Employment in San Diego’s life sciences sector grew by 15 percent over the past two years, as biopharmas, medical device companies, and other employers added roughly 5,550 jobs here—raising employment in the sector to 41,937 in 2011, according to a report released today by Biocom. The report says overall employment in San Diego increased by 1.1 percent over the same period, gaining about 20,600 jobs to reach 1.83 million in 2011.

The 40-page economic study says San Diego’s life sciences cluster also is expected to outpace the nation in terms of job growth and economic impact over the next two years, as another 2,770 jobs are added by 2013. A broader snapshot that includes life sciences companies in neighboring Orange, Riverside, and Imperial Counties projects the region will add more than 6,000 workers over the next two years.

Despite a significant decline in venture capital funding, the report says the four-county region of Southern California will continue to retain its high standing and competitive advantage in the life sciences. By 2013, there will be 70 percent more jobs in the life sciences in these four counties than the national average.

While venture capital funding is a key indicator of entrepreneurial activity and business formation, the report says the sharp decline in Southern California VC investments, from $1.1 billion in 2007 to $553 million in 2010, reflects the severe economic downturn and other industry trends underway nationwide.

San Diego’s strength was especially apparent in federal funding for biomedical research. Of the top 10 research institutions receiving National Institutes of Health grants in 2011, nine are in San Diego. The $835 million in grants awarded last year to San Diego scientists accounted for more than 85 percent of the grants allocated in the four-county region.

The report says the four-county life sciences cluster comprises more than 3,500 companies and employs over 97,000 people. On average, salaries range between $54,141 and $116,462, well above the national and regional averages. Including direct, indirect, and induced employment, the report says this region supports a total of 248,800 jobs that pay over $17.7 billion in wages and generate $57 billion in economic activity.

San Diego County alone accounts for 1,700 companies that employ 41,937 people. Including direct, indirect, and induced job, San Diego’s industry supports more than 106,000 jobs that pay $7.5 billion in wages and generate roughly $22 billion in overall economic activity. A .pdf file of the full report can be downloaded here.

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When Doug Orr first moved up to Google’s Seattle office in mid-2010, he found a lot to like. The infrastructure expert isn’t a California guy—he came to Google by way of Ann Arbor, MI—and found Seattle’s culture, and even its climate, a little more familiar than Silicon Valley’s. “People are pretty laid back here, and there’s a lot of interest in beautiful green things,” Orr says.

One thing that was missing, however, was a large contingent of Googlers working on the networking side of the business. “I spent six months doing video conferences in a very small room, eight hours a day,” he says with a smile. “That was not a pinnacle fulfillment experience. But it worked OK.”

Things have picked up since then. As we first reported last month, Orr is the new Seattle site director for Google, giving him a senior management role with the Mountain View, CA-based web advertising and search titan. He replaces former director Brian Bershad, who is now on a new assignment in Russia for Google. Orr works closely with Scott Silver, a manager in Google’s advertising unit who has been director of Google’s Kirkland office since mid-2009.

Google Seattle

The pair oversees more than 1,000 employees for the growing office, which is expanding further on its Fremont neighborhood campus in Seattle as it takes over space previously occupied by Getty Images. Googlers in the Seattle-Kirkland offices work on a large swath of high-priority projects, including the network user connections within Google Plus, the company’s new social service, and Hangouts, the video-conferencing service that’s also part of Google Plus.

Orr retains major responsibilities in Google’s infrastructure unit, where he’s in charge of the systems that manage, monitor, and plan capacity for the traffic that flows through Google’s vast network. In addition, Orr is closely involved with Google’s moves into the retail cloud-computing market—a market that crosstown tech giant Amazon.com has revolutionized with its Amazon Web Services division. Google’s offerings include a cloud storage service, a relational database service, and Google BigQuery, which lets developers analyze huge sets of data.

“The infrastructure team is definitely growing here. It’s incredibly important to me, and the projects are actually completely awesome. I’m very excited about what we’re doing here,” Orr says. “Between the networking and other infrastructure stuff I do, I have connections with all the major offices, and it’s a great source of interesting diversity.”

While Orr downplays his appointment as a pretty simple case of filling a need, Google Kirkland site director Scott Silver—who’s been in his job since mid-2009—says Orr’s ability to tackle big projects is well known.

“The process by which Doug became the site director here wasn’t just like he raised his hand and there was no one else raising their hand, or something like that,” Silver says. “Doug actually has an excellent track record at Google about building consensus among disparate interests, someone who can build a community out of a bunch of parts that don’t all look the same at the beginning.”

Site directors serve as the semi-public faces of Google’s Seattle-area operations. That means they play key roles in finding possible acquisitions, building connections with the University of Washington’s computer science department, and recruiting new Googlers to the team.

“The majority of our time is spent working in the areas in which we make software. But at the end of the day, the site needs an identity based on the projects it works on,” Silver says. “It’s really important, in concert with the recruiting team, to have people who are passionate about building stuff to attract people to work on their teams.”

The past few years have seen a flood of Silicon Valley tech companies, big and small alike, heading to the Seattle area to fill their rosters with talented people from Microsoft, Amazon, the University of Washington, and the startup scene. The grizzled veteran of that pack would have to be Google, which first established an engineering office in the region in 2004.

Even though recruiting in the area is a lot more competitive now, Google is still growing quickly. Along with the expanded Seattle offices, there’s a new facility up in the Bothell area, which GeekWire found could hold more than 800 workers. To visitors, the company is eager to show off its bright, colorful offices with all the tech-company bells and whistles you’d expect: Game rooms, massage therapists, full cafeterias, snacks everywhere, and even rentable kayaks hanging on a wall.

“We’re out there aggressively growing. You wouldn’t hear about space coming online if we didn’t want people to work in that space,” Silver says.

For his part, Orr says the range of skills on display in the Seattle area has been a pleasant surprise, with smart people running the gamut of experience from gaming and interactive media to hard-core infrastructure and systems backgrounds.

“There’s really kind of a shocking diversity,” Orr says. “And there are a lot of people that have overlap with the kinds of problems that we do. So we’ve had a lot of good luck in terms of getting very high-quality talent.”

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Tableau Software, the Seattle-based data visualization company that started as a Stanford University spinoff, says it plans to hire some 300 employees this year after ending 2011 with nearly double revenue growth.

The company, which views itself as “a future IPO prospect,” says its hiring plans include an expansion of its San Francisco Bay Area office to a location in Menlo Park, CA that can house 60 employees. Tableau also has offices in Kirkland, WA and London.

Tableau’s software helps businesses analyze data in charts, graphics, and other visual displays. It also has a free version of the software that is available to the public, which has been used by news organizations in big demographics projects.

Tableau had big staff growth in 2011, adding more than 160 workers to bring its total to about 350. It also recently reported 2011 revenue growth of 94 percent, which would give it yearly sales of about $66 million, based on the 2010 revenue figure cited in the Inc. 5000 entry about the company.

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Hey Seattle, are you feeling above average?

You should, at least in the paycheck department, according to the latest report tracking American wages from Seattle-based PayScale.

The greater Seattle area came in as the fifth-best city for wage growth in 2011, one notch ahead of the San Francisco area. Yep, that’s right—we beat the Valley at something.

Specifically, Seattle’s rating in the PayScale Index for the fourth quarter was 1.6 percent higher than a year earlier, slightly better than San Francisco’s 1.4 percent. Nationally, PayScale pegged wage growth at 1 percent.

Unsurprisingly, the jobs that led the way for wage growth nationally were generally highly skilled professions in the energy or technology sectors.

“Seattle, San Francisco, and Washington, D.C. are major tech hubs and saw good wage growth over the last year,” PayScale noted on its blog (D.C. was fourth nationally).

PayScale doesn’t rely on the usual government agency data for its analysis, but instead gathers its information via submissions from some 30 million people in full-time, private-sector work. More than 300,000 profiles are analyzed each quarter to determine the index, which is given for different industries, locations, and so on. Much more on the methodology here.

For a comparison, the federal government’s separate measure of private-sector wage growth showed similarly modest growth in the last comparable quarter.

With the frenzied hiring competition for people with software and other digital skills, it’s no surprise that tech jobs continue to pay well—and that the Seattle area does well nationally.

But why would the Emerald City’s index slightly outperform the San Francisco area’s? It’s partly because of economic diversification, with a potent manufacturing sector tied to Boeing—still the largest private employer in Washington state by far—and “a less-damaged construction industry than is typical nationally,” PayScale said.

The national summary for 2011 shows some optimism for the economy at large—another sign, perhaps, that we’re continuing to slowly shake of the malaise from the near-fatal economic collapse that sparked the Great Recession.

Labor economists had some good news last month when the unemployment rate fell to 8.5 percent-the lowest since February 2009—but the overall joblessness rate is still high by historic standards

“For the first time since 2008, wage increases are being seen across the board and not just for workers in high-tech and energy industries. Granted, these increases are small compared to those seen pre-2008, but they are a sign that the economy is on the right track,” PayScale analytics director Katie Bardaro said.

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Business hasn’t gotten any easier over the past six months for San Diego’s Somaxon Pharmaceuticals (NASDAQ: SOMX), which says it has hired the investment banking firm Stifel Nicolaus Weisel to help the company assess its strategic options. The company also laid off 60 percent of its employees who aren’t out in the field.

The company has struggled to establish itself against lower-cost generics in the sleeping pill market. Somaxon began selling doxepin (Silenor), its prescription drug for insomnia in September 2010. In June, Somaxon filed patent infringement lawsuits against four generic drugmakers that are challenging its patents.

The banking firm was hired to help Somoxon identify alternative strategies, according to Somaxon CEO Richard Pascoe in a statement issued yesterday. That could include “one or more of a sale of the company or assets relating to Silenor, or partnering or other collaboration transactions relating to U.S. or ex-U.S. prescription or over-the-counter rights to Silenor,” Pascoe says.

While the company didn’t say yesterday how many employees were laid off, Somaxon reported in its third-quarter financial results that it had terminated 14 employees in November, after the quarter had ended.

Somaxon reported sales of just $3.7 million for the third quarter that ended Sept. 30, compared with sales of $38,000 in the same quarter last year, when Somaxon began Silenor sales. The company lost $17 million, or 36 cents a share, compared with $12.9 million, or 37 cents a share). Somaxon says it had $34 million in cash and cash equivalents at the end of September.

Somaxon says it intends to allocate significantly more marketing resources to direct-to-consumer marketing in 2012, concentrating in regions where there is a potential for sales growth based on managed care coverage, favorable insomnia demographics, feasible media costs, and in areas where the company has sales representatives. Somaxon says it plans to hire 30 sales reps by the end of the year.

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A 48-percent uptick in new company formations, a funding deal, and two acquisitions made for an encouraging week in San Diego’s innovation economy. This is our roundup of tech sector news.

—The California Public Utilities Commission approved five power purchase agreements that Soitec, the photovoltaic chip maker based Bernin, France, negotiated with San Diego Gas and Electric. The five deals represent a total capacity of 155 megawatts of new solar power for San Diego, according to Soitec. As we explained in April, Soitec says its innovation, which combines concentrating Fresnel lenses and high-performance PV chips, operates twice as efficiently as conventional solar cells. Soitec plans to manufacture its solar modules in the San Diego area, creating about 450 new jobs. Building the solar facility will cost an estimated $500 million.

—Qualcomm (NASDAQ: QCOM) acquired HaloIPT, a UK-based startup developing wireless charging technology for electric vehicles. Financial terms were not disclosed. The technology uses inductive power transfer to charge an electric vehicle (EV). The car parks over an electromagnet, which generates an electric field that transfers energy to the EV power system. A couple days after announcing the deal, Qualcomm said it’s planning to carry out a field trial in London that calls for establishing the wireless EV charging systems for 50 vehicles.

—Cubic (NYSE: CUB), the San Diego defense contractor, conducted a series of local exercises to demonstrate new “combat ID” technology, which is intended to reduce friendly fire casualties among U.S. troops in combat. The technology integrates laser targeting with radio frequency identification tags (RFIDs) and a GPS-based system in a rifle-mounted targeting scope, according to Cubic. The RFID tag, mounted on each soldier’s helmet, transits a coded radio signal that enables users to distinguish between friend and foe combatants.

—The San Diego-based Active Network (NYSE: ACTV) paid $21.5 million to acquire RTP (also known as Resort Technology Partners), a specialized IT company in Colorado that provides online reservation and registration services for Vail and other ski resorts. The Active Network already provides Web-based registration services for … Next Page »

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A comprehensive snapshot of San Diego’s innovation economy shows that 76 technology startups were formed during the three months that ended June 30, a nearly 20 percent increase over the 64 startups established during the same quarter last year.

Counting the 70 new tech companies formed during the first quarter, a total of 146 startups sprouted here during the first half of 2011, according to the latest Connect Innovation Report, which covers innovation activity in the San Diego area during the second quarter of 2011. The full report is available here.

Connect’s innovation report also highlights rising tech employment, a three-fold increase in the total value of M&A deals involving tech companies, and a historic high for patent applications. The report was prepared by Connect, the nonprofit group supporting San Diego innovation and entrepreneurship.

Taken as a whole, the indicators suggest that economic activity was improving for thousands of local life sciences, technology, and defense companies during the first half of 2011. For example, the 146 new companies founded during the first six months of 2011 marked a nearly 48 percent jump over the 99 new companies formed during the first half of 2010.

But the encouraging vital signs measured in the report were taken before this summer, when U.S. markets were unsettled by a variety of political and economic setbacks, both foreign and domestic.

Those broader economic concerns could have been a factor in a nationwide survey of CEO confidence conducted during the third quarter by Vistage International. The survey, which Connect included in its full report, found that small-business CEOs anticipate a slowdown in the pace of economic growth amid record-high economic uncertainty. Generally speaking, that means small companies are more cautious about making investments and slower to hire new workers. The September survey of 1,710 small business CEOs resulted in … Next Page »

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San Diego’s high-tech sectors did not escape unscathed from the great recession of 2007-2009, but a new study says local technology industries have had a disproportionate effect in boosting the regional economy in recent years.

Using state employment data, the study released yesterday by the National University System Institute for Policy Research counted just over 6,000 high-tech employers in this region last year—or about 6 percent of all employers (with payrolls) in the San Diego region.

Yet these 6,000 companies directly employed 138,800 workers, or 11.2 percent of the total regional workforce in 2010. Using standard economic modeling, the institute estimated that San Diego’s technology industries indirectly created an additional 103,800 jobs last year, and induced another 120,400. The total—363,000 technology-dependant jobs—represents more than 29 percent, or close to a third of all jobs in the San Diego area.

Wages paid by technology companies have had an even-more disproportionate effect on the regional economy in recent years, according to the institute’s analysis. It shows the average annual wage of workers directly employed by technology companies in San Diego at $93,800 in 2010, more than double the $45,000 average annual wage paid by non-technology companies.

Accordingly, overall labor income generated directly by technology jobs reached $15.7 billion in 2010. The study found another $12.3 billion was generated by indirect and induced labor income, totaling $28 billion—or 45 percent of all labor income generated in the San Diego region last year.

San Diego’s technology sectors shed some jobs during the Great Recession of 2007-2009, contributing to a county unemployment rate that still stands at slightly more than 10 percent, according to August unemployment data. (The statewide unemployment rate in California was nearly 12 percent in August.) But technology employment held up much better than the overall  job market, according to the study. Employment in most tech sectors had returned to 2007 levels by 2010—except in computer and electronics manufacturing, which declined 8 percent, from 13,700 to 12,600 jobs throughout San Diego County.

In contrast to all other technology sectors, the number of biotechnology and pharmaceutical jobs actually increased by almost 21 percent in San Diego County during the recession—from 17,300 jobs in 2007 to 20,900 jobs in 2010.

The institute analyzed economic trends in nine high-tech sectors, based on a standard federal job classification system. The nine sectors are biomedical products, biotechnology and pharmaceutical, communications equipment, computer and electronics, defense and transportation, environmental technology, recreational goods, software, and technology consulting services.

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We’re quickly moving to a new world where the wealth gap is compounding and increasing. We’re moving to a world that is going to look a lot like Hollywood: a few people enjoying insane success … and everyone else spends their days waiting tables.

The delta between A-players and B-players in companies has always been high. A-players get promoted faster and they earn more. My guess is that an A-player earns about 30 percent more than a B-player in that same position for most professions. An A-player administrative assistant usually can earn about 30 percent more than a B-player in the same position. That’s a significant difference and even more when you compound that difference in savings and lifestyle over the course of one’s career.

In some professions like sales and entertainment, an A-player might earn 300 percent more than a B-player and essentially live an entirely different lifestyle. In the future, everyone’s jobs will look more like salespeople.

Let’s focus on the profession I am most familiar with: software engineers.

Today, an A-player software engineer has a lot more job prospects than a B-player. That seems obvious. But there are plenty of B-player and C-player engineers that work at great companies and get paid well. Their services are needed and important. And while they don’t make the contributions that an A-player makes, they still are very valuable to a company and have a lot of importance to the success of an organization.

But things are changing (queue in the Darth Vader music).

There are three forces that will drastically change work, compensation, and our value to each other forever:

1. A productivity boom will automate B- and C-player work.
2. Globalization will commoditize B- and C-player work.
3. A-players can have much more impact.

The productivity boom will automate your job.

Everyone is massively more productive today than they were just a few years ago. A salesperson can use tools like Salesforce.com to track customers, LinkedIn to find prospects, and they can easily call and send documents from the road with their iPhones (unless they are on AT&T). The Internet makes all of us extremely productive and automates parts of our jobs.

In the 1990s, I was a software developer and I remember writing a script to determine if a string was a valid e-mail address. It took about 12 hours for me to write. First, I had to research what could and could not be in an e-mail address (dashes are ok, commas are not, only one “@” symbol, etc.) and there were a bunch of corner cases that I had to guard against and test against. After coding into the night, I finally came up with something I was proud of.

Today those 12 hours of work would take about 1.2 seconds. There are hundreds of libraries that have been written by really smart people and tested by thousands of programs. All one has to do is … Next Page »

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San Diego’s life sciences and biomedical communities showed their support today for California Gov. Jerry Brown’s tax plan, which he has offered as a way to promote statewide job growth by closing a “toxic tax loophole” and offering other incentives for companies to add jobs.

“The majority of Biocom’s members are smaller companies within Southern California, and those companies will realize benefits from each of the three components of the package,” Biocom CEO Joe Panetta (and a San Diego Xconomist) told the governor during a news conference today at Gen-Probe (NASDAQ: GPRO), the San Diego-based medical diagnostics company.

Brown welcomed the support, saying, “The folks in Washington from the President on down have been trying to figure out what to do about the economy.” In California, where statewide unemployment has been running at 12 percent, higher than the national average, Brown says it’s clearly important to stimulate the economy “by putting a foot down on the accelerator to create jobs” and “putting a foot on the brakes” for costly entitlement programs.

“The point is to have tax policy that encourages what you want and discourages what you don’t want,” Brown said. The governor, who proposed the tax changes just two weeks ago, said he wants to get two-thirds of the California legislature to agree to his three-point plan—and he was optimistic that can happen by the end of this week.

“This is not something that we talk about over months,” Brown said. “It would be days. It would be an example of how the two parties can work together in the face of the sorry spectacle that is taking place in Washington these days.”

Getting two-thirds of the state legislature to approve Brown’s proposal will require getting two Republican votes in the assembly and two in the state senate. Despite Republican resistance, Brown says that has to happen this week, before the legislature adjourns. “We seem to be picking up support in some conservative corners,” Brown said. “I don’t want to count the chickens before they’re hatched, but there’s a lot of cackling going on here.”

It was Brown’s first visit to San Diego since he took office in January. In addition to Panetta, Gen-Probe CEO Carl Hull and David Gollaher, CEO of the San Diego-based California Health Institute, joined the governor on the podium. Other San Diego business leaders were in the audience, including … Next Page »

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New Yorkers who follow technology trends know our state is losing jobs in life sciences. Many people in the industry believe it’s because New York is inhospitable to biotech. In the words of a recent academic report, “the state taxes too much, regulates too much [and] has fostered a generally risk averse atmosphere…” The exodus includes biotech startups as well as large pharmaceutical companies, according to the report, which was released in April by the nonprofit Public Policy Institute of New York State, Inc. (PPI). Some 3,000 biopharmaceutical manufacturing jobs were lost in New York in 2010 or are now on the block, according to the PPI. The multiplier effect is at least 10 support positions lost for each of these slots.

Given this background, you might wonder why I founded Acorda Therapeutics in New York, and why I have kept it here for the past 15 years.

I won’t deny that Acorda has struggled with this choice at times, reaching a crossroads earlier this year. We had outgrown our headquarters in Hawthorne, NY, and aggressive incentive packages beckoned to us—not just from the usual suspects, like Boston and New Jersey, but from other states that have made recent inroads in fostering biotech hubs. Instead, I chose to move just five miles down the road, to a new life science campus in Ardsley. I hope my reasons for staying in Westchester will provide a counterpoint to the PPI report and encourage other New York biotech entrepreneurs wrestling with the relocation decision to stay in the Empire State.

First of all, I believe the investment environment dissected by the PPI is less brittle than the report implies. Acorda was able to form effective partnerships with Empire State Development Corporation (ESDC), County of Westchester Industrial Development Agency, New York State Energy Research and Development Authority (NYSERDA) and the County of Westchester. Together we crafted an economic incentive package that was competitive with what we might have obtained in New Jersey, Massachusetts or North Carolina.

In return for our 15-year lease of about 138,000 square feet of laboratory and office space, we received tax credits of up to $5.2 million as part of the New York State Excelsior Jobs Program, an employment-creation initiative administered by ESDC. We’re also eligible for tax credits of up to $1.15 million through the County of Westchester and for additional incentives through NYSERDA. These incentives weren’t giveaways. We committed to increasing our footprint in New York. We plan to keep close to 200 jobs here and create up to 190 new positions over the next several years.

Acorda and other companies in Westchester that view the area as a viable biotech hub have joined an initiative called NY BioHud Valley, aimed at nurturing New York’s first biopharmaceutical “hot spot” in the Hudson Valley. Some of the 60 plus members benefit from one of the state’s most forward-looking programs, the Qualified Emerging Technology Company Credit, or QETC. They may also have access to the comptroller’s in-state private equity program, which has almost half a billion dollars available to invest in the region. And there’s $100 million in … Next Page »

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Software-as-a-service is driving strong growth at two San Diego Web companies, and several other tech companies raised cash last week. We’ve got the highlight reel, and our play-by-play analysis begins now.

—After its May 25 IPO, San Diego’s Active Network (NYSE: ACTV) reported its first quarterly financial results, showing a $5.5 million profit on $99 million in revenue for the second quarter ended June 30. Active Network CEO Dave Alberga says the Web-based registration services and media company is now targeting an estimated $10 billion market that was impossible to address before the rise of software-as-a-service.

—Another San Diego software-as-a-service company, ServiceNow, opened a new office in San Jose, saying it was a “long overdue debut” for the fast-growing company in Silicon Valley. ServiceNow plans to hire 50 people in San Jose by the end of the year, and its global workforce will hit more than 500 by the end of September.

—San Diego’s SmartDrive Systems raised $10.1 million from investors. Targeting fleet operators, SmartDrive provides a SmartRecorder device mounted above the dashboard to record driving behavior and determine what happened in accidents.

—San Diego’s KidZui announced the debut of Zui.com, a search engine for kids. KidZui also extended its $4 million Series C round with an additional $2 million led by San Diego-based Mission Ventures. CEO Cliff Boro told me the company plans to use the cash for general corporate purposes.

—Qualcomm reached the halfway point in its Qualcomm Wireless Fitness Challenge. After four weeks, the 32 participants have burned a total of 1.9 million calories and lost a total of 48.5 pounds. Qualcomm hopes to eventually roll out a wireless health program to other companies.

—Google Ventures provided the lead funding in a $500,000 seed round for Nettle, a 10-month-old San Diego startup that is still in stealth mode with technology described … Next Page »

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New companies struggling to hire fresh talent may find help in the form of a nonprofit organization that debuted last Wednesday in New York. Venture for America says it will match a select group of college grads with early-stage companies, particularly in cities that face employment challenges.

“Our main goal is to create U.S. jobs,” said Andrew Yang, president and founder of Venture for America, in an interview. “We think that sending talented college graduates to early-stage companies is the way to do that.”

Yang says his New York-based organization is modeled in part on Teach For America, which recruits college grads and professionals to teach for two years in under-resourced urban and rural schools across the country. Venture for America plans to place its recruits as full-time employees with startups and other early-stage companies for two years. Yang says the program will initially focus on filling the ranks at companies in Detroit, MI; New Orleans, LA; and Providence, RI, with other cities to follow. “We are also talking to [Mayor] Corey Booker’s office to include Newark in the first year,” Yang says. Venture for America says it has $500,000 in funding commitments from its board, individual donors, and other sponsors.

Recruiting recent and soon-to-be grads to help companies evolve is not a new idea. The Silberman College of Business at Fairleigh Dickinson University in Madison, NJ, for example, matches MBA students with companies at all stages of development through its business ventures program.

Yang says college grads and professionals will be chosen … Next Page »

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The venture news was flying last week like beach chairs in a hurricane, and the Xconomy forecast calls for more venture activity data this week. Get your biztech briefing quick, before I think up any more metaphors.

—We got the early returns on quarterly venture capital activity, and more surveys are expected to follow in the next week or so. The New York financial information firm CB Insights says U.S. VC firms invested $7.6 billion in 768 startups nationwide during the second quarter. That was a 54 percent increase in capital and a 25 percent gain in deals, compared to CB Insights’ data for the same quarter in 2010.

—A pair of reports (one from Thomson Reuters and the National Venture Capital Association and the other from Dow Jones LP Source) show that pension funds, college endowments, and other institutional investors are putting more money into VC funds. But a smaller number of name-brand funds are grabbing most of the capital. In fact, Dow Jones says seven firms got 80 percent of the $8.1 billion it counted in capital raised during the first half of 2011.

—The Kauffman Foundation released a study that shows startups these days are making do with fewer workers. The study, which highlights the “slow leak” in job creation, said fewer new companies are being formed and those that get started are hiring fewer workers.

—San Diego’s Daylight Solutions raised $15 million in a Series C round of equity financing led by defense giant Northrop Grumman (NYSE: NOC). The startup, which specializes in mid-infrared laser technology, recently demonstrated how … Next Page »

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Has the air gone out of the American economy? That’s the troubling suggestion of a new study showing how, even before the current downturn, fewer new firms were being formed and those that did open for business were hiring fewer workers.

Titled “Starting Smaller, Staying Smaller: America’s Slow Leak in Job Creation,” the report looks at the entire gamut of new companies and not just high-tech startups.

But Dane Stangler, research director for the Kauffman Foundation of Kansas City, MO, which produced the study, says technology firms exemplify these hiring practices because they are most familiar with the productivity tools that let employers get more work done with lower headcounts.

“Clearly technology is at play because you need fewer people to run a company nowadays,” Stangler says. “And one of the most prominent places you see that is in the tech sector.”

The new findings have nationwide significance because previous studies by the Kauffman Foundation, which specializes in research about the entrepreneurial sector, have shown that job creation in the United States is essentially driven by new companies.

“Historically, startups are the key to long-term employment growth, and they have been hiring fewer people over the last several years,” study co-author Robert Litan said in a statement today.

During the 1990s, for instance, the average new business establishment opened its doors with about 7.5 employees—compared to about 4.9 jobs per startup today, the report said.

Moreover, the number of new businesses that hire employees has contracted by more than 27 percent since 2006, according to the study. So not only are there fewer employees per new company, but there are fewer new companies making any hires at all.

The net result is a persistently high unemployment rate, despite the fact that the recession technically ended two years ago. “We won’t fix our core unemployment problem in the United States until young businesses get back on track,” Litan said.

One potentially hopeful finding in the otherwise discouraging study was the fact that larger numbers of Americans were going into business as freelancers or contractors. Stangler says some of these one-person shops could become employers in the future.

“Call them necessity entrepreneurs if you will, but some of those people—how many we can’t predict—could drive future job growth,” he says.

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Eli Lilly today unveiled a multi-million dollar initiative to expand its biotech R&D in protein engineering, a move that includes hiring biochemists and biologists to work in “multi-specific therapeutics” in San Diego and Indianapolis. A spokeswoman says Lilly plans to hire about 20 scientists in each city. With its extensive expertise in biologics, Lilly says it is possible to engineer compounds so that one medicine provides multiple therapeutic effects. Lilly gained much of its experience in protein engineering through its 2004 acquisition of San Diego-based Applied Molecular Evolution.

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It was a slow week for tech news in San Diego, perhaps due to a post-Uplinq lull following Qualcomm’s annual conference for wireless app developers. We did find a spurt of cleantech news, however, so plug in, turn on, and tune in. Your Xconomy briefing begins now.

—San Diego’s chumby industries, which has developed a touch-screen device and widgets to provide music, photos, games, and web sites, has expanded its software platform into the connected TV market through a collaboration with UK-based Pace, a global developer of digital TV technologies. Chumby said Pace showcased its applications for the connected TV market last week at the Cable Show in Chicago. Last month, chumby raised an additional $1.5 million from its venture investors.

—The jobless rate in San Diego County declined to 9.6 percent in May from 9.8 percent in April, marking the second straight month that unemployment has stayed under 10 percent. This dip is the first time unemployment has been under 10 percent locally in roughly two years, according to the California Economic Development Department (EDD). Statewide unemployment remained at 11.7 percent, a tick below the 11.8 percent rate in April. While the trend is encouraging, the U.S. unemployment rate increased in May to 9.1 percent.

—In an “Ode to Error,” Xconomy’s Wade Roush reviews the Kathryn Schulz book “Being Wrong: Adventures in the Margin of Error,” and argues that it’s one of the best business books in recent years, even though it’s (wrongly?) classified as psychology. As Wade puts it, “There are so many opportunities for showstopper mistakes in a typical startup that, from the badge-of-honor point of view, it would be silly to penalize the founders too harshly when a venture runs aground. Most Silicon Valley investors do seem to realize this…”

—San Francisco-based Ecotality, which began installing its residential charging stations seven months ago, is now beginning to install its electric vehicle charging stations at public and commercial sites in San Diego, Seattle, Phoenix and 15 other EV Project communities. Ten public EV chargings stations that Ecotality installed at San Diego’s Balboa Park will be free until … Next Page »

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Palo Alto, CA-based Mindflash, which makes software that helps companies develop and administer online training courses, said this week that it has raised $4 million in new funding, bringing the total raised since December 2009 to $9 million. Previous backer The Investment Group of Santa Barbara led the round. The new capital will position Mindflash to “further disrupt the online training industry by pushing the boundaries of how people think about and execute on-the-job learning,” Mindflash CEO Donna Wells said in a statement.

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Cloud computing was my big theme last week, but we also covered stories about renewable energy, and we brought back a report from the future (the way the Churchill Club sees it, anyway).

—I profiled Heroku, the Y Combinator-backed Ruby on Rails platform that was acquired by Salesforce.com last December for $212 million. Co-founder Adam Wiggins shared previously undisclosed details about the company’s crucial “pivot” prior to the acquisition, from training ground for Ruby on Rails programers to true application hosting company. Coincidentally, Heroku today announced a major upgrade of its cloud-based services.

—Speaking of cloud computing, I took a look at Emergence Capital, the San Mateo venture firm known for being one of the earliest and most active investors in Software-as-a-Service-based startups, including Salesforce.com (which brought it an 80x return when it went public in 2004).

—I attended the annual Churchill Club “Top 10 Tech Trends” dinner in Santa Clara, and came back with a post-game report summarizing this year’s featured trends and the reactions from the audience and from panelists Aneesh Chopra, Paul Saffo, Steve Jurvetson, and Ajay Royan. One of the highest ranked trends: the emergence of trusted social networks to supplement Facebook.

—In my Friday column, I wrote about the economic impact of “ephemeralization,” including the tendency of software and hardware makers to distill the functions of many old devices into just a few new ones such as smartphones and tablet computers. Ephemeralization (and its cousin, efficiency) are probably net destroyers of jobs, I acknowledged, but I listed a few reasons why there may be room for optimism about the long-term employment picture.

—Ford Motor Company listed the San Francisco Bay Area as one of the 25 regions in the country best prepared for an influx of electric vehicles, when it comes to the availability of charging stations and other infrastructure, my colleague Bruce reported.

—South San Francisco-based Solazyme (NASDAQ: SZYM), which is developing technology to turn plant sugars into hydrocarbon fuel, saw its stock price shoot up after its initial public offering last Thursday night, as Luke reported. Solazyme shares rose more than 16 percent on Friday and are up another 8 percent in trading today.

—We compiled details about four summer competitions open to startups, including the Kauffman Foundation’s Startup Open, Morgenthaler Ventures’ Health IT Startup Showcase, Evernote’s developer competition, and Kaggle’s dark matter competition.

—Google bought Sparkbuy, a Seattle-based electronics shopping startup that had just launched last November, as my colleague Curt reported. At first it looked like a classic case of Google “acqhiring” a team of talented engineers, but Google later commented that it intends to foster the Sparkbuy  business within Google.

—In other acquisitions news, Jive Software bought OffiSync, BuyWithMe brought Groop Swoop, and Twitter confirmed that it had purchased Tweetdeck.

—In funding news, Everloop raised $3.3 million, GainSpan raised $10.2 million, VuClip raised $8 million, Revel Systems raised $3.7 million, BlueStacks raised $7.6 million, Zozi raised $7 million, CrowdStar raised $23 million, RelayRides raised $673,000, MobileIron raised $20 million, Intel Capital unveiled a series of four tech-startup investments totaling $24.5 million, Google invested $55 million in wind power company Terra-Gen, and Innovalight won a $3.4 million grant from the Department of Energy.

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San Francisco-based BranchOut, which is building a LinkedIn-like professional networking service within Facebook, has secured $18 million in Series B funding, according to numerous press reports. Redpoint Ventures took the lead in the round, which was joined by Accel Partners, Norwest Venture Partners, and Floodgate Fund. The company also debuted a “Jobs Tab” feature that allows its clients to publish job listings on their Facebook fan pages. Levi’s of San Francisco is already using the service.

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