton, OR-based semiconductor firm Ambric announced it is shutting down operations while it looks for a corporate buyer. Ambric has developed parallel processor chips for wireless, medical, and military applications. It was backed by OVP Venture Partners, Northwest Technology Ventures, and other investors.

—Lastly, we posted an update on where a lot of local deals are (unofficially) being made. We added a few more anecdotes to Xconomy’s Greater Seattle Coffee Cluster, a list of 46 (and counting) area cafes, together with the entrepreneurs, investors, and innovators who frequent them, in the form of an interactive map.

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A week ago, Xconomy Seattle published a list and an interactive map of the coffee hotspots around town where entrepreneurs, investors, and innovators like to gather. It generated a fair bit of attention and a really great response from our readers. So I thought we should post an updated list here with a bunch of new additions for the Seattle area. There are 50 coffee spots and counting—and yes, Eastside and West Seattle, we heard you, and you are certainly not devoid of coffee-based innovation. Let us know if there are other spots we’ve missed.

Now, a few more coffee tidbits I’ve picked up from the community:

—On finding a prospective Yahoo buyer: In the past few months, there have been reported sightings of Microsoft’s Steve Ballmer at the Overlake Village Starbucks in Redmond, and at the Clyde Hill Tully’s.

—On the stalking of wireless carriers: Dan Shapiro of Ontela says he used to have meetings with his advisory board at Victor’s in Redmond. He adds that it’s where Microsoft and AT&T folks go to “have meetings away from prying eyes.” But the “best place to catch AT&T people in their core habitat” is the Starbucks in Redmond Town Center, he says. “Some wireless startups will nurse a cup of drip there for hours, waiting for the right person to come through.”

—On rags to riches: Ken Myer of the Washington Technology Industry Association says he used to work in the Uptown Espresso on 4th Ave. in Belltown when he was a consultant, before he moved into his current WTIA office on Alaskan Way. That was about two and a half years ago.

—On coffee-shop IP protection: Martin Tobias of Kashless says he has interviewed all his employees at Caffe Fiore in Queen Anne, and “can tell a lot about someone by the coffee shop they ask to meet at.” When asked to elaborate, Tobias said, “I consider my coffee shop/personality trait matrix to be proprietary information.” He added, “Suffice it to say that certain coffee shops are ‘cooler’ than others.”

—On a little-known fact of local coffee innovation: Not only is Caffe Fiore beloved by entrepreneurs and VCs alike (with branches in Queen Anne, Ballard, and Sunset Hill), but it’s also owned by Michelle Maclise of the Robot Co-op, makers of the popular social sites 43 Things, 43 Places, and 43 People.

Other notable additions to our list and map were contributed in the past week by Bill Bryant of Draper Fisher Jurvetson, Scott Darling of Frazier Technology Ventures, Rebecca Lovell of Alliance of Angels, Matt Hulett of WidgetBucks, Max Ciccotosto of Wishpot, Dave Schappell of TeachStreet, Jeff Lawson of Twilio, Ethan Lowry of Urbanspoon, and others.

So please check out the updated list here, and leave a comment or send further anecdotes to me at gthuang@xconomy.com. In the meantime, hope to see all of you out there enjoying your coffee (or other beverage of choice), and working on the next big thing.

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It was another slow week in the Northwest for deals. Still, there was a trickle of activity in energy, biotech, and software.

—Seattle-based EnerG2 and its lead investor, Kirkland, WA-based OVP Venture Partners, told Xconomy the full story of the energy-storage startup’s $8.5 million Series A financing. Turns out EnerG2 needed to refocus on a particular slice of the market and prove it could scale up its operations before the deal could happen.

—Bellevue, WA-based Talisma, a maker of customer relationship management software, was acquired by Campus Management, an e-learning company based in Boca Raton, FL. The financial terms of the deal were not disclosed.

—Luke reported that Seattle-based Accelerator, the biotech startup incubator, collected some $4.5 million in investment from PPD, the global contract research organization that runs clinical trials and animal tests for pharma companies. The new investment gives Accelerator a total of $27 million in its third fund.

–Seattle mobile-software startup Ontela landed a partnership with Denver, CO-based Photobucket to provide automatic photo uploading to the Web via Verizon Wireless phones. So far, Verizon is the largest wireless carrier to sell Ontela’s photo-sending technology as a monthly service.

—Not technically a deal, but a merger of sorts. EMC (NYSE: EMC), the Hopkinton, MA-based data-storage company, formed a new company, Decho, out of two of its formerly separate businesses, Seattle-based Pi and Utah-based Mozy. Decho will combine the “personal information” management software of Pi with the online-backup service of Mozy.

—Lastly, a rundown on where a lot of local deals are made—unofficially, of course. We presented Xconomy’s Greater Seattle Coffee Cluster, a list of 38 (and counting) area cafes, together with the innovators and investors who frequent them, all in the form of an interactive map and list.

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Map and list updated Dec. 19: Want to know where your favorite VC gets his or her morning latte? How about where tech and life sciences entrepreneurs gather to network and discuss ideas? If you’re looking to rub shoulders with the technological elite—or if you’re just looking for a quiet cafe to have a meeting or get some work done—you’ve come to the right place.

Here at Xconomy Seattle, we’ve been keeping track of the coffee hotspots around town favored by the tech-business leaders we talk to and write about every day. We thought it would be fun to share what we’ve found, both as a list and as an interactive map you can click around on (see below). In many cases, we’ve met the innovators or investors in their favorite haunts and sampled the local beverages. In other cases, we’ve gone by what they told us. But this is in no way a comprehensive list. We’d love to hear from you about where you like to go, where plans get hatched, and where tomorrow’s deals are being discussed. We’ll update the list as we go.

It may be cliché to say the Seattle innovation scene runs on coffee, but it seems to be true. One of the amazing things about the region is the sheer number of great cafes and places to gather, talk, refuel, and recharge. There’s something for everyone, from the quiet elegance of Caffe Fiore on Queen Anne Hill to the casual charm of Louisa’s on Eastlake to the hustle and bustle of Espresso Vivace near downtown. Not to mention the old reliables, Starbucks, Seattle’s Best, and Tully’s (especially on the Eastside—what’s with the dearth of independent cafes over there?).

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And behind every great cafe is a great story. Take Trabant Coffee & Chai, known for its strong espresso, tasty drip coffee, and spicy teas. The Pioneer Square branch is a personal favorite of Dan Shapiro, the co-founder and CEO of Ontela—and there’s an interesting reason why. In early 2006, Shapiro says, he was one of several entrepreneurs pitching their companies at a Keiretsu Forum angel investor meeting downtown. “We were singing for our supper,” he says. The guy in front of him was pitching a $12,000 drip-coffee maker, and he had coffee samples for everyone (Shapiro was too wired to try any). The panel asked the coffee guy questions like, Aren’t you just going to compete with Starbucks? Why wouldn’t Starbucks just do this? He replied that Starbucks’ leaders were too set in their ways, and the only way they’d do it is if they saw it in action.

The guy was Zander Nosler of the Ballard-based Coffee Equipment Company. His machine was called the Clover, and sure enough, he was right. His 11-person startup was bought last March by Starbucks, which now has Clover machines in several-dozen stores in the Seattle, Portland, San Francisco, and Boston metro areas. So what does this have to do with Trabant? The local coffee shop was a key early customer of the Clover, buying the machine in the spring of 2007. “Every time I go there, I feel like I’m supporting the local startup scene,” says Shapiro.

There are many more stories, but we won’t get to them today. Instead, we present our first pass of the Greater Seattle Coffee Cluster: an alphabetical list of cafes (50 and counting), and some of the notable people you might run into there. If you’ve got a favorite spot, or a story to pass along, please do comment below or drop us a note at editors@xconomy.com. Then again, you might want to keep your local treasures to yourself…

Belle Epicurean
1206 4th Ave, Seattle, WA
Recommended by Megan Muir of DLA Piper for its pastries, good coffee, and confidentiality.

Caffe Fiore
224 W. Galer St, Seattle, WA
Martin Tobias of Kashless is known to arrive for meetings here on his Segway. Also the favorite of Paul Thelen of Big Fish Games and Bill Bryant of Draper Fisher Jurvetson.

Caffe Ladro
600 Queen Anne Ave North, Seattle, WA
Paul Thelen of Big Fish Games also lists this institution as one of his likes. …Next Page »

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Andy Sack’s favorite coffee drink is a 12-ounce, single-shot, non-fat latte. But if you’re meeting with him to pitch your latest technology startup idea, be advised that he’s probably on his second or third cup already. These days, his schedule is filled with meetings and networking—most of it pretty informal. “I’ll have coffee with anyone,” he says.

On Tuesday morning, he sat down with me at Louisa’s Cafe near Lake Union in Seattle. It’s where Sack hosts his weekly “open coffee” hour, drawing a regular crowd of entrepreneur types looking to network over coffee and pastries. (”They don’t have the best coffee, but they have the best blueberry scones,” says Sack—and he’s right.) I wanted to get the full story of Founder’s Co-op, the startup fund run by Sack and fellow Web entrepreneur Chris DeVore, as well as hear feedback from the community. Back in June, I reported on the background and motivation behind the half-year-old venture. Then, just a week ago, Luke reported that Sack and DeVore have raised a new round of funding and announced 14 limited partners in the fund, all of them tech entrepreneurs who are well-known in Seattle innovation circles.

It’s a unique model, and Sack began by clarifying the terms of the new financing. The fund is $2.5 million, with each limited partner (LP) putting in $150-200K, which buys each of them a stake in all of the startups to be funded. They will meet as a group six to eight times a year. “It’s a peer-to-peer, seed-stage fund,” says Sack. “Chris and I are the decision makers—it’s not a democracy. As a group, the LPs provide deal flow and help guide our investment strategy.” Crucially, they will also provide mentoring and connections for the portfolio companies, which Sack says will typically be made up of small teams of young, first-time entrepreneurs (usually just two people).

The peer-to-peer aspect is a big part of what makes Founder’s Co-op different from the Y Combinator and TechStar incubators of the world (we’ve covered those here and here). The firm’s limited partners include Ben Elowitz and Kevin Flaherty of Wetpaint, Andy Liu and David Niu from BuddyTV, Adam Brotman from Corbis and Barefoot Yoga, and Geoff Entress, formerly of Madrona Venture Group. I asked a few of them about their involvement in the fund, and what’s special about it. “The model is special because it really helps entrepreneurs jump start their businesses,” says BuddyTV’s Niu. “They don’t have to worry about some associated startup infrastructural costs like phones, Internet, etc. if they move into the co-op’s office. In addition, they can access a wide range of ideas and experiences from Andy [Sack] and other LPs who have successfully started their own companies and want to give back to other local entrepreneurs.”

As for why he joined, Niu touts “the opportunity to work with Andy and the other LPs. I have a great amount of respect for what they have accomplished individually, and I think pooling their collective experiences will be a formidable asset that portfolio companies can tap…Of course, there is much less certainty and a higher chance to see failure when you invest in something early stage and unproven. At the same time, you can have an outsized positive influence and guiding hand to hopefully channel them towards success.”

Kevin Flaherty of Wetpaint echoes the sentiment about Sack and the other partners. “They all have miles of experience in the startup world. Being able to experience how they evaluate potential investments is a great learning opportunity for me. From a purely financial standpoint, there is a great need in the Seattle startup community for this type of investment. Matching that need with good insight provides a great opportunity for a solid rate of return,” Flaherty says. “We’ve already seen less venture interest in certain types of businesses and renewed focus on certain business metrics that for a while were undervalued. That being said, I expect there to be significant startup activity that is uniquely suited for Founders Co-op. Two folks in a garage are perfect for the fund.”

I also gathered some reactions from people outside the co-op—local angel investors and …Next Page »

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