Last month, Aastrom Biosciences president and CEO Tim Mayleben and his wife, Dawn, announced they are funding a new “venture shaping” program at the University of Michigan.

Venture shaping refers to the process of systematically vetting a nifty idea for a startup, with the idea that the failure of a less-than-viable business will occur at a much earlier stage before too much financial damage has been done—a key component in supporting new businesses led by student and faculty entrepreneurs.

“My wife and I decided we wanted to give back, and we liked [managing director of U-M's Zell Lurie Institute] Tim Faley’s scientific approach to new company creation,” Mayleben says.

What the Mayleben Family Venture Shaping Program will do, Mayleben says, is help students weed out failing business ideas earlier. Grants of $500 will be awarded to approximately 25 teams of students or faculty who have an idea for a startup that they want to test or refine. Each team will then evaluate their idea for profitability and market viability through a three-step process.

“The grant is meant to encourage students to do business discovery work,” Faley says. “People are writing plans on vague ideas. That’s an interesting first pass, but go talk to the potential customers and find out what the revenue stream might look like.”

Faley calls the venture shaping program a needed bridge between the university’s 1,000 Pitches competition, which generates raw ideas, and the Dare to Dream program, which awards up to $10,000 to the most promising of those ideas.

“To get students to do the [venture shaping] work without an incentive was challenging,” Faley says. “It fills in a really nice gap.”

Aastrom is an Ann Arbor, MI-based startup that recently entered the final stage of clinical trials for its multicell therapy for patients with critical limb isschemia. Mayleben has a lots of experience developing life sciences startups. Before joining Aastrom, he served as chief operating officer of Esperion Therapeutics, which raised more than $200 million in capital under his direction before being acquired by Pfizer in 2003.

Mayleben says he has gotten to know the folks at Zell Lurie by serving as both a formal and informal advisor to the student-managed Wolverine Venture Fund for the past decade. He likes the school’s disciplined approach to failing early. He says university entrepreneurial programs fall short when they only track the number of companies created.

“The more relevant score is how many successful businesses get launched,” Mayleben says. “The venture shaping program will increase the likelihood of success, and that’s especially true for first-time entrepreneurs.”

Faley says he and the university are thrilled that the Maylebens are funding the program, and he says they’ve already expressed that they’ll entertain the idea of providing more venture shaping grants if the program grows the way Faley hopes that it will.

“Tim is a very successful serial entrepreneur, but he’s also a very thoughtful and methodical person,” Faley says of Mayleben. “That helps us when we’re trying to move students through the program.”

The first recipients of the Mayleben Family Venture Shaping Program will be announced on February 17 during the Michigan Business Challenge finals.

Comments | Reprints | Share:          

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 »

Comments | Reprints | Share:          

[Corrected 2/9/12, 9:05 a.m. See below.] A few weeks ago, Dan Gilbert and the Detroit Venture Partners (DVP) crew welcomed reporters for a tour of the newly renovated Madison Building in downtown Detroit. Gilbert had recently spent $12 million to turn the former theater into a sort of fantasy workspace for budding entrepreneurs, and the results of his makeover didn’t disappoint.

The building features plenty of walls that function as whiteboards, a 150-seat auditorium that seems the perfect place to host an investor pitch meeting, and a stunning rooftop kitchen and deck that overlook Comerica Park, home of the Detroit Tigers. Little flourishes, like the exposed brick and the fact that some of the graffiti found in the building during renovations has been preserved, give the space a young, slightly edgy feel. All of it is meant to transform the Madison Building into a destination for startups across the nation—and if the story of Quikkly‘s Shawn Geller is any indication, it’s working.

Geller, a native of Pennsylvania, graduated from Temple University in 2009. While in school, he was bothered by what he saw as a disconnect between the small mom and pop stores surrounding the campus and the students they sought as customers.

“It wasn’t just local stores, but even the national brands would only come on campus one day a year with student ambassadors,” Geller says, noting the cost and inefficiency of that strategy. “It wasn’t a good model whatsoever.”

Geller worked with local merchants in need of promotion to create a simple landing page where students could find coupons and send them to their phones via text message. They would then claim the coupon by showing the text message at the store offering the discount.

Word of mouth quickly spread, and Geller built up a database of about 3,000 Temple students. He then went around to different restaurants and stores and asked them what their slowest times and days were. Armed with that information, he created his first “flash deal,” where he sent a text out to his database offering the first 150 people who responded within a certain amount of time a large pizza for $5. When close to 100 students went in to the pizzeria to claim their coupons, Geller knew he was onto something.

“It was a very cool way of testing the market,” Geller says. “Groupon was less relevant then, so it was exciting to be able to drive student interest in such a short amount of time.”

Geller began incorporating Facebook social gestures into his platform and named his startup Student Coupons. Soon, friends who didn’t attend Temple were noticing the Facebook posts and asking how they, too, could take advantage of the coupons.

Geller starting working with Jason Lorimer, another Philly entrepreneur, to refine and scale up his business model. Lorimer had just begun spending time in Detroit first as a tourist visiting a friend, and then as an entrepreneur scouting for opportunities. Lorimer connected Geller with Josh Linkner, DVP’s managing partner, after he saw some common ground between the national brands Geller hoped to snag as clients … Next Page »

Comments | Reprints | Share:          

She started her career as a management consultant, but Aubrie Pagano says she always knew she wanted to be an entrepreneur. And she was particularly energized by fashion.

So Pagano spent her free hours assisting local Boston designer Emily Muller in launching her collection, in exchange for the opportunity to get some firsthand experience in the independent fashion design space. There she discovered that designers face a particular challenge—one that would eventually inspire Pagano to create the e-commerce startup Zoora.

“Its hard for independent designers to scale because there’s a discovery issue,” says Pagano. “[Muller] has a great website buts nobody goes to it.”

And as a shopper, Pagano says she’s felt like she’s had to settle for a piece of clothing that just isn’t quite right. Women like her are the perfect customer base for independent designers, she says.

“Something that a lot of people don’t know about independent designers is that they’re really flexible,” Pagano says.

Just last Monday, Pagano opened the Zoora website to the public, to offer women clothing that they can customize to best fit their measurements and taste. Her hope is that the women who feel underserved by traditional retail will bring independent designers the traffic—and business—they so desperately need.

Zoora joins a booming cluster of Boston companies in the space of mass customization, where e-commerce platforms allow shoppers to select and tailor products to better fit their preferences. As my colleague Greg has pointed out previously, these companies offer shoppers personalized jewelry (Gemvara), bags (F. Rock), girls clothing (FashionPlaytes), men’s dress shirts (Boston’s Blank Label and Proper Cloth in New York), and even bras (Zyrra).

Pagano started working on Zoora (a name inspired by “misura,” the Italian word for measurement) last spring, and made hiring a head buyer her first move. Since then, the company has enlisted about a dozen designers (including Muller) to sell garments on the site with options for customization. Another designer is Althea Harper, a former contestant on the Lifetime show Project Runway. (Worth noting, New York fashion tech startup Send the Trend has Project Runway veteran and winner Christian Siriano on staff.)

The customizations to Zoora garments fall into two baskets, says Pagano: “made-to-measure adjustments” and “ready-to-wear tweaks.” With the first category, customers input their specific measurements, which designers take into account to create a garment that’s a perfect fit. With “ready-to-wear tweaks,” meanwhile, garments come in standard sizes, but offer different options for elements like fabric, necklines, sleeves, and hem length.

The Zoora team now consists of … Next Page »

Comments | Reprints | Share:          

Yo, is there a ballplayer in the house? Well, there is a House playing ball—professional basketball, that is.

At the age of 33, Adam House, a serial entrepreneur (and shooting guard) who has successfully built and sold three companies—his most recent startup, Velocitude, was acquired by Akamai in 2010—has at least temporarily put aside the tug of entrepreneurship for his love of hoops. More specifically, House has decided to uproot his family from Boston to upstate New York to join the Rochester Razorsharks, a professional basketball team in the Premier Basketball League. Here is his player page).

True, it isn’t the NBA—but House describes the league as very competitive, with most players having come from Division 1 college teams, and several going on to the NBA’s D-League (development league) or playing pro ball overseas. So it’s pretty cool. I caught up with House by phone when he was with the team in Michigan, where they had finished a two-game sweep of the Lake Michigan Admirals. Here is a quick overview of his version of Hoop Dreams…

House grew up in Birmingham, MI, about 25 miles northwest of Detroit. He played basketball for nearby Brother Rice High School, a well-known Catholic school attended by the offspring of many of the Detroit area’s business leaders or auto execs.

But House also had a passion for entrepreneurship. He worked at Rock Financial, a Quicken Loans company, and was able to learn from Dan Gilbert who is now the main owner of the Cleveland Cavaliers. So, bitten by the business bug, he left college (Centre College, a small liberal arts school in Kentucky) after his freshman year at age 19 to work for a direct marketing firm in Florida. He quit that after one year, and in 1998 formed a startup to do direct marketing for financial services companies with $500 of his own money. He built that into a multi-million-dollar business (an Internet lead generation startup he also founded merged with the company) and sold it in May 2007. A few years later, House launched his third startup, Velocitude, a mobile services platform company that enabled delivery of video and other content to mobile devices. He built that up as well, and sold it to Akamai in mid-2010 for undisclosed terms.

But let’s get back to hoops. As part of the Akamai deal, House and his family—wife and now three sons—moved to the Boston area. Among other things, he joined CommonAngels, the angel investor group that is the lead investor in Xconomy. After leaving Akamai, House was not quite ready for the grind of another startup, so he decided to train for a triathlon. “I saw myself in bike pants and a helmet, and I just looked in a mirror and said, … Next Page »

Comments (6) | Reprints | Share:          

Applied Proteomics hasn’t exactly been operating in stealth mode since it was founded five years ago. Co-founders David Agus, a cancer specialist at USC, and Danny Hillis, the MIT-trained computer scientist, gave TedMed talks about the startup’s technology, which provides a 40-gigabyte snapshot of all the proteins circulating in a drop of blood. By pure coincidence, I watched John Stewart’s Feb. 2 interview with Agus last night on “The Daily Show.”

“Danny and David had the foresight to build the tool before trying to use the tool,” says John Blume, a molecular biologist who joined API in 2008 as chief scientific officer. “Although the company wasn’t in stealth mode, the first several years were spent in taking the time to make it right, and then to use it and avoid some of the stumbling blocks.”

Now Applied Proteomics is raising the curtain on several steps that mark its progress beyond a seed-stage startup that was incubating at Applied Minds, an industrial think tank that Hillis founded in Glendale, CA, with a colleague from Disney Imagineering. After moving the headquarters to San Diego late last year, Applied Proteomics is today naming a new CEO—Peter Klemm, a veteran in molecular diagnostics and the former CEO of Lexington, MA-based Predictive Biosciences.

Danny Hillis

The company known as API says it also secured $22.5 million last June in Series B funding from Domain Associates (San Diego partner Jim Blair joined the board), Seattle’s Vulcan Capital, and returning angel investors. Klemm tells me the company raised $4 million from angel investors (who prefer to go unnamed) in what amounted to API’s Series A round in 2007.

David Agus

API’s goal, Klemm says, is nothing less than to “elevate molecular diagnostics to another level beyond the genome” by measuring the proteins made by genes—a long-sought technology that is expected to help doctors improve medical care for individual patients. Because proteins carry out most cellular functions, the company says a snapshot of all the proteins circulating in the body at a given moment represents “the most powerful source of information” in terms of understanding a patient’s health status.

Quantifying all the proteins in the body, Klemm says, can help doctors optimize the course of treatment for individual patients by making it easier to identify the specific drugs that would have the greatest effect on blocking specific proteins or signaling pathways, which can vary dramatically from person to person.

In a statement from the company, Hillis says, “For the first time, we can look at all the proteins in the body with remarkable specificity and sensitivity and use proteomic technology to create … Next Page »

Comments | Reprints | Share:          

We’re starting to see fresh signs of life among the Internet software startups in San Diego. Check out this news.

—During a visit last week, TechStars CEO David Cohen talked with the leaders of San Diego’s grassroots Web startup community about the factors that help to create and sustain entrepreneurial communities. One crucial issue confronting San Diego is a crying need for savvy and experienced Internet entrepreneurs who are willing to “pay it forward” by mentoring a new generation of startups.

—A dozen seed-stage companies moved into the new EvoNexus incubator in downtown San Diego. EvoNexus, which was founded by the CommNexus non-profit industry group, will continue to operate its original incubator in University City, where eight startups are taking root. In both locations, EvoNexus provides office space, utilities, and other services free of charge and with no strings attached.

—Sigma Partners led a $10 million round in venture funding for San Diego-based MOGL, a Web startup that has developed a comprehensive customer loyalty program for restaurants and bars, to fuel its expansion into San Francisco and New York. San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures joined in the round.

—San Diego’s MicroPower Technologies named two new board members after raising $6.5 million in Series C funding in a deal that was led by Motorola Solutions Venture Capital and joined by an undisclosed private fund. MicroPower Technologies, which uses wireless networking technologies to create low-cost surveillance capabilities, named PacketVideo CEO Jim Brailean and former DivX CEO Kevin Hell to its board. Hell, who is now chairman of San Diego’s EvoNexus incubator, will join as MicroPower chairman.

—San Diego’s StockTwits said it has established a partnership with Toronto’s Q4 Web Systems, which provides … Next Page »

Comments | Reprints | Share:          

—San Diego’s Amylin Pharmaceuticals says Bydureon, its new once-a-week drug for treating Type 2 diabetes can hit the market as early as next month, after the FDA cleared Bydureon. The FDA rejected the Amylin’s drug twice before. An estimated 26 million people in the United States, or roughly 8 percent of the population, have type 2 diabetes.

—San Diego’s life sciences sector has expanded since 2009, with employment increasing by more than 5,550 jobs, or 15 percent, over the past two years, according to a new economic report from Biocom, the local industry group. The comprehensive study counted more than 1,700 life sciences companies with a total of 41,937 employees throughout San Diego County in 2011, and says those numbers are expected to grow over the next two years.

—The FDA gave its approval to Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which has substantial operations in San Diego, for a new drug called Ivacaftor (Kalydeco), developed to treat a rare form of cystic fibrosis. The twice-a-day pill targets about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis.

—Johnson & Johnson’s reorganized R&D operation in San Diego, now known as Janssen Healthcare Innovation, is trying an experiment in innovation by creating an incentive prize challenge. Janssen is offering a total of $250,000 for technology that helps improve care for patients who have just been discharged from a hospital.

—The folks who produce the quarterly MoneyTree report on venture capital funding just released a deeper dive into the details of life sciences investments. The survey shows that VC funding for life sciences increased 21 percent nationwide in 2011, with a total of $7.5 billion going into 785 deals. San Diego ranked third among metropolitan regions in terms of capital invested in the fourth quarter. The top five are Bay Area ($498 million), Boston ($384 million), San Diego Metro ($193 million), NY Metro ($98 million), and Orange County ($97 million

—Optimer Pharmaceuticals (NASDAQ: OPTR) CEO Pedro Lichtinger outlined his plans for expanding the market for the company’s first product, the antibiotic fidaxomicin (Dificid), as a preventative therapy for hospital patients at risk for a nasty intestinal infection called C. difficile. San Diego-based Optimer is planning a clinical trial to prove the drug can help prevent severe diarrhea in patients undergoing bone-marrow transplants.

—A tweet from Bob More of Frazier Healthcare Ventures prompted Luke to delve into the importance of character among life sciences leaders in his BioBeat column. “Politics pretty similar to backing CEO’s,” More said. “Newt may be smart and a good debate guy. But Newt=Smug. Never back smug,”

Comments | Reprints | Share:          

When it comes to tech startups—especially in Internet software and app development—San Diego has been adrift in the horse latitudes. That’s the term Spanish mariners had for the waters where the trade winds died out for days and even weeks at a time. Becalmed sailors desperate to gain some headway would heave their horses overboard to reach the New World.

It hasn’t reached that point yet in San Diego, but you would never know that software was once a thriving entrepreneurial community here. Even now, the software sector accounts for more than a third of San Diego’s private technology companies. But as I’ve written previously, it feels as if the local software companies speak different languages. In contrast to the flourishing tech hubs in Seattle, Boston, and New York—not to mention Silicon Valley—San Diego’s software scene is sleepy and indifferent.

Still, there are signs of a freshening breeze.

David Cohen last week at UC San Diego

Scores of new seed-stage startups have begun to emerge throughout the region, including a dozen that just moved into the new EvoNexus incubator in downtown San Diego. These emerging companies are led by young entrepreneurs who view San Diego’s innovation establishment as old-school and irrelevant. They are turning out instead for informal “hackathons” and “meetups.” They tell me they’re yearning for real mentoring by real tech entrepreneurs, and for access to real tech investors who are really investing.

Last week, more than 200 people turned out to hear David Cohen talk at U.C. San Diego about TechStars, the early stage fund and accelerator program for Internet startups that he co-founded with three partners in Boulder, CO, six years ago. Cohen is the CEO, and by any measure, the startup program has been wildly successful.

TechStars enrolled its first 10 Internet startups in 2007, providing as much as $18,000 in seed funding and an intense, three-month mentorship program for each company in exchange for a 6 percent stake. Since then, TechStars has expanded to … Next Page »

Comments (9) | Reprints | Share:          

In Michigan, technology spun out of the University of Michigan is firmly entrenched in the startup success stories that get the most press: HandyLab, Accuri Cytometers, and the like. What’s less publicized is the key role Wayne State University’s technology has played in major companies like Asterand and the California-based SciClone Pharmaceuticals.

Wayne State is particularly renowned for its contributions to chemical technology, and, earlier this month, the university hired Harl Tolbert—a former pharmaceutical executive with an extensive business development, licensing, and IP management background—as its associate vice president of technology commercialization tasked with building relationships with startups.

“Once upon a time, I wanted to be a researcher,” Tolbert says. “Then I became drawn more to the business part of science. I made my way out of the lab to a medical clinic in Illinois, and that whet my appetite for understanding how science, medicine, and business intersect.”

Tolbert comes to Wayne State after working in sales and business development at Abbott Laboratories and Pierce Chemical, both located in Illinois. When a job opened up in the technology transfer office at Tulane University, the Louisana native jumped at the chance to return to his home state and raise his children closer to family. Then, about a year later, Hurricane Katrina hit.

“We decided to leave New Orleans,” Tolbert says. “It was really painful, but everything was so uncertain. We didn’t know if we’d be able to rebuild our home or even re-occupy our neighborhood.”

He and his wife had a pact to relocate to the first city that offered both of them a job, and that ended up being Rochester, NY. Tolbert served as the associate director for biological sciences in the University of Rochester Medical Center’s Office of Technology Transfer before landing the job at Wayne State.

Though Tolbert was only slightly familiar with Detroit before accepting his position, he was very familiar with Wayne State, thanks to mentors throughout his career who had intimate ties to the university.

“Wayne State has a reputation for great achievements in chemistry,” he adds.

Tolbert says he plans to increase the school’s efforts to commercialize its technology by pitching both fresh technology and older technology to startups, particularly those in the realm of life science applications that involve human cells or tissue. He’s also seeking ways to develop technology despite the relative lack of funding that university research typically receives, such that the technology is “one or two steps” beyond the earliest stages.

“There’s a need for more bridge funding,” Tolbert says. “That’s true for all universities, and it’s true for Wayne State.”

One advantage Wayne State’s Office of Technology Transfer has is that it’s located in TechTown, the university’s startup incubator and a hub for local innovation. Tolbert imagines that his proximity to TechTown’s entrepreneurs will lead to “a lot of brainstorming in the hallways,” and the chance to not only interact, but keep tabs on companies that are interested in licensing Wayne State’s technology.

“We want to work with more startups in Detroit and the Southeast Michigan region,” Tolbert says. “Entrepreneurs tend to be a little more receptive to early-stage technology. We just have to be creative in how we engage them so that we can help them, and they can help us.”

Comments | Reprints | Share:          

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.

Comments | Reprints | Share:          

After previewing its expansion plans last summer, San Diego’s EvoNexus, the free startup incubator established by the non-profit technology group CommNexus, has opened a newly renovated downtown office space. A dozen early stage companies began moving into the incubator Monday.

CommNexus founded EvoNexus in 2009, when San Diego’s innovation economy was reeling from the Great Recession. The incubator has taken in 14 companies so far, including six that have moved out of the EvoNexus incubator in University City. Office space, utilities, and other services are provided to startups free of charge, and companies leave with no obligations to EvoNexus or CommNexus.

“As far as we know, we’re the only pro bono incubator in the country,” EvoNexus chairman Kevin Hell says in a statement issued late yesterday. “The goal is to grow sustainable tech companies and expand the industry here in San Diego.”

When the EvoNexus incubator first opened in Sorrento Valley, organizers said they wanted to host startups developing advanced communications technologies, including wireless life sciences and smart grid networking.

Since then, CommNexus moved EvoNexus to University City and broadened its criteria. The industry group established the new downtown EvoNexus to host startups that are focused primarily on developing Internet software, Web services, gaming, social networking, and cloud computing technologies. The privately held Irvine Co. made the 15,000-square foot space available to EvoNexus at no cost. The incubator takes up an entire floor of the building at 101 W. Broadway, known locally as the AT&T building.

Hell says he sees parallels in the downtown San Diego locale with San Francisco’s SoMa, the downtown neighborhood South of Market Street that has become a magnet for social media startups and mobile app developers. The nightlife, housing, and amenities available in San Diego’s city center should appeal to young entrepreneurs, Hell says.

CommNexus plans to continue to operate its incubator in University City. The 12 companies in the new downtown space are:

Antengo: Real-time mobile classifieds.

BigSho: Social webcam game show.

Chatmeter: Online reputation management.

Fashioning Change: Shopping experience for eco-friendly apparel.

Saambaa: Social media app for finding things to do.

SwoopThat: Online textbook shopping by course.

TapChow: Cloud-based restaurant experience manger.

Taphunter: Mobile app for locating places that serve craft beer.

UgliApps: Mobile apps focused on food.

Voluware: Saas healthcare information software.

Xpenser: Web-based tracking of business expenses, time, and mileage.

Zambig: Web-based service that provides online outlet for radio ads.

Comments | Reprints | Share:          

There’s a new player in the seed-stage investment game in Boston. As of this week, the Experiment Fund is open for business at Harvard University, backed by the Silicon Valley venture firm New Enterprise Associates (NEA). The startup investment fund is being hosted by Harvard’s School of Engineering and Applied Sciences in Cambridge, MA.

The new fund is led by Hugo Van Vuuren (see photo above), a Harvard graduate student and entrepreneur, and two venture capitalists from NEA, Patrick Chung and Harry Weller (both Harvard alums). David Edwards, a Harvard professor of biomedical engineering, serves as an advisor to the fund. Van Vuuren and NEA did not respond to requests for comment in time for this article.

The basic structure of the Experiment Fund is that selected startups—mostly student-led teams from Cambridge—will receive up to $250,000 in seed funding over the next two years, presumably in exchange for a sizable equity stake in the companies. The fund is based out of Harvard but says it will operate independently of the university and will look at teams from other local schools—and, more broadly, from the East Coast. The sectors targeted are pretty broad as well; they include information technology, healthcare, and energy.

No word yet on the size of the fund or how many companies it will invest in. But Van Vuuren, a recent fellow at Harvard’s Berkman Center for Internet and Society, said in a press release that he and his partners are looking for “smart and resourceful people, zealous full-time teams, and experiments in need of seed funding and hands-on help to get off the ground.”

Not to beat a dead Zuckerberg, but the overarching goal here is to keep the next Facebook in Boston—and, preferably, affiliated with Harvard. “It’s continued growth of the ecosystem for Harvard and beyond,” says Gordon Jones, director of the Harvard Innovation Lab, which is collaborating with the Experiment Fund to provide office space and resources, but is separate from the new fund. Jones calls the Experiment Fund “extremely complementary” to the i-Lab.

One of the first Harvard teams to receive an investment from … Next Page »

Comments | Reprints | Share:          

San Diego’s StockTwits is developing a bit of a Canadian accent, eh, through a partnership being announced today with Toronto-based Q4 Web Systems, which provides online investor relations services for publicly traded companies throughout North America.

StockTwits is an online social media network that enables traders and shareholders to share their market insights, ideas, charts, and news in real time via Twitter. The startup structures financial and investor-related information from its Twitter feed by stock, user, reputation, and other criteria. StockTwits also enables users to save the stocks they follow to their own portfolios and to limit the comments tweeted about each stock to trusted sources.

As I reported last summer, the four-year-old startup has determined that its chief source of revenue also lies with the investor relations and public relations units of publicly traded companies.

By introducing a ticker tag symbol for publicly traded stocks, $(ticker), StockTwits makes it possible for public companies to sign up for a higher level of StockTwits’ Web service and to “claim” their stock tickers. Once claimed, a company’s IR and PR teams can use the ticker tag to distribute corporate information over the Web in real time.

By partnering with Q4, StockTwits plans to integrate its services with the subscription-based services that Q4 provides its corporate customers. Q4 says its website services include more than 30 IR “best practices” modules that help companies properly provide information and other services to investors and shareholders.

“We’re working with them to make it easier for people to use both of our products,” says Francis Costello, StockTwits’ chief operating officer. He tells me StockTwits has more … Next Page »

Comments | Reprints | Share:          

San Diego’s MOGL, a Web-based customer loyalty and rewards program for restaurants and bars, says it has raised $10 million in venture funding to fuel its expansion into San Francisco, New York, and other markets.

The Menlo Park, CA, office of Sigma Partners led the Series B round, which was joined by San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures. That brings total funding for MOGL to $12.4 million, according to a statement from the company. Entrepreneurs Jon Carder, Jarrod Cuzens, and Jeff Federman started MOGL in 2010.

The Internet startup offers its customers multiple incentives for returning to member restaurants and bars, using a mixture of technology, games, and psychology. The incentives include a 10 percent cash back each time a customer returns to eat at participating restaurants. A contest  offers monthly cash prizes to the top three most-frequent customers at each locale. Customers also can automatically donate a meal to someone in need every time they spend $20.

MOGL Homepage Screenshot

MOGL says it provides customer analytics and return-on-investment data for participating bars and eateries. In a statement from the company, Sigma partner Peter Solvik says, “The MOGL team has generated an explosive response from both consumers and restaurant partners, while effectively positioning itself as the most innovative loyalty platform of its kind.”

Since it was launched last April, MOGL has signed up nearly 350 Southern California-based eateries and bars, donated more than 27,000 meals to Feeding America, and has rewarded its members with more than $350,000 in cash back to date.

The company also offers a location-based mobile app for iPhone and Android, so MOGL members can easily locate participating restaurants while on the go. The mobile apps also help customers track their cash rewards and jackpot opportunities, as well as the number of meals donated in their name.

Comments (1) | Reprints | Share:          

Serial entrepreneur Angel Gambino has every right to be arrogant—as people with resumes like hers often are—but she’s as down-to-earth and polite as they come.

Sure, a casual question about which local gym she prefers reveals that she’s currently training to be an Olympic soccer-team liaison, the Olympics’ most senior volunteer role and one which oversees every aspect of the team’s participation in the international games, but the answer is delivered in such a gradual, casual manner that it’s hardly bragging. (She’s awaiting confirmation from the Olympic Committee whether she’ll be overseeing the American, English, Italian, Australian, Brazilian, or Argentine men’s team.)

Trust me when I say Gambino’s life is way more interesting than mine and probably yours. She helped develop Gameplay.com, an early gaming site that eventually had 900 employees in nine countries; was instrumental in helping to popularize the social network Bebo, which was sold to AOL Time Warner in 2008 for $850 million; helped oversee the BBC’s expansion into mobile, broadband, and on-demand platforms; and helped launch social and video-on-demand platforms for Viacom channels such as MTV, VH1, and Comedy Central.

Gambino is still a co-owner of Sonico, the third largest social network in Latin America—Gambino describes it as “the Facebook of Latin America before Facebook became the Facebook of Latin America”—as well as Spoonfed Media, a popular website that directs Londoners to upcoming arts and entertainment events.

So what the heck is she doing in Detroit?

Gambino and her partner, Scott Griffin (more on his story later), purchased a massive building on Rosa Parks Blvd. for $270,000 in September, which they plan to turn into retail, restaurants, and space for local startups, the first step in a plan to further revitalize the Corktown area so it attracts not only the suburban visitors that are already coming in droves to eat at the neighboring Slow’s Bar-B-Q, but also to send the message to entrepreneurs around the globe that Detroit is the place to be.

“Detroit is a city of tremendous opportunity—I don’t know any other cities like it in the world,” Griffin says. Responding to the question of why two people as worldly as he and Gambino would choose Detroit as their base of operations, Griffin says, “I wonder why there aren’t more of us here already. I don’t understand why there aren’t a thousand of us here competing for these deals.”

Gambino was actually born in Detroit, though she spent her formative years in the suburbs outside of the city. Even in her youth, she says it was obvious to her that there were a lot of things lacking in Detroit.

“I knew Detroit was famous for sports and music, but not much else,” Gambino says. … Next Page »

Comments (2) | Reprints | Share:          

—Peter Clarke of EE Times reported that San Diego’s Qualcomm (NASDAQ: QCOM) has acquired Andover, MA-based Pixtronix, a startup founded in 2005 to develop Microelectromechanical systems (MEMS) display technology. Qualcomm, which confirmed the deal with EE Times but provided no details or press release about the deal, reportedly spent between $175 million and $200 million for Pixtronix. The Massachusetts company founded by Nesbitt Hagood raised more than $53 million in venture funding, athough the Pixtronix technology has not yet been introduced to the market. Qualcomm has spent years working to refine its own MEMS-based display technology—known as Mirasol.

—More than 200 entrepreneurs turned out to hear TechStars founder and CEO David Cohen talk about the startup accelerator program he helped to launch in Boulder, CO, in 2007. Cohen told the rapt audience during a San Diego Tech Founders meetup that the Internet software community in Boulder “is just totally on fire” compared to five years ago. This was the night after Cohen met with local tech leaders to discuss the steps that helped boost the entrepreneurial ecosystem in the Colorado college town. Xconomy San Diego arranged the dinner discussion, and I plan to have more about our conversation later this week.

—Meteorologist Stephen Bennett and investor John Plavan founded San Diego’s EarthRisk Technologies in mid-2010 with the idea of creating predictive analytics technology that could extend the range of weather long-term forecasts from two weeks to 30 or 40 days. They are now providing their Web-based technology to commodities and energy-trading firms on a subscription-basis. Bennett told me the core business at EarthRisk Technologies is focusing on extreme weather events—heat waves, frigid cold snaps, and storms because extreme events are the ones with the highest impact.

—Mark Heesen of the National Venture Capital Association gave a good-news, bad-news presentation to the San Diego Venture Group last week. Among the interesting bright spots: Corporate venture capital is growing and San Diego-based Qualcomm now ranks as the nation’s second-largest corporate venture outfit. The bad news? U.S. VC firms invested $28 billion in startups last year, but only … Next Page »

Comments | Reprints | Share:          

Last week Steve Case wrote an op-ed in the Washington Post called “Give Entrepreneurs Room and They Will Grow the Economy.” For those not familiar with him, Case was the founding CEO of AOL and has been an active healthcare investor, among other things, for the past seven years. My firm, Psilos Group, has co-invested in a health company with with Case’s Revolution Health Fund.

Anyway, it was a very good editorial and one of the statistics within it particularly stood out to me in light of my venture capital role: firms less than five years old have produced 40 million American jobs over the past three decades—accounting for basically all of the net new jobs created in that period. That is a pretty stunning fact and also one that really makes a person scratch their head about current U.S. policy towards startups.  It is worth watching this Kauffman Foundation 3 minute video that is very instructive about start-ups and job creation.

Nowhere is this issue more relevant than in the healthcare industry, which conveniently happens to be the only thing I know anything about. In a world where there is no way out of the healthcare crisis except through the generation of new ideas to solve our healthcare problems, young companies are the golden ticket to new employment.

In his State of the Union speech last week, President Obama specifically stated that he wanted Congress to work with him to institute policies that advance research in medical devices, a field in which the U.S. has long been the leader. However, due to a combination of factors, including several government policies, we are now in peril of losing this supremacy to other nations like China and India. Research is nice, but tax and other policies that support the genesis of new companies and growth of existing ones are better right now in a world where medical device start-ups can’t catch a break. As AdvaMed President Stephen Ubl points out, the Patient Protection and Affordable Care Act (PPACA) imposes a $20 billion annual tax on the medical device industry to help cover the cost of health reform, and this new tax is already causing layoffs at large and small companies. FYI, the companies that sell branded drugs will also be hit with a $2.5 billion excise tax. Add these taxes to the challenges and costs presented by today’s FDA and it’s a toxic cocktail.

The small start-up companies that have answers to our healthcare challenges should be growing, not shrinking, but they are gasping for air in the current environment. I was in a board meeting at a medical device company just last week where we had a frank discussion about the R&D projects we would have to forego in order to cover this medical device tax, which is being imposed equally on large profitable and young unprofitable companies starting in 2014.

If healthcare startups are not allowed to thrive, I can assure you that the jobs in healthcare are not going to come from larger healthcare entities, either. The American Hospital Association has stated that anticipated reductions in Medicaid and Medicare funding and reimbursement will cost hospitals 278,000 jobs as revenue declines in these programs. The pharmaceutical industry has already laid off over 124,000 people in the last three years; expected further consolidation in this field isn’t going to help. The large medical device companies have also been shedding their staffs. It is the young upstarts that make the jobs appear.

As Steve Case clearly says in his op-ed, “America’s best chance to achieve robust, sustainable growth and prosperity is by ensuring that the United States increases its entrepreneurial competitiveness relative to the rest of the world.” There has been some activity in the form of a variety of bills supporting crowdsourcing of young companies (although that is a mixed bag, if you ask me), relaxed Sarbanes-Oxley rules to encourage smaller companies to go public, the StartUp Act, and others. But so far these are bills, not laws, and startups are having a hard time raising financing, particularly in a world where the IPO market is so compromised. It is worth noting, for instance, that in the last four years there were a total of nine medical device IPOs but in the four preceding years there were an average of 13 per year. In the pharma/biotech sector, a similar phenomenon: 26 IPOs in the last four years in total and an average of 21 per year in the prior three years. This is important because IPOs have traditionally given these young firms the capital to grow exponentially, creating many jobs in their wake.

Case refers to a great Thomas Edison quote in his Op-Ed that applies perfectly to the entrepreneur: “Vision without execution is hallucination.” Nothing could be more true, as I have seen hundreds of entrepreneurs over the years I have been a healthcare investor, and it is only those who have the gene for excellent execution that reach nirvana. I can’t say if the others are merely hallucinating, but I have my suspicions.

Edison’s quote applies equally well to our lawmakers, however, who are all running around saying “Jobs! Jobs! Jobs!” when they are not busy pointing out which Republican candidate is the true pillar of family values. Job creation can be the byproduct of these lawmakers’ endeavors but … Next Page »

Comments (1) | Reprints | Share:          

In my recent piece Reengineering Capitalism I highlighted a phenomenon that the global entrepreneurship ecosystem is paying very little attention to: Over 99 percent of entrepreneurs who seek funding get rejected. Yet, the entire world is focused on the 1 percent that is “fundable.”

The media, when pitched a startup story, is interested in who funded the venture. They seldom ask how much revenue the company has or if it  is profitable.

Incubators take pride in how exclusive they are and how many “deals” they “reject.”

Angels and VCs, of course, discard most of their “deal flow.”

And entrepreneurs? They seem to have confused the definition of entrepreneurship altogether. Entrepreneurship, they mistakenly believe, equals financing!

This is wrong.

There are numerous stories of successful businesses that have been built without a penny of outside financing. I want to share with you some wisdom from the heroes of the other 99 percent. They live in a world of entrepreneurs who enjoy their freedom and are not looking to sell their businesses or take them public. You could say these businesses are built-to-enjoy, as opposed to built-to-flip. Needless to say, outside financing, by definition, requires an “exit,” and for most businesses, that means a sale to a larger company.

But the entrepreneurs I will introduce you to today are not interested in selling their companies. They just want to continue doing what they are doing: building value.

Meet Girish Navani, CEO of eClinicalWorks, a super-successful healthcare IT company based in Boston. He has never taken any funding but has built a $100 million-plus business by delivering value to customers.

Girish says, “I don’t foresee leaving the company for at least 10 years. I would like to leave it a private company with no external investors and absolutely no thoughts whatsoever about Wall Street. I am having fun and take great pride in my freedom. There is no reason I would give that up. We are a cash flow positive company. We have recurring revenues and no debt. We have a large customer base that is growing exponentially.” (You can read Girish’s full story here.)

Meet Andrew Fox, CEO of ClubPlanet, a $30 million-plus nightclub ticketing services company that is also 100% founder-owned. Andrew loves nightlife and says, “The business is very successful and has a lot of room for growth. I think that we have a lot of suitors out there who mention really ridiculous numbers at times. This is such a great lifestyle business that I don’t know if I could ever sell it. All of my previous businesses I built to sell, but this time around you might find me right here in thirty years. I hope by then it is $300 million a year. Based on our growth trajectory, we are seeing really good signs of improvement. (You can read more of Andrew’s story here.)

Then there is the oft-cited Sridhar Vembu, who has turned all tables with Zoho, a $100 million-plus SaaS company that … Next Page »

Comments (4) | Reprints | Share:          

Boston has no place for “serious, venture-backed startups” to grow from five employees to 25 employees, akin to San Francisco’s RocketSpace, or New York City’s General Assembly, says Mark Kasdorf.

Enter Intrepid Labs, the co-working space he recently established in the former digs of another co-working space (Dogpatch Labs) at 222 Third Street near Kendall Square in Cambridge, MA.

Intrepid Labs comes as the answer to a problem Kasdorf himself was facing. His mobile development company Intrepid Pursuits started with three people in the co-working unit (C3) of the Cambridge Innovation Center around the spring of 2010. It grew pretty quickly to eight people, so was kicked out of the C3. The building gave them an attractive “transition” rate to move into the more grownup office space, says Kasdorf, but they outgrew that, too, hitting about 15 employees last fall.

“We had to get real office space, which was more expensive than we could afford as a bootstrapped consulting company,” Kasdorf says. “As we started digging into commercial real estate, we realized how bad it is for startups.”

The Boston area has its share of coffeehouse-style co-working spaces for pre-seed companies with a few employees, but nothing for the more mature (revenues, funded, five employees and up) crowd, says Kasdorf. Traditional office spaces require three-year leases, a time period in which a lot could change for a startup, says Kasdorf. They also require companies to get their own furniture, printers and scanner, and the like. “This whole litany of things that CIC had been offering to us became obvious, but it was still really expensive,” Kasdorf says

In October he started checking out other office space in The American Twine Office Park at 222 Third Street, and saw the vacant fourth floor. “We walk in here and I’m blown away,” he says. “Everything about it screams, ‘This would be a fun place to work.’”

Inspired by General Assembly, he signed a lease for three years, with the intent of creating a co-working space for growing startups like his. Kasdorf and his team moved in during November. While Intrepid Labs has the long lease it originally wanted to avoid, it’s subletting to other startups on a month-to-month basis. So what about that big expense? Kasdorf says it is pre-paying some of the rent, while the “landlord has taken a real interest in what we’re doing and is really flexible with us.”

For startup tenants, a dedicated desk costs … Next Page »

Comments (2) | Reprints | Share: