Funding for clean technology startups has increased substantially in recent years, with 323 U.S. companies raising a total of $4.3 billion in 2011, according to the recently released MoneyTree Report. In the San Diego area, the same report shows that four cleantech startups raised $78 million last year, including $15 million that went to SG Biofuels in the fourth quarter.

But sometimes it’s not enough to be green. Many cleantech startups face a basic challenge in competing against existing products that might not be as environmentally friendly, but are nevertheless well-established—even commoditized—in their respective markets.

In San Diego, sustainable design architect (and Xconomist) Robert Noble has led the development of clean manufacturing methods and technologies for manufacturing a green replacement for medium density fiberboard (MDF) structural panels—a standard material used in building construction and other industries. Noble says the proprietary process makes panels from any kind of fibrous, cellulosic material, such as recycled paper, cardboard, wood chips, corn stalks, and even cow manure. The big difference is that the replacement product, which Noble calls 3-D Engineered Molded Fiber (3DEMF), requires no petroleum-based glues or addititves, or vapor-emitting chemicals.

Ecor samples

Now Noble Environmental Technologies, a company he founded in 2005, is overseeing installation of a 3DEMF factory, showroom, and design lab in downtown San Diego to manufacture the company’s Ecor brand panels. “The tide has turned for sustainable materials,” says Jim Torti, the company’s chief operating officer.

After personally funding the company through 2009, Noble says he now has about 15 individual and institutional investors, and he’s in the process of raising another $4 million to help equip the 10,000-square foot factory and to provide some cash flow. Noble adds that he has no plans to seek venture capital. He says the time required to build large-scale manufacturing and their primary market—the building industry—”doesn’t easily fit the venture capital model for a quick exit,” which is an issue for many cleantech businesses.

Torti and Noble say they wanted to establish the company’s first production plant in an urban, mixed-use setting—an apartment building is across the street—to demonstrate … Next Page »

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—Venture capitalists invested $269 million in 23 deals in the San Diego area during the last three months of 2011, according to the MoneyTree Report from the National Venture Capital Association, PwC, and Thomson Reuters. That was almost a 20 percent gain in dollars, but a 28 percent slide in deal count from MoneyTree data for the fourth quarter of 2010. For the full year of 2011, the MoneyTree VC survey said $829 million was invested in 104 deals in San Diego, a 5 percent decline in dollars and a 17 percent slide in deals from the $871.7 million sunk into 126 San Diego deals in 2010.

—What should students study now to be prepared for the workplace 10 years from now? We asked that question of 22 Xconomists, including San Diego Xconomists Ramesh Rao, Duane Roth, Drew Senyei, Larry Bock, and Robert Noble. We’ve compiled all 22 answers in an Xconomy special report on education, which you can find here.

—San Diego Gas & Electric hosted a grand opening of its new Energy Innovation Center, which is designed to serve as an energy innovation showcase and education facility, and to meet the U.S. Green Building Council’s requirements for a platinum LEED (Leadership in Energy & Environmental Design) certificate. The center includes a full commercial “food service demonstration kitchen” where San Diego chefs can test their recipes on energy efficient appliances and restaurant owners can learn about the advantages of new and more energy efficient equipment. Utility officials said Commercial kitchens are particularly energy intensive.

—San Diego-based Tealium raised $1.1 million in Series A financing from private investors, and plans to use the funding to expand development of the tag management technology the company created to help enterprise customers manage their online marketing. Tealium said the investors include Limelight Networks CEO Jeff Lunsford, former Visual Sciences CEO Jim MacIntyre, Collective CEO Joe Apprendi, EyeWonder CEO John Vincent, and eValue Group CEO Thomas Falk.

—After previewing their plans last year, the X Prize Foundation and San Diego-based Qualcomm Foundation officially unveiled the Qualcomm “Tricorder” X Prize, a competition offering $10 million to the team that can develop new wireless diagnostics technology. The winning entry must be able to accurately diagnose a set of 15 diseases across 30 consumers in three days, capturing real time, critical health metrics such as blood pressure, respiratory rate, and temperature, and providing information in a consumer-friendly way.

—Qualcomm’s leadership has been talking for several years about the anticipated competition between its ARM-based semiconductors and the CPUs developed for desktop computing in the expanding market for smart devices. Now some of those skirmishes are beginning. Illinois-based Motorola Mobility (NYSE: MMI)  said recently it would use Intel’s (NASDAQ: INTC) latest low-power x86 Atom processor in a number of future Motorola products, marking Intel’s opening move into the smartphone market. A Motorola spokeswoman told me by email, “We will continue to use multiple chip set vendors.” Qualcomm (NASDAQ: QCOM) already has hundreds of mobile devices using its Snapdragon processor, and has been working with manufacturers on hundreds more.

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Money pumped into San Diego’s regional economy by venture capital firms hit an eight-year low in 2011, with a total of $829 million invested in 104 startups throughout the year, according to the MoneyTree VC survey being released today. The 2011 deal count was the lowest seen in San Diego since 1997.

The 2011 numbers represent a 5 percent decline in dollars and a 17 percent decline in deals in comparison with the previous year, when VCs put a total of $871.7 million in 126 startups, according to the MoneyTree Report from PricewaterhouseCoopers, the National Venture Capital Association (NVCA) and Thomson Reuters.

The decline in San Diego’s venture activity ran counter to the nationwide trend in 2011, in which $28.5 billion was invested in 3,673 deals—and ranks as the third-highest total in the past decade. The U.S. numbers represent a 22 percent increase over the $23.6 billion in 2010 VC funding and a 4 percent rise over the previous year’s deal count, according to the MoneyTree analysis.

The overall U.S. trend depicted in the MoneyTree Report generally agrees with the rise in venture activity nationwide that CB Insights charted last week in its 2011 findings. CB Insights, the New York financial analysis firm, said the $30.6 billion VCs invested in 3,051 deals throughout 2011 was a 10-year high in terms of both dollars and deals. (The two sets of numbers don’t line up exactly because the firms use different methods to collect their venture data, and count dollars and deals in different ways.)

In the fourth quarter of 2011, the MoneyTree Report shows that venture capitalists invested $269 million in 23 deals in the San Diego area, with life sciences startups in diagnostics, drugs, and devices accounting for roughly two-thirds of the transactions. It represented a … Next Page »

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Two trends are driving the current job market: globalization, where everybody is becoming part of the economy, and innovation, which increases productivity and allows fewer people to do the same jobs. These two trends will not slow down during the next few decades. How should students train in college to build careers under these conditions?

The situation is similar to 150 years ago, when 98 perecent of people farmed. Now we need only 2 percent of the population to look after the farms. The other 96 percent are engaged in businesses that did not exist 150 years ago. Similarly, the globalization of the workforce and the concurrent productivity gains will take care of people’s current needs. New graduates over the next decades will be part of businesses that don’t exist today.

What are these new businesses? We know that the world faces several big challenges such as energy, sustainability, poverty, education and healthcare. We need to solve these problems, but no one is sure how they will lead to specific businesses. This is the challenge and the opportunity for new graduates.

New graduates who want to be players in the new economy will need a strong work ethic, rigor in their thought process, and entrepreneurial energy. In the old economy, individuals mastered a specific skill and practiced it over the course of a 50-year career. In the next 50 years, new graduates will probably change their field of practice every 10 years. They need a good work ethic to be able to learn new things. They need rigor in their thought process to learn to learn. They need to be flexible and be entrepreneurial to adapt to new businesses.

No matter what students study, whether it is technology, journalism, art, medicine, business, or law, they will have to be entrepreneurial to survive and prosper in the next 50 years. In universities they learn to solve problems. In addition to solving problems posed by others, students need to learn how to pick problems that they are passionate about solving. A big part of being an entrepreneur is to learn to pick problems that you want to solve.

I am a big believer that students should create experiential learning opportunities during their university years. They should treat the whole world and its problems as their laboratory, as opposed to confining themselves to their campuses. Picking a problem that they feel passionate about and finding a way to solve it builds confidence and gives students a taste of taking charge. New graduates have to be entrepreneurial and innovative in creating opportunities for themselves as opposed to waiting for others to do it for them.

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San Diego’s SG Biofuels, an agricultural biotech developing the Jatropha plant to produce biofuels, says today it has raised $17 million in a Series B round of financing led by Thomas, McNerney & Partners. San Diego-based Finistere Ventures also joined the round, along with existing investors, Carlsbad-based Life Technologies (NASDAQ: LIFE) and Flint Hills Resources, the Kansas refining and chemicals business owned by Koch Industries.

Thomas, McNerney partner Pratik Shah, who moved his office to San Diego from San Francisco last year, has joined SG Biofuels’ board, along with Jerry Caulder, Finistere’s managing director and the former CEO of Mycogen, an agricultural biotech founded in San Diego.

SG Biofuels says it will use the additional capital to expand its research and development, advance commercialization efforts, and scale global operations. The company says it is working with an airline industry consortium to plant 250,000 acres of Jatropha. The agricultural biotech has focused on improving the jatropha plant to optimize its productivity in various climate zones. The shrub’s golf ball-size seeds produce oil that can be processed into jet fuel, biodiesel, and other fuels.

In a statement from the company, SG Biofuels CEO Kirk Haney says, “The funding comes at a time when we’re experiencing significant commercial adoption of our hybrid Jatropha and will be instrumental as we continue to expand our global footprint.”

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When Samsung Electronics unveiled its new 55-inch screen organic LED television at the International Consumer Electronics Show, Universal Display (Nasdaq: PANL) in Ewing, NJ saw its own prospects rise. Organic LED (OLED) technology uses razor-thin layers of organic semiconductor material to generate light and electronic displays. It is an alternative to traditional LED and LCD technology and offers the potential to create devices that are lighter and use less energy. OLEDs do not use backlighting, which some LED and LCD displays require.

Universal Display develops OLED material and technology it licenses to manufacturers such as Samsung. While OLED screens have made their way into handheld-size devices such as Samsung’s Galaxy series of smartphones, production of larger displays that use the technology has been limited so far.

That seems to be changing with the debut of 55-inch OLED televisions from Samsung and a wicked thin 55-inch television from LG Electronics due for sale by the later half of this year. Steven Abramson, CEO of Universal Display, visited CES in Las Vegas but did not exhibit though his company’s technology could be found around the show. The plethora of smartphones and other devices built with OLED displays increases demand for the technology, he says. “We’ve been laboring in this vineyard for a long, long time,” Abramson says. “After sixteen years, we’re finally starting to see this take off.”

In addition to Samsung, other manufacturers tap into Universal Display’s research and development. “LG is buying material from us,” Abramson says. “We’ll eventually have a long-term agreement with them. Our revenues grow as the OLED industry grows.”

Universal Display reported net income of nearly $6 million on revenue of $21.8 million for the quarter ended Sept. 30, 2011 compared with a net loss of $7.2 million on a bit less than $7.1 million in revenue for the prior year period. The company also … Next Page »

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[Editor's Note: We asked selected Xconomists a series of questions designed to zero in on the big issues of the year, including "What would you be willing to throw a punch over?"]

In both of my fields of distributed renewable energy infrastructure and environmental composites, I would throw a punch at corporations and/or public sector entities, agents, or elected officials who have an environmentally destructive agenda, yet make no real effort to alter that agenda—and to add insult to injury, lie about their activities in the interest of power or profits. “Greenwashing” is rampant in most industries and sectors and needs to be targeted. It is a particularly disingenuous form of false advertising.

Plundering our environment is a type of crime, and in most cases it is done, not out of ignorance, but out of a singular focus on profit above all else. This is unacceptable by any standard.

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Even though our local economy is far from strong, I am pleased to report that at the Northwest Energy Angels, we continue to see and invest in interesting deals across the spectrum of clean technologies.

In the past year, we’ve seen and closed deals in virtually every segment of the cleantech industry, including more efficient lighting, purer water technologies, and more productive renewable energy. Contrary to the popular press, our shrewd entrepreneurs are doing it with little reliance on special subsidies or government funding.

For 2012, there are several trends that I expect to see emerge and develop in these segments (borrowing the category definitions from the Cleantech Open):

Air, Water, and Waste
For the last few decades we have been wrestling with the need to develop alternatives to fossil fuel reliance and are now clearly on a path to consider water and its shortages in a similar vein. In many respects, the clean water segment is where the energy industry was a couple of decades ago. We will continue to see companies looking to develop ways to use water more efficiently, measure water and its cleanliness more precisely and cost-effectively, and recoup water that was previously thought unusable.

Domestically, vigilance in air quality makes opportunities for dramatic improvement difficult. Obviously, carbon dioxide emissions are a huge exception to this, but uncertainty over government mandates and/or incentives will make CO2 control a market that startups will have a hard time making a dent in.

The area of waste will continue to offer a wide variety of disparate, but valuable opportunities as cost of disposal and potential value of the refuse continues to be recognized.

Energy Efficiency
The Pacific Northwest has been blessed and cursed in this segment. The ethic of the region is very pro-conservation but our energy costs are among the lowest of any region, which gives priority to other faster-paying investments in this economy. As we look at efficiency technologies, the key questions are, first, will it sell in California (and elsewhere) and second, is there any way for a local company to deploy, test and further develop its technology for commercial roll out?

Given recent predictions for climbing energy costs, the second question is most often the decider for investor involvement. As I’ll explain below, I see a very positive trend here and am bullish on this sector for our local companies for the first time in a long while.

Green Building
As in the case of efficiency, our region enjoys quick consideration for new green building products here and enthusiasm for early winners. Status quo materials and practices are, unlike our energy, on par cost-wise with the nation, giving local solution providers an excellent chance to gain early market traction.

Renewable Energy
This segment of the cleantech world is seeing the biggest changes. The sunsetting of many U.S. government incentives is causing entrepreneurs to rethink their prospects. Opportunities will continue for those companies that have a “mine the miners” strategy to help established renewable energy equipment manufacturers to improve their product offerings—especially when products are aimed at the world market, which is expected to see much less retrenchment in 2012.

One area of exception to the slowdown is renewable transportation fuels, aviation fuels in particular. Our region has a leg up with Boeing and military interest in the subject as well as the nation’s largest operating biodiesel producer, Imperium Renewables. While it won’t be built overnight, I do see more and more opportunities for companies that can contribute to the success of this industry.

Smart Power, Green Grid, and Energy Storage
The Smart Power, Green Grid, and Energy Storage category encourages links between information technologies and electricity delivery that give customers greater control over when and how their energy is delivered and used.

In many regards, startups in this space have a chicken-and-egg problem: Utilities and regulators want to see products before using these new technologies at scale, while startup companies (and their investors) want to see buyers ready to write checks before gearing up for production.

Our region is rich in the technologies needed to implement the smart grid and its cousins—we have a tradition of progressive utilities that have implemented its precursors. But I remain skeptical of a fast market uptake in 2012.

Our Secret Weapon
Military installations. The local cleantech community has been sought out by representatives of the Navy (Naval Base Everett) and the Army/Air Force (Joint Base Lewis-McChord) to help them achieve some truly remarkable sustainability goals for waste, water, and energy.

Don’t get me wrong—this isn’t to say that the procurement floodgates have opened. They haven’t. The military is on a downward budget trend and they know it. But what they do have is a long view and a willingness to invest in projects that will pay off over a longer term than most homeowners or businesses would.

These military installations capture a complete subset of our local economy: industrial operations, commercial/office buildings, residences, and more. In some cases there are also financial partners who will step in alongside military sustainability initiatives, to provide funding where others wouldn’t.

Perhaps most importantly for our entrepreneurs, these bases are looking for good, early commercial products to test, demonstrate and embrace to achieve their goals.

The Road Ahead
While I don’t think that cleantech is in for any 1990′s-style boom, I do think we will continue to see a wide variety of clever entrepreneurs with great market insights and technological breakthroughs in 2012. And the Northwest Energy Angels will continue to be ready, willing, and able to fund them.

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[Editor's note: As a New Year's exercise, we asked a select group of Xconomists to answer this question: "What's the craziest idea out there that just might succeed?"]

All-electric commercial boats, ships, railway engines, and aircraft. The hyper-convergence of energy generation, battery storage, electric vehicle systems development, and electric charging infrastructure has first focused commercially on cars, and now trucks. These advancements may, sooner than we have expected, transition into other highly polluting vehicle markets. As the economies of the all-electric automobile industry are understood and realized, the specific systems and technologies will migrate quickly into these other markets. Air and noise pollution will be dramatically reduced, and everyone on board will enjoy a much smoother ride. And pilots and other EV operators will love the hyper-responsiveness of their electric motors.

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A decade ago, when newspaper and magazine editors prepared their rundown of the year’s most important news stories, they really were just choosing the articles that they thought had the most impact. That was old media.

Today, everything is measured and anything can be quantified—at least on the Internet. In cyberspace, people vote with their clicks, and my list of the top 10 stories of 2011 is based on the stories posted on the Xconomy San Diego website (from Jan. 3 through Dec. 23) that attracted the most traffic. That’s new media.

And a new year is beckoning, so it’s out with the old and in with the new.

Believe it or not, some stories published before 2011 still pulled in a lot of interest over the past year. For example, one of the top stories of 2011 was a post I wrote two years earlier about the pervasive skepticism voiced by biofuels industry leaders during the 2009 Algae Biomass Summit in San Diego. It also is noteworthy, although perhaps no surprise, that a 2009 post I wrote about the first human trial of San Diego-based Histogen’s hair regrowth treatment continues to attract readers who are Googling for news about baldness and hair restoration.

The No. 1 story of 2011, however, was surprising—at least to me. It was a commentary about the dramatic changes underway in new treatments for hepatitis C by San Diego Xconomist Steve Worland, the CEO of San Diego-based Anadys Pharmaceuticals. Worland alludes to the spate of new product introductions by Merck and Vertex, and predicts an increasing number of direct acting, cocktail-type antiviral drugs. It’s a hot topic, although Wall Street’s interest might have been piqued as analysts and traders searched to understand why Roche acquired Anadys for $230 million about five weeks after we published Worland’s op-ed.

It’s also worth noting that these high-traffic stories tend to occur in … Next Page »

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‘Tis the season to reflect on the past year and take a look at some of Xconomy Boston’s top stories.

As usual, these aren’t necessarily the highest-traffic stories (though in some cases they are). They are stories that exemplify what we are trying to deliver to our readers every day—narratives about the people, companies, and ideas that are shaping the future of technology, life sciences, and cleantech in our region, and across the country.

It was very hard to pick just 20 stories, like I usually do. I guess that’s a good thing. So I fudged it and actually picked slightly more—a dozen tech stories, and a dozen life sciences and cleantech stories.

In any case, our editor’s picks for 2011 span the fields of software, mobile, Internet, security, health IT, biotech, life sciences, energy, and hardware/materials.

They range in topic from people stories (Adriana Jenkins, Steve Jobs) to company strategies (Acme Packet, Vertex) to trends and analysis (big data, biotech risks); from universities (Harvard accelerator) to startups (MedicalRecords, Harvest Power) to big companies (IBM, Pfizer, Biogen Idec); from Q&As (Rob Day, Jim Baum) to company profiles (EnVivo, MC10) to news features (testing the nation’s first car collision-avoidance system); and from big community projects (Entrepreneur Walk of Fame) to cheeky area clusters (top 10 “boring” tech companies).

Here they are in their full glory, our top 20-ish stories of the year, sorted by sector:

Top 12 Tech Stories

Adriana Jenkins, Boston Biotech PR Maven, Dies from Breast Cancer at 41

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[Editor's note: We asked a group of Xconomists to answer the following question: "If you could patent one thing, what would it be?"]

Two patents:

a. A low-cost holographic pad: an “hPad,” which would sit on your desk and project three-dimensional fixed and moving images. It would include a touchscreen-like functionality. This would not only have extraordinary commercial potential, but would provide very high utility for medical diagnoses, building and infrastructure visualization, energy management, and many other individual and societal benefits.

b. A low-cost photovoltaic coating material and application process for virtually any exposed surface, including road surfaces, which when combined with simple conductor fabric could provide low cost, low maintenance, embedded renewable energy generation infrastructure everywhere energy is used.

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Anyone who says cleantech companies are having a tough time raising money should take a look at Boston-Power. The Westborough, MA-based advanced lithium-ion battery maker is announcing today that it’s taken in $30 million in equity funding, just three months after announcing a massive $125 million Series F funding round. The company has now attracted more than $346 million in financing since its founding in 2005.

Of course, that recent money has come with some strings attached. The newest investment was led by Beijing-based GSR Ventures, a firm that led Boston-Power’s $125 million Series F round and is focused on building companies in China. Along with the September financing, Boston-Power announced that it was moving the majority of its operations to China to chase the electric vehicle market, and said it was reducing its 80-person Bay State workforce by about 35 percent.

Boston-Power, which also sells its batteries to customers like Hewlett-Packard for portable electronics, plans to add between 600 and 800 jobs in China across manufacturing and engineering roles. The company has begun construction of a manufacturing facility near Shanghai in Liyang and has established a temporary R&D site in Beijing, which will focus on customer applications of its battery technology. Both sites are expected to be complete in 2012, said founder and international chairman Christina Lampe-Onnerud.

Boston-Power also has an executive search underway, in China, to fill positions like CEO, said Lampe-Onnerud, an Xconomist. In September, Boston-Power’s Westborough-based CEO, CFO, and vice president of marketing left as part of the shift to China. Lampe-Onnerud said the pool of CEO candidates the company is considering is mixed, comprising both engineers earlier in the careers and more senior managers.

For her part, Lampe-Onnerud says she is excited to think about what she’ll do next. Alongside the September financing, Lampe-Onnerud committed to remaining with Boston-Power for at least another year, in the role of international chairman, and is helping to oversee the shift in operations.

“This opens up opportunities for me to do what I love to do, which is executable innovation,” she says of when this one-year commitment period ends. “I’ll have a chance to look at other problems that need attention.”

She says she’s interested in staying in high-tech or cleantech, and that water-related energy and transportation are areas of particular interest. We’ll have to keep our eye on her.

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—Quest Software (NASDAQ: QSFT), the IT software provider on the border between San Diego and Orange Counties, said today it acquired BitKOO, a North Hollywood, CA-based specialist in identity and access management technology. Financial terms were not disclosed. Combined with the recent acquisitions of e-DMZ (privileged identity management), Völcker Informatik AG (provisioning), and Symlabs (virtual directories), Quest says the BitKOO deal extends the strength of its Quest One Identity Solutions business.

—San Jose, CA-based EnVerv, a chip design firm with a San Diego office, said it raised $12 million in a Series B round for its power line communications technologies, which enable electric utilities to use their own power lines to serve as a smart grid communications network. Benchmark Capital led the new round, which was joined by existing investors New Enterprise Associates and Walden International.

—UC San Diego computer security researcher (and San Diego Xconomist) Stefan Savage talked with me about recent research into spam networks and hacking the automotive software used to control cars. Savage said he takes a more holistic approach to protecting computers and networks against malicious intruders. While a great deal of money and effort are devoted to technically “hardening” computer systems against spam, for example, Savage said the payment systems by which advertised goods and services accept consumer credit cards “is a huge weak link that has no cheap substitute.”

—Ford’s Dan Kapp came to San Diego to plug the carmaker’s new plug-in, the 2012 Focus EV. The electric vehicle will go on sale at San Diego Ford dealers during the first quarter of 2012. Ford said … Next Page »

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EnVerv, a chip design firm based in San Jose, CA, says this morning it has raised $12 million in a Series B round for its “system-on-a-chip” technology, which enables a utility to use its own power lines to serve as a smart grid communications network.

Benchmark Capital led the new round, which was joined by existing investors New Enterprise Associates and Walden International. The proceeds will go toward further development and working capital.

Reza Mirkhani, the company’s San Diego-based founder, is now EnVerv’s president and chief operating officer. Since I talked with Mirkhani about EnVerv and its strategy earlier this year, EnVerv’s executive chairman, Shahin Hedayat, the former co-founder and CEO of Santa Clara, CA-based Beceem Communiations, has stepped in as CEO. (Irvine, CA-based Broadcom (NASDAQ: BRCM) acquired Beceem for more than $310 million in October 2010.)

EnVerv continues to maintain a San Diego office and also has established an office in China.

The fabless semiconductor company says it has developed and delivered a range of high-performance power line communication (PLC) modems for utility smart meters, PLC head-end modems, display modems, smart homes, solar panel control and monitoring, and other applications. In recent months, EnVerv says it has been field testing its products in cooperation with its customers and utilities.

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Here’s another data point for New England cleantech investors. Coskata, a Warrenville, IL-based developer of cellulosic ethanol, has filed paperwork for an initial public offering. The proposed maximum offering is $100 million, but as usual, that doesn’t mean much at this point.

Coskata is backed by a couple of Boston-area venture firms—Advanced Technology Ventures and Greatpoint Ventures. ATV (owning 17.7 percent) and Greatpoint (15.6 percent) are the third and fourth largest stakeholders in the company, behind Khosla Ventures and Blackstone Group. General Motors is also an investor in the company. Coskata has raised more than $80 million in VC funding since 2008 but isn’t making money yet.

It’s a difficult climate for biofuels companies. Nevertheless, Coskata isn’t the only one testing the IPO market. Lebanon, NH-based Mascoma filed to go public in September. Mascoma, which is building a cellulosic ethanol refinery in Michigan, is backed by another pair of Boston-area VC firms, Flagship Ventures and General Catalyst, as well as Khosla Ventures.

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There are about 25 million cars registered in California, and probably about 2 million of those are motoring around the roads of San Diego County. So it was statistically insignificant when I stepped out of the San Diego Automotive Museum today and counted at least six all-electric vehicles bathed in Southern California sunshine at the Pan American Plaza of Balboa Park.

It still seemed like a wondrous moment—think of your grandfather watching his first biplane. And the numbers are slowly improving, so perhaps some day, you too will see one of these zero-emission, gasoline-free autos with your own eyes.

Nissan began selling its all-electric Leaf in San Diego almost exactly a year ago. There were a couple of those in the parking lot. Last month, Texas-based Car2Go introduced 300 electric versions of the smart micro car in San Diego—and there were several of those in the lot too.

Now the Ford Motor Co. is coming to town with its new 2012 Focus Electric—a standard Focus body and frame that has been refitted with a lithium-ion battery pack and all-electric drive. Ford bills the Focus Electric as the first five-passenger electric vehicle (which is true if one of your passengers is a dog) that is expected to achieve a 100 miles per gallon equivalent (MPGe) fuel-efficiency rating.

Focus Electric

Ford announced yesterday that its Michigan Assembly Plant began production of the 2012 Focus Electric. And today Dan Kapp, Ford’s director of power train research and advanced engineering, came to the automotive museum to tell the media that the first Focus Electrics are expected to arrive in California by March. In San Diego, the first Focus Electric is expected to plug-in by mid-February.

The price? If you have to ask, you probably can’t afford it. Kapp says the sticker price for the Focus Electric will be $39,200, although a federal tax rebate could reduce that by as much as $7,500. Buyers will have to pay an additional $1,500, however, for the 240-volt Ford/Leviton EV charger—which is supposed to charge the Focus Electric in half the time it takes to fully charge a Nissan Leaf.

As we reported in May, Ford has long viewed California and the West Coast as a key market for its all-electric innovations. Early adoption could be problematic, though, when a Focus costs as much as an entry-level BMW 3-Series or Audi A4.

Kapp is a headliner on Ford’s “Power of Choice” fuel-efficiency road tour. He was here to highlight Ford’s latest selling point—that several vehicles in its new product lineup are fuel-efficient. So consumers have the choice of driving a monster Ford Explorer with an “EcoBoost” engine, a 40 mpg-rated Ford Fiesta, a Fusion hybrid electric vehicle, and the all-electric Transit Connect delivery vehicle.

Ford says, “nearly one-third of Ford’s vehicle lines will feature a model with 40 mpg or more in 2012.” That doesn’t seem like a tidal wave of change, but hey, the odds are improving.

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Some of San Diego’s biggest tech news last week came out of the mHealth Summit near Washington, D.C. But we’ve rounded up all the other tech news too.

—San Diego-based Mingle, an Internet holding company operating Climber.com and several affiliated businesses, said it acquired Sunnyvale, CA-based Affinity Circles to expand its job hunting and recruiting capabilities. Financial terms were not disclosed, although VentureWire pegged the deal at about $1 million. Mingle CEO Michael O’Brien told me he plans to hire another 20 to 30 employees in 2012.

—Did you notice anything different about Xconomy last week? Just in time for the holidays, we completed an extreme home-page makeover, the first in a series of changes that are intended to make Xconomy more convenient and usable. We also moved our Xconomy headquarters in Cambridge, MA. We’re interested in your feedback, so please send us a note via editors@xconomy.com. If any of this suggests that Xconomy is growing and extending its reach into the innovation community, we are!

—After launching its ViaSat-1 satellite in October, Carlsbad, CA-based ViaSat (NASDAQ: VSAT) has begun a different sort of countdown. ViaSat said last week that its satellite-based Internet service is expected to begin through Wildblue Communications before December ends. ViaSat-1 is the highest capacity communications satellite ever launched into space, and download speeds for households in Wildblue’s sparsely populated service areas are expected to range from 2 megabits per second to more than 10 megabits per second.

—During the mHealth Summit near Washington D.C. last week, San Diego’s Qualcomm (NASDAQ: QCOM) said it formed a new subsidiary, Qualcomm Life, established a $100 million wireless health investment fund, and launched 2net Platform, a platform for distributing data from the potpourri of wireless health sources. As part of its new platform, Qualcomm also introduced the 2net Hub, a product that plugs into a standard electric outlet and serves as a gateway to the technology-agnostic, cloud-based 2net Platform.

—Other news from the mHealth Summit: Aventyn, a private health IT company based in Carlsbad, CA, said it has partnered with Annapolis, MD-based Zephyr Technology in an international, multi-center clinical study testing mobile technologies for remotely monitoring heart failure. Aventyn said the companies are working together to use Zephyr’s heart monitoring technology, which uses an Android smartphone to transmit data, with Aventyn’s remote patient monitoring and chronic disease management system.

—Independa also had news from the 2011 mHealth Summit this week. The San Diego startup unveiled Artemis, a wireless technology platform used to connect to a variety of in-home sensors for the elderly. Independa said the technology is intended to help relatives and caregivers monitor the vital signs of independent seniors, as well as room temperature, smoke, flooding, and other safety factors.

—The San Diego-based Endeka Group, a wireless Internet services provider and managed services operator, said recently it arranged $4.2 million in venture debt financing through the Agility Lease Fund of Prescott, AZ, and Trinity Capital Investment of Los Angeles. The two privately held firms specialize in financing and consulting for the broadband industry. Founded in 2004, Endeka provides wireless broadband services to campuses, military bases, hotels, convention centers, ships, and other locations.

—As part of an industry challenge to reduce the planning and installation costs of solar energy projects, the U.S. Department of Energy awarded $700,000 to the San Diego-based California Center for Sustainable Energy. The team will use the funding to develop standardized rules for permitting and interconnection processes to streamline rooftop solar projects, with the idea of fostering the adoption of solar projects throughout Southern California. Considerable barriers remain to scaling up solar, according to Andrew McAllister, director of planning and strategy at the nonprofit center.

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Connect, the non-profit group that supports innovation and entrepreneurship, named San Diego’s eight most-innovative products of 2011—and bestowed its highest honor on Gen-Probe (NASDAQ: GPRO) for its nucleic acid test for screening donated blood.

Connect gave Gen-Probe its William W. Otterson Award for its Procleix test, which won FDA approval in 2002, saying Procleix has significantly increased the safety of the world supply of donated blood by dramatically reducing the risk of contracting HIV, Hepatitis C, Hepatitis B, and West Nile virus from a blood transfusion. Previous recipients of the award include Intuit for TurboTax, Qualcomm for CDMA technology, and General Atomics for the Predator unmanned spy plane.

But the afternoon belonged to Bill Walton, the legendary basketball player and Grateful Dead fan, who served as Connect’s master of ceremonies at the luncheon ceremony Friday. With his extensive experience as a sports broadcaster and counter-culture icon, the NBA Hall of Famer delivered a moving tribute to the spirit of entrepreneurship and the determination needed to overcome adversity.

Almost three years after undergoing a new type of spinal surgery that San Diego-based NuVasive (NASDAQ: NUVA) helped to pioneer, Walton proclaimed himself “the luckiest man alive.” The injury-prone basketball great has said that his back pain was so intense before the surgery that he considered suicide. Now living without pain for the first time in years, Walton is a walking testimonial for NuVasive, and a life-affirming example of what a breakthrough in medical technology can accomplish.

In a commentary that was vintage Walton, “the Big Red Deadhead” intertwined the lyrics of several Grateful Dead tunes in a paen to entrepreneurship and San Diego’s Challenged Athlete Foundation. He urged entrepreneurs to defy those who say, “that will never work,” likening their experience to handicapped athletes who struggle to compete. And he reminded the audience that in “Stella Blue,” the late Jerry Garcia sang, “It all rolls into one and nothing comes for free.”

Connect says it received more than 140 nominations—a record number— from local companies for its 24th annual “Most Innovative New Product Awards.” In one category, software, there were a record 37 applications, more than any other category in the history of the event.

To be eligible, the product must have been developed in the San Diego area, introduced between March 2010 and September 2011, and generated sales revenue. More than 850 people attended the awards luncheon, which offers awards in biomedical diagnostics and research tools, medical products, software, communications and IT, cleantech, aerospace and security technologies, hardware and general technology, and action and sport technologies.

The 2011 winners of … Next Page »

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As we turn the page on the year 2011, there is no shortage of topics about which the entire world seems to be debating. One that interests me the most is the renewed debate on the role of government in the energy sector, specifically in the United States. Budget shortages, deficit increases, front-page analysis of public-backed private enterprises, and a particularly bitter political climate have combined to push this topic to the forefront more so in 2011 than in recent years. It’s as though we are back in the smoky classrooms of the University of Chicago in the ‘50s and ‘60s where economists engaged in frequent Keynes Vs. Friedman (Milton not Thomas, mind you!) debates.

Energy is always a popular topic in the U.S., given its strategic importance to national security. All this recent debating has been interesting to follow but a bit confusing. Economists, reporters, business folk, and politicians do not seem to agree on what constitutes a government subsidy, let alone which sub-sector is the recipient of how much. While I do not want to take any sides, I thought it would be worthwhile to examine what constitutes a government subsidy, and what subsidies and how much were provided by the U.S. government historically.

As I began to think about what sectors to focus on, it made sense to examine those that have been of significant strategic importance to U.S. economic growth in the past. The rise of the U.S. to be the largest economy in the world was driven to a large extent by what some refer to as the second industrial revolution constituting the rise of the railroad, steel making, telecommunications, petroleum, and the automobile industries. This article attempts to capture the subsidies provided by the U.S. government to some of these industries at different stages of their growth cycle.

What is an energy subsidy?

I am no economist, but it seems to me that we can all agree on what constitutes a government subsidy without too much debate. Table 1 (below) attempts to summarize the different forms that energy subsidies can take. Most of these subsidy types are immediately recognizable. The “type” that has generated much debate so far is the “Failure to include Externality Costs.” No matter where you stand on the climate change debate, it is not that hard to see that pollution has at the very least caused smog and acid rain—ask the residents of the Los Angeles from the ‘80s and, more recently, those from Beijing. There has not been a worldwide accepted externality cost measure yet, but as we move forward the chances of that happening are higher.

Regardless, it is safe to say preferential tax treatments and price controls are as much a government subsidy as a cash grant or a low-interest loan. The U.S. government wallet is a bit lighter in both cases.

Historical U.S. government subsidies

The growth of the U.S. economy after the Civil War to become the world’s largest economy was driven by increasing commercialization of technologies including the railroad, iron and steel making, petroleum, and the internal combustion engine. Besides private capital and resources, an important catalyst behind the development and growth of these industries were U.S. government subsidies at different stages. Table 2 summarizes the amounts, types, time period, and stage at which government subsidies were provided to these industries.

Railroad and transportation

U.S. railroad companies laid more than 35,000 miles of track between 1867 and 1873—more than three times that laid in the previous 30 years. Congress gave the railroad companies more than $64 million ($8 billion in 2011 US$ at 3.5 percent inflation) in loans and tax breaks and more than … Next Page »

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