Gregory Bialecki is Massachusetts Governor Deval Patrick’s Secretary of Housing and Economic Development, and leads an ungainly collection of agencies charged with everything from promoting affordable housing in Massachusetts to attracting international business investment to the state. Here at Xconomy, we cross paths with Bialecki quite a bit, since he’s also responsible for many of the state’s initiatives to support high-tech innovation and greater collaboration between business, academia, and government.

I interviewed Bialecki at length last week, and in Part One of our conversation, published yesterday, I asked him how his work as an attorney specializing in real estate development and land-use permitting related to his current business-development role for the state. We also talked about the roles state government can play in promoting innovation. Bialecki said the Patrick Administration has spent much of the past two years simply helping players in various technology sectors to recognize that when it comes to working with business, state government can play a supportive rather than an adversarial role.

In particular, we were talking as Part One closed about the state’s obligation to help business by improving the quality of science, technology, engineering, and math education for young people. In this second half of the interview, I pressed him for more examples of things state government can do to accelerate innovation. And we went on to talk about the need for more funding to move ideas from the lab bench to early-stage commercialization, the debate over non-compete agreements in employment contracts, and the Administration’s progress drafting new business regulations on protecting consumer data.

Xconomy: I think it’s pretty easy for everyone to agree on the importance of science and engineering education. But what are some of the other parts of this innovation agenda—things that maybe are not so easy to agree on?

Secretary Bialecki: There are other aspects of the innovation ecosystem, if you will, where I think we can play a partnering role. When it comes to thinking up great ideas, Massachusetts is fantastic. But when it comes to converting those good ideas into commercial products and services, we need to do a better job. The way to do that is a collaboration between business and academia and government to look systematically at the ways we do that. In other words, what great ideas are behind the university walls right now that aren’t coming out? When I describe the state government [as] having a partnering role, in many cases it’s as simple as being a convenor or facilitator. So, for example, the Governor, who is very interested in innovation, has the capacity to say to all of the public and private universities, “Can we get together and compare notes and talk about how we are commercializing our ideas? Who has the best practices and are there things we can learn from each other? Are there things the state can do to make public universities better at it?”

That’s one of the things we are focused on—learning from universities and businesses the ways we can make these connections better and literally get good ideas out of the lab and into …Next Page »

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Following on a $9 million financing of its domestic receivables in late November, San Diego’s Overland Storage said today it had reached a similar two-year deal to finance up to $5 million of the data protection company’s foreign accounts receivables. In a statement, Overland’s new CEO, Eric Kelly, said, “We believe that together these two financing arrangements will allow us to continue our recovery and execute our strategy.”

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EMC (NYSE: EMC), the Hopkinton, MA-based IT storage company, announced a new partnership between Microsoft (NASDAQ: MSFT) and EMC security division RSA to improve data security for the companies’ customers across networks and data centers. The partnership will combine RSA’s and Redmond, WA-based Microsoft’s resources and technologies to, among other things, integrate RSA data-protection software with Windows Server 2008. Financial terms of the deal were not given.

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I thought it was unusual when San Diego’s Overland Storage said Friday it had closed on a $9 million receivable financing agreement. All it means is that a finance company has agreed to lend Overland immediate cash for its customers’ IOUs—like one of those “payday loan” outfits.

So I arranged to talk with Vern LoForti, who was named as Overland’s CEO in 2007 after a two-year turnaround effort derailed. Amid the broader economic downturn, there’s little doubt that Overland Storage could be a harbinger of the painful effects the credit crisis is having on IT technology companies.

“It’s been difficult,” LoForti told me. “We’ve restructured once. We brought our expenses way down. But then we got caught in the buzz saw of this downturn.”

Overland’s available cash was down to $5.4 million at the end of September, and the company said at that time it needed about $10 million to fund its operations at current levels through next September.

Trying to raise money in what may be the nation’s worst-ever credit crisis proved exceptionally difficult, which LoForti says is what led Overland to finance its domestic accounts receivables.

“We think this is a short-term solution, rather than long-term, because it is very expensive,” LoForti says. “So, difficult times, and still a ways to go.”

But LoForti says Overland Storage is far from alone in seeking such unconventional sources of short-term credit. The finance companies he met before closing Overland’s deal told him they have been overwhelmed by requests from other companies.

I’ve known LoForti for a long time. We know a lot of the same people. He was named as Overland’s CFO in 1995, about the time I moved to the business desk at The San Diego Union-Tribune, and he played a key role in Overland’s IPO in 1997. We’ve had many discussions as the tech bubble popped and as much of the IT market bypassed the tape-based data backup and archiving machines that gave the company its start in 1981.

Overland still manufacturers tape libraries and autoloaders, along with network-attached storage servers, and fibre channel storage devices. But the company set out in a new direction in October by forming a strategic alliance with Mobotix Vision Systems, which makes high-resolution camera networks that provide Internet-based video surveillance systems equipped with data archiving capabilities.

The new strategy is intriguing, but Overland still needs cash and it must overcome a variety of problems.

The company’s last financial statement, for the three months that ended Sept. 30, lays out three years’ of recurring losses, negative cash flows and other woes that “raise substantial doubt about our ability to continue as a going concern.”

The company, which has about 350 employees worldwide, also says it has to get the price of its common stock to $1 a share (or higher) for 10 consecutive business days before March 30 to maintain its listing on NASDAQ. I’ll bet a lot of those notices have been going around.

Overland’s share price was unchanged yesterday at 34 cents a share. It traded as high as $1.91 earlier this year.

The company still has other options. Management put forward a proposal for a reverse stock split for shareholders to consider at the company’s annual meeting set for Tuesday at Overland’s corporate headquarters. That could increase its share price. The company could put itself up for sale. With a market value of less than $5 million, Overland’s board also could take the company private.

Asked about that, LoForti says, “I would say the board is considering various solutions.”

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San Diego’s Arkeia Software, a data protection software developer, has named two executives, including former Gateway executive Bill Evans as CEO. Evans was previously CEO of Parascale, a cloud storage startup and senior vice president of Gateway’s international business unit. The company also named Frederic Renard as vice president of marketing.

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It’s been a busy week for data-protection companies around here. Two days after Decho was formed out of Seattle-based Pi and Utah-based Mozy, information security firm Datacastle of Seattle has announced a $5.3 million Series A financing round. The investment was led by the Australian venture firm CM Capital Investments. No other investors were disclosed.

The new venture investment comes with a reshuffling of Datacastle’s leadership and management team. Alex Knight, formerly of Edge Labs and Arch Venture Partners, will become Datacastle’s chairman of the board. Gary Sumner, Datacastle’s founding CEO, will step aside to become chief technology officer. And Ronald Faith, formerly of the mobile services and commerce companies Clonefone and Qpass, joins the company as chief executive.

Datacastle was founded in 2005 and raised a seed-stage round in July 2007. Its data-protection software, which is aimed at personal computers in businesses, does online backup, encryption, and reduction of storage space needed for files.

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