[Editors note: Architect Robert Noble wrote this article with Glenn Croston]

The San Diego area is the home of numerous cleantech businesses that are developing innovative green cars (Aptera, V-Vehicle Co.), developing alternative fuels (GreenHouse International, Synthetic Genomics Inc., Sapphire Energy), finding alternatives to petrochemicals (Genomatica, Verdezyne), and providing renewable energy and energy efficiency solutions (KEMA, Kyocera, Envision Solar).

Assisting our growing cluster is a network of non-profits, trade groups, government agencies, universities, and investors who share a common interest in cultivating a green economy. These groups collaborate on many projects, strengthening our vision for more green businesses, jobs, and investments in cleantech innovation. But while they share common goals, local green groups are also distinct in many ways and often compete for money, members, and media; their varying perspective, focus, message, membership, and goals can be confusing. If you’re an entrepreneur, how can you find support for the green innovations you hope to commercialize? Where do investors look for opportunities and advice? Where can founders find the resources they need to move their ventures forward?

We’ve compiled a listing of these groups to help San Diego entrepreneurs and others find the resources they need to grow green, and to help San Diego’s green economy grow.

—The California Center for Sustainable Energy (CCSE) is the cornerstone in developing San Diego’s green business cluster. As a non-profit, the CCSE works to advance the adoption of renewable energy, green building design, clean transportation options, and energy efficiency by providing workshops, information, and training.

—Cleantech San Diego is a membership-based non-profit industry association that sponsors events for businesses, investors, and others working in the cleantech cluster. They summarize their mission on their website, saying, “Cleantech San Diego advocates for new sources of investment capital, workforce development, international trade, federal and state research funding, targeted regulation, and sustainable land use planning and development.”

—San Diego Clean Enterprise Program, which is administered by Cleantech San Diego through a partnership with the City of San Diego and the mayor, which provides interest-free financing for energy efficiency improvements for small businesses. Cleantech San Diego also is working with the rest of the green community to support funding and grant applications, such as the effort to win $260 million in Clean Renewable Energy Bonds (CREBs) for local solar projects.

—San Diego Gas & Electric committed to develop a distributed solar power generation system in the San Diego region in 2008. So it’s no surprise that …Next Page »

Comments | Reprints | Share:        

Managing a venture fund is hugely different from running a startup. Eric Paley told me that last year at this time his primary responsibility was at dental imaging firm Brontes Technologies, the MIT spin-off that he co-founded and where he had served as general manager after its sale to technology giant 3M (NYSE:MMM) in 2006. Nowadays, as managing partner and co-founder of new seed fund Founder Collective, his much broader focus includes meetings with a whopping 30 entrepreneurs a week, he said.

Early this month Paley’s firm had an official launch after closing a first fund of about $40 million to invest in seed-stage startups, even though reports about the firm surfaced in June after its initial SEC filings became public knowledge. The firm is made up of a group of successful entrepreneurs who have been backing each other’s startups for ages before coming together as Founder Collective. David Frankel, the firm’s other managing partner along with Paley, was a seed investor in Brontes as well as partner Chris Dixon’s startups SiteAdvisor and Hunch, for example. Their experience as entrepreneurs who have raised venture capital and reached successful exits, along with their compelling investment strategy, could help them succeed in the struggling venture industry.

Founder Collective, which has offices in Cambridge, MA, and New York (where Frankel is based), is taking a much different tack than many funds have taken over the past decade. Paley says that the vast majority of funds closed over the past 10 years have been more than $100 million, while most of the funds were less than that in the previous decade. But the big knock on the venture industry is that it’s done a poor job of returning capital and returns commensurate with their risk profile to their limited partner investors. And large funds often aim to invest big amounts of capital ($10 million or more) in their portfolio companies, even when companies don’t really need that much money, Paley says. Founder Collective’s first fund is a lean $40 million or so, and that money is intended to be invested in capital-efficient businesses that aren’t taking on more investment capital than is needed to achieve their goals. Indeed, we’re seeing this movement toward smallish investments in lean teams, at least in software/tech, all around the country.

Another big downside of a startup raising more venture capital than it requires to execute its plan is the dilution of ownership for the entrepreneurs who founded the company. “We really created the fund out of frustration that there wasn’t a really good answer for the capital-efficient business in the early days to achieve major milestones and increase the value of the company before giving so much of it away to investors,” Paley said.

There are no banker-turned-venture capitalists at Paley’s shop. Many of the partners maintain operational roles at startups they’ve co-founded. Dixon, a founder of Web security firm SiteAdvisor (acquired by McAfee), is full-time CEO of his firm Hunch that provides an online decision-making tool. Also, Micah Rosenbloom, who co-founded Brontes with Paley, is now the general manager of the Brontes business for 3M. (Here’s a full list of the the Founder team on the firm’s website.)

The investment philosophy at Founder is to back startups led by committed entrepreneurs. And though Paley said the firm has no stated limits on sectors or geographic areas in which it invests, the firm will most likely invest, as it has done so far, in …Next Page »

Comments (2) | Reprints | Share:        

On May 18th of 2009, I signed the papers to legally incorporate my first company. Three weeks later, I graduated from MIT with my BS in biological engineering. Fast forward, and after 10 months of working on the venture, it was decided to not continue.

After failing to get the outcome the team had hoped for, some questions loom: did I make the right decision to jump into the entrepreneurial arena so early in my career? Is it generally a good idea to start a company right out of college?

Before I answer these questions with the benefit of hindsight, I’d like to first take you through the process that led to my decision to just go for it.

During the year prior to making this decision, I had spent a lot of time thinking about what I would do after graduation. I knew I wanted to be a part of the entrepreneurial community, so I began learning all I could about the entrepreneurial process. I read everything I could get my hands on, I talked my way into relevant MBA courses at MIT’s Sloan School of Management, I did projects for startups and venture funds, and I sought advice from members of the entrepreneurial community.

I received a variety of opinions on the best route for getting into the land of startups. Here are the three most common views, along with my brief analysis of each:

Go get a job. Learn how real business is done first. This is the safe advice, which is why it is the most prevalent. By getting work experience, you get a chance to really develop your network, expertise, and understanding of problems in a specific industry. However, working in a mature business isn’t anything like a startup.

Go work for a startup. “Startup” work environments, of course, vary heavily. Some startups are a couple of guys working out of their apartment trying to find a way to make some revenue. Others are more like developed companies, with office space, hours, and managers.

At the time, to me, joining a later-stage startup didn’t seem all that different from getting a job at a more mature company. Joining a smaller band of warriors setting out on the start-up road would have been difficult. In the early stages, such efforts mainly need engineers to get a prototype built. I knew how to code, but programming wasn’t my forte. All in all, this wasn’t a very good option in my eyes.

If it feels right, go do it. The negatives for starting a company immediately after school are the lack of experience, network, credibility, and money. But, there are many positives:

• Access to a lot of help. I find the entrepreneurial community to be incredibly supportive, with lots of vibrant, experienced people happy to help students. I had access to tons of great people through the MIT and Boston communities. I talked with professors, cold called and emailed alumni, and just found a way to get in touch with people. Not everyone would respond, but those who did were extremely helpful.

• Low opportunity cost. You aren’t walking away from a high-paying job in order to attempt a startup, so you have little to lose financially if it doesn’t work out.

• Low responsibility. By this I mean you …Next Page »

Comments (5) | Reprints | Share:        

When Tom Clancy introduced a panel discussion yesterday at a forum on analytics software, the founder of San Diego’s Tao Venture Partners said the forum was “founded four years ago by people who had an interest in seeing San Diego get established as a leading cluster in the analytics space.”

The forum, which is sponsored by the San Diego Software Industry Council, offers an annual snapshot of local developments in a booming industry that has become crucial to business intelligence, data storage and management, and complex decision-making.

Since Robert Hecht-Nielsen founded HNC Software here in 1986, the number of companies that focus on analytics software in San Diego has mushroomed, with more than 100 companies specializing in neural networking, data mining, pattern recognition, and related algorithms and technologies for analyzing data. Yet Clancy and local experts who discussed “opportunities in analytics” lamented that San Diego’s standing as the birthplace of some key companies and technologies has gone largely unrecognized. Among the examples cited:

— HNC, which specialized in technology to analyze credit card transactions, was acquired for $810 million in 2002 by Fair Isaac and Co. and integrated with the Minneapolis, MN-company’s credit-scoring business.

—Urchin Software, a suburban San Diego Web analytics company that developed an assortment of tools for measuring website usage, page views, and other statistics, was acquired by Google in 2005 for an estimated $30 million. Seven months later, Google renamed its Urchin business Google Analytics, and made analytics tools available to Web users for free.

—WebSideStory, a San Diego company that developed website traffic analysis tools, rebranded itself as Visual Sciences in 2007 and was acquired later that same year for $394 million by Utah-based Omniture. (Last month, Omniture was itself acquired by San Jose, CA-based Adobe Systems in a $1.8 billion deal.)

—Carlsbad, CA-based analytics software developer Keylime Software was acquired for $9.5 million in 2003 by Pasadena, CA-based Overture, an advertising distribution network that was later acquired by Yahoo for $1.6 billion.

Such deals reflect a surging awareness of the value of data, says Stephen Coggeshall, a co-founder and chief technology officer for San Diego-based ID Analytics, which uses advanced analytics to search credit databases for telltale signs of identity theft. In terms of technology innovations that will likely lead to forming new companies, Coggeshall says …Next Page »

Comments (1) | Reprints | Share:        

Some San Diego life sciences companies reported a burst of new financing, while embattled Sequenom told investors it’s trying to conserve its available cash. Here’s our rundown of the latest highlights:

—San Diego’s Trius Therapeutics, a venture-backed biotech developing a new antibiotic for treating acute and life-threatening bacterial infections, disclosed plans to raise as much as $86 million in an initial public stock offering. With additional funding, the company will proceed to Phase 3 clinical trials of torezolid, which Trius describes as a second-generation successor to linezolid, the Pfizer antibiotic known as Zyvox.

—Life Technologies (NASDAQ: [[ticker: LIFE]]), the Carlsbad, CA-based provider of biotech instruments and lab supplies, agreed to acquire Woburn, MA-based BioTrove, which has developed a high throughput gene expression and genotyping analysis system.

— SpectraScience, the San Diego medical device maker, has raised more than $4.3 million through a private placement that combines preferred shares and warrants. SpectraScience (OTCBB: [[ticker: SCIE]]) CEO Jim Hitchin told Bruce the offering closes a $5 million round the company began earlier this year.

—PaxVax, a San Diego startup backed by Seattle’s Ignition Capital, has raised $2 million of a planned $6 million investment round. The biotech founded in early 2007 is developing a new type of vaccine that is administered as oral tablets and avoids much of the requirements that conventional vaccines require.

—Sequenom, San Diego’s embattled diagnostics company, said it expects to end the year with $39 million in cash—but that’s not enough to get through 2010 without raising funds or slowing spending. In April, Sequenom (NASDAQ: [[ticker: SQNM]]) disclosed that it had “mishandled data” from a prenatal Down syndrome diagnostic test, indefinitely postponing that product launch.

Comments | Reprints | Share:        

San Diego-based Qualcomm (NASDAQ: QCOM) says Panoramic Power, a wireless sensor startup based in Kidron, Israel, is the winner of the first QPrize, the incentive prize competition launched earlier this year by Qualcomm Ventures. Panoramic Power has developed energy monitoring wireless technology that enables a company or institution to deploy Smart Grid technologies within their existing facilities. Panoramic Power, which previously won $100,000 as a QPrize regional winner, was awarded another $150,000 and the opportunity to compete in a global business plan competition held at the Mobile World Congress in Barcelona, Spain.

Comments | Reprints | Share:        

Mark Underhill says he was doing Web design and applications development for Clear Channel Communications when the San Antonio, TX-based media company announced plans to sell 448 of its 1,150 radio stations, along with its 42-station TV group. That was in November 2006.

Underhill, who had initially been hired in San Diego six or seven years earlier to run 11 Clear Channel websites, says he remembers thinking at the time, “I’ve learned so much doing this. But I could do better than this. I could build a better mousetrap.”

The following year (just a few months after Clear Channel completed its $1.5 billion sale), Underhill and his longtime friend Claudio Canive started Platformic, a San Diego startup that enables customers to create and manage their own websites. The company, which acquired its first customer by the end of 2007, has targeted the broadcast industry and now counts Comcast, the Tribune Co., and Fox Broadcasting among its biggest customers.

Platformic-based Web design

Platformic’s software-as-a-service model provides simple point-and-click tools that do not require users to learn Adobe’s Dreamweaver Web design software or to write computer code. The company says its hosted system enable customers to “come up with any look and feel” for their own websites by empowering people who know what a website should look like, but who don’t necessarily know how to create it. Websites using Platformic’s technology include Los Angeles TV station KTLA and San Francisco’s AM sports radio station KNBR and its San Mateo sister station, KTCT. Last week, Platformic helped launch 12 Fox regional sports websites throughout the country.

Platformic’s roughly 200 customers also include what Underhill describes as small “mom and pop” businesses operating …Next Page »

Comments | Reprints | Share:        

The new Somerville, MA-based venture fund Founder Collective made a public debut today in a blog post by founder Chris Dixon, the CEO and co-founder of New York-based Hunch. Joining Dixon in the collective are serial entrepreneurs Eric Paley (Brontes Technologies), Dave Frankel (Internet Solutions), Mark Gerson (Gerson Lehrman Group), Zach Klein (Vimeo), Bill Trenchard (LiveOps), and Micah Rosenbloom (Brontes). Xconomy reported in June that the firm had obtained investments and commitments totaling about $30 million; according to Dixon’s post, that number is now $40 million. That’s small for a venture fund, but Founder Collective intends to help New York- and Cambridge-based startups with seed funding only. “Hence our interests and the founders’ interests are aligned,” Dixon writes. “This also means we are happy with smaller exits if that’s what the entrepreneur wants to do.”

Comments (2) | Reprints | Share:        

It was a busy week for local technology news.

—Two teams from San Diego and a third from Northern California demonstrated their development of advanced chemical sensor prototypes that are tiny enough to be found inside ordinary cell phones. The U.S. Department of Homeland Security is funding the Cell-All program, with a goal of basically creating an anti-terrorism app for cell phones that would enable authorities to crowd-source chemical detection.

—MaxLinear has filed for its initial public stock offering. The Carlsbad, CA-based fabless chipmaker, which specializes in designing semiconductor-based television receivers, intends to raise about $100 million through its IPO. The market may be de-frosting a bit, with 47 IPOs so far in 2009, compared with 45 last year, and 272 in 2007.

—ProQuo, a San Diego-based Web 2.0 company that was founded in 2007, was quietly shut down after taking in a total of $15 million in venture capital from Menlo Park, CA-based Draper Fisher Jurvetson and San Diego-based Mission Ventures. ProQuo was never able to validate its business model; its website offered consumers a way to remove their names from mass-mailing lists for free, and the company planned to sell its optimized lists back to mass marketing companies.

—San Diego’s wireless industry group, CommNexus, celebrated the opening of EvoNexus, its free high-tech incubator, by announcing the selection of three more startup companies: EcoATM, MicroPower Technologies, and TetraVue. CommNexus CEO Rory Moore says EvoNexus is believed to be the first incubator that is completely free for startups—that is, it doesn’t even require an equity stake in participating companies, as most incubuators do.

—Jitterbug, the San Diego wireless provider that puts an emphasis on simplicity, has acquired MobiWatch, a Waltham, MA-based startup developing mobile personal emergency response services. A regulatory filing shows that Jitterbug’s parent, GreatCall, provided 630,000 shares of common stock to MobiWatch and its shareholders in a deal valued at $107,100.

—San Diego-based Networkfleet is using its technology to help companies that operate fleets of vehicles go green by monitoring engine emissions and ensuring that vehicles are operating efficiently. Co-founder Diego Borrego told me the company also expects to be a player as consolidations sweep through the fleet tracking industry.

—EcoDog, a Vista, CA, cleantech startup that has developed a device that helps homeowners sniff out savings in their electric utility bill, was named best of show at GadgetFest, the annual fall competition sponsored by CommNexus, the San Diego wireless industry group. EcoDog founding CEO Ron Pitt won over the crowd when he declared, “My product is the only product up here tonight that saves you more money than it costs.”

—San Diego-based cleantech startup EESG is looking to raise $1.2 million to expand the 10-employee company’s sales staff, purchase inventory, and ramp up public relations and marketing. The company’s founders told me they have raised about half so far, including $300,000 from Longboard Capital Advisors, a green investment firm based in Santa Monica, CA.

Comments | Reprints | Share:        

“People say if you fail in Seattle, you’re screwed,” said Marcelo Calbucci. “If you fail in the Bay Area, you just have a badge of honor.”

We were at the TechStars reunion event in Seattle last week, listening to early-stage investors Brad Feld, Andy Sack, Steve Hall, Greg Gottesman, Shawn Broderick, and Chris Sheehan speak about entrepreneurship and the tech startup scene in their respective cities. Calbucci, the founder of Seattle 2.0 and Sampa (which folded in August), was asking the panelists about how the tolerance of failure, whether real or perceived, affects a region’s culture of innovation.

It’s a deep question, and it continues the discussion of startup cultures in different cities that I highlighted last week. It’s also part of a debate on failure that has been going on since long before I wrote about it in Xconomy last January. There seem to be two camps. Most entrepreneurs I’ve talked to feel there is a stigma associated with having a failed startup in Seattle. Most venture capitalists, not so much. But it’s a much broader issue than just Seattle. My colleague Bruce talked with a Web 2.0 startup founder in San Diego last week who said his first failure, earlier this year, “was truly a painful experience, and I’m still not over it.” And meanwhile, Brad Feld, the co-founder of TechStars and Foundry Group in Boulder, CO, had some provocative things to say about the failure aspect of Boston’s culture.

But first, Andy Sack of Seattle’s Founder’s Co-op gave his perspective on having failed at his last startup, Judy’s Book, after having had three successes prior to that. “As much as you teach entrepreneurship, as much as there’s supply of capital out there, really when push comes to shove, entrepreneurship comes from within,” he said. “I couldn’t take a job at any of the big companies. We’ve been through the tech boom of the ‘90s. We’re just coming off of a major hiccup. I’d say right now, early-stage investors in Seattle have retreated some; venture capital has retreated some, they’re focused primarily on their portfolio. That said, you [Calbucci] failed and went out and started your own thing. I failed and went out and started my own thing. Because we didn’t know any better. The entrepreneurs that don’t know any better, they just go do it again.”

Greg Gottesman of Seattle-based Madrona Venture Group is one of those VCs who says he doesn’t see failure as a black mark. “My sense in this community is, to people who matter most, I don’t think failure is a huge negative,” he said. “There are certain types of failures, like failure of integrity—that’s hard to recover from. But failure of a startup, just speaking with all my partners, that’s not a negative. We talk about that as a learning experience. It’s just another piece of the puzzle.”

So how does Seattle’s tolerance of failure differ from, say, Boston’s or Silicon Valley’s? Feld, who has been investing nationally for 15 years, said, “I actually believe that the shtick of ‘failure as a badge of honor’ is really great shtick. I’ve failed a lot. It’s hard to fail. Failure impacts a person in …Next Page »

Comments (2) | Reprints | Share:        

Dave Paton and Dave Moody tell me they founded EESG, a San Diego cleantech startup also known as Energy Efficiency Systems Group, last year in anticipation that soaring energy prices would unleash strong demand for practical alternatives. But they didn’t focus on new technologies for alternative energy sources. They focused on energy efficiencies.

They also wanted to take advantage of their extensive experience with the hotel industry. Paton had spent 30 years working as an executive at the Hilton, Radisson, and Doubletree hotel companies. And the company the pair had previously founded, Vista, CA-based Paramount International Telecom, provided a voice-activated automated attendant and message system for the hospitality industry. So they knew hotels. As Paton and Moody put it, they understood that for a hotel to keep its four-star rating, it was going to have to keep the air-conditioning running through the summer.

As a result, Paton and Moody concluded that developing technologies to help hotels and other facilities improve their energy efficiency was a likely growth business ideally suited to their expertise and industry contacts. And it was a business that wouldn’t require huge amounts of external capital. The business partners say they set out to create a system that incorporated the best technologies for sensing and measuring energy use, for monitoring and communicating such information in meaningful ways, and for remotely managing everything—from the 15-ton air-conditioning chiller on the roof to the boiler in the basement.

“Every piece of equipment has a sweet spot that it operates at with optimum efficiency,” Moody says. The energy conservation and management systems that EESG has developed are designed to identify equipment throughout a facility, and to optimize the performance of each unit. “We know every model, every unit, every product type, and we know how to control it,” Moody says. “Our system is specifically programmed for that equipment, say a Trane 360, and to keep it operating at that sweet spot.”

To tie it all together, they hired software engineers to develop proprietary software analytics that provide a comprehensive and real-time energy audit of customer facilities. EESG also developed a Web-based interface that can be accessed online or by a smart phone. Paton says their system, once installed, reduces customers’ energy consumption by 8 percent to 15 percent annually. The partners say EESG has implemented its technology so far at four hotels in the U.S. and Canada, including the luxury Fairmont Hotel in Washington D.C.

Fairmont Hotel

“The building engineer can be anywhere in the world,” Moody says. “You just go to a secure portal, and see how the system is operating. Or maybe the vice president of asset management wants to drill down to one chiller at one property, but he also wants it aggregated to show all the chillers at all the buildings that he manages.”

So far, the founders have funded EESG’s technology development themselves, along with friends and family. But they are now looking to raise about $1.2 million to expand the 10-employee company’s sales staff, purchase inventory, and for public relations and marketing.

Moody and Paton say they have raised about half from wealthy individual investors and cleantech investment funds, such as Longboard Capital Advisors of Santa Monica, CA, which has invested $300,000 from its Blue Earth Fund in EESG’s current round.

“Although we typically do not invest in early stage companies, it was an easy choice to invest in the management at rapidly growing EESG,” Longboard managing partner Brett Conrad wrote in an e-mail to me last night. “We felt like our investment risk was further reduced by management’s deep experience and relationships in hotel and resort management around the world. Because Longboard Capital Advisors focuses on clean tech investing, we are particularly excited by EESG reducing their customer’s carbon output while at the same time while achieving extraordinary ROI’s by significantly reducing energy costs from power hungry air conditioners, elevators and escalators.”

Moody sums it up a little more succinctly. “It is a good green thing for sure,” he says, “but the bottom line is that it helps you save money.”

Comments (1) | Reprints | Share:        

I was chatting with a couple of local investors at the TechStars (seed fund and mentorship program) event in Seattle on Wednesday. They thought the VC panel discussion of the startup climate and culture in different cities around the country was boring. If you’re an entrepreneur or investor, they said, that’s just where you are, and you deal with it.

But au contraire, mon frère—as a journalist and outside observer—I view those comparisons across different innovation clusters and their respective histories as a way to generate some good stories and insights. On the panel, there were certainly some constructive (and at times controversial) things said about the entrepreneurial climate in Seattle, Boston, and Boulder.

Here are a few edited highlights from the panelists, several of whom bring an outside perspective to their current cities:

Brad Feld of TechStars and Foundry Group gave a brief history of the startup scene in Boulder, CO—useful for any city with entrepreneurial aspirations. “When I showed up in ’95, what I found was on the software side you had a lot of smart engineering talent but you didn’t have much else. A handful of entrepreneurial companies in storage and cable infrastructure. Not much in the way of entrepreneurial executive leadership other than from these pockets. In the mid-90s, because of the counter-culture community—and the Internet was purpose-built for places like Boulder—you had a lot of people who were independent, very smart, doing their own things suddenly intersecting with a medium that allows you to be anywhere. It’s 100,000 people plus 25,000 college students. A pretty small town, but it has the largest percentage, per capita, in the United States of computer scientists and PhDs. Yet there wasn’t a broad wave of entrepreneurial experience,” Feld said.

“In the mid-to-late 90s, there was huge activity around the Internet. Anybody with a pulse could get a company started. The predictable thing eventually happened, there was a lot of wreckage. But from ‘95-2001, Boulder had imported a lot of executive talent—CEOs, VP sales, engineering leadership. We also had a lot of entrepreneurs who had one or two companies in that cycle. So by 2003, people were starting to come back and get re-engaged in entrepreneurial activity. There were probably 50-plus people that made $10 million or more, so there was enough of an angel community. There was critical mass around this. But what was missing was something that tied the community together. There was the endless cocktail party circuit of entrepreneurs. Eventually people got bored and stopped going.”

That led David Cohen, Feld, and others to form TechStars in Boulder. “It cemented this notion of first-time entrepreneurial activity is the core of the ecosystem. What was needed was fresh meat into the system. We got a lot of new, young people into the community,” Feld said. “The other thing was that one of the hardest things for first-time entrepreneurs is to have an engaged relationship with an experienced entrepreneur. We found we were creating this thing that integrated the whole value chain of entrepreneurs. It really energized the existing entrepreneurial activity around a thing.”

Chris Sheehan of CommonAngels then gave his thoughts on the Boston innovation scene. [Disclosure: Chris is on Xconomy’s board.] “In the IT ecosystem in Boston, there are a number of things going on,” Sheehan said. “It’s a wonderful place for universities and colleges. MIT has been the granddaddy in terms of the entrepreneurial ecosystem. But what I’m seeing is a fresh set of energy coming …Next Page »

Comments (8) | Reprints | Share:        

I caught up yesterday with noted entrepreneur and investor Martin Tobias, after his latest startup, Seattle-based Kashless, announced a partnership with RecycleBank to reward people for recycling items at Kashless.org. The basic idea is a rewards program—redeemable for merchandise at hundreds of retailers—for people who give away things like old clothes, food, bikes, electronics, or other equipment online.

Since I last reported on Kashless last winter, the “recommerce” firm has rolled out its free online marketplace and community website in 122 cities around the U.S. The partnership with RecycleBank, a New York-based firm and fellow RRE Ventures portfolio company, should help Kashless acquire new members. Kashless currently has tens of thousands of members, while RecycleBank has hundreds of thousands. “They’ll promote their members to join Kashless,” Tobias says. “They’re rewarding people for separating their trash, and we’re rewarding people for extending the life of products they’re no longer using.”

Tobias says the deal puts his company “over the top” and should help convince more people to give away their stuff on Kashless.org instead of Craigslist, Freecycle, or Goodwill stores. “We’ve been working hard to make Kashless.org the best place for people to find and give away free things,” he says. The rewards program “adds to the things we’ve already been doing, like driving directions [to available items] and tax deductions. It further differentiates us and makes it more valuable to give things away through us.”

Kashless is now staffed by five full-time employees and a couple of contractors. That’s down from about a dozen earlier this year, during the bulk of the company’s product development work. Tobias says there are more than 500,000 active listings on the website.

The company’s revenue model is a combination of advertising on the consumer site and licensing of the software platform to brands and communities that want to boost their recycling. The latter “private label” portion of the business makes up the majority of Kashless’s revenues, Tobias says.

I asked Tobias for the weirdest thing anyone has given away on the site. He named a couple items off the top of his head: a live monkey in a cage, and a tugboat up on blocks in someone’s yard. “An interesting thing for us is that everything posted on Kashless has been taken by somebody,” he says.

Tobias then remembered that he had once advertised a broken urinal from his old house. (I didn’t ask.) “Some guy said, ‘I’ve been looking for that.’ He thought he could fix it.”

Comments | Reprints | Share:        

To a large extent, the story of San Diego-based Networkfleet is also an intriguing tale about co-founder Diego Borrego. The privately held company, which currently has more than 100 employees, is one of the nation’s largest providers of technology and services for monitoring the location and status of company-owned vehicles.

Borrego, a Mexican-American who says his first language was Spanish, helped start the company in 1999, quit when he realized he had lost his ownership stake, and rejoined Networkfleet before the business entered a period of double-digit growth. The 42-year-old engineer says his name is on about 10 of 30 patents issued so far to the 10-year-old company.

While wireless fleet management systems are what my Xconomy colleagues politely refer to as “mature” technologies (as opposed to our usual focus on the sweet spot of emerging tech), Networkfleet maintains that not all fleet management systems are alike. Many systems simply use global positioning satellite technology to monitor the locations of company-owned vehicles. Networkfleet’s technology also helps customers reduce their fleet operating costs and vehicle emissions by using the computerized sensors in every vehicle to monitor the vehicle’s performance and engine efficiency.

Diego Borrego

“There are processors now that control the brakes, the engine, transmission, airbags,” says Borrego, Networkfleet’s vice president of engineering. “There’s a rich set of information that we call diagnostics.” He views the technology as more of an IT challenge, because nowadays there is essentially a local area network (LAN) in every new car and truck that links together an average of 25 different computers. “Extracting that data from the vehicle, and somehow transmitting it (in conjunction with GPS) and turning it into information that can be used by fleet vehicle managers is the innovation,” Borrego says.

Networkfleet provides its Web-based service to customers that range from plumbing companies with 10 trucks to the state of Delaware, which operates more than 2,400 government vehicles. Networkfleet installs a piece of hardware that connects to the LAN in every vehicle, gathers information about the vehicle’s operation and transmits the data via cellular links to a data center operated by Networkfleet. Each customer’s fleet manager is given a login to Networkfleet’s website, where he or she can monitor the location of the company’s vehicles. Data about each fleet also can be converted into reports that fleet managers can use to schedule maintenance, optimize operations, and monitor driver behavior.

The company generated about $30 million in sales last year, a 45 percent gain in revenue growth over 2007 that made Networkfleet the second-largest company in the business (based on number of subscribers), according to Keith Schneider, Networkfleet’s president. (The largest is Trimble, a Sunnyvale, CA-based GPS technology company that acquired rival @Road in 2006 for $496 million.) Schneider says many of their competitors tend to specialize in narrow segments of the technology-based business, such as GPS-based vehicle location, advanced routing applications, and workforce management—and he sees the technologies converging. “The industry is poised for massive consolidation,” Schneider says.

The Networkfleet president indicated during our conversation that Networkfleet, which has been owned by the New York private equity firm Apollo Management since 2006, aims to take an active role in that consolidation.

Still, Networkfleet has taken a winding road to get this far—after beginning more than a decade ago on a strategy that came …Next Page »

Comments | Reprints | Share:        

It can be argued that among talent, cash and technology, no factor is more critical to a start up than talent. The talent drives innovation, attracts the venture capital and makes the critical life or death choices of the company. No matter how groundbreaking the technology or the amount of money invested, it is the people steering the ship that can sail off into the sunset or crash into rocks. This can be said for all sectors, especially life sciences.

That is why the focus of many of the discussions in the Seattle community about our life science industry center on generating a vibrant talent pool. Though the primary concern is on the recruitment and retention of the existing talent by generating an ‘anchor’ company, Seattle must not forget to be proactive with cultivating the young scientific entrepreneurs and talented businesspeople that want to build great new companies, and their careers, already here in the Northwest.

Before you jump to conclusion that this is some rant by a whiney grad student, I have to say upfront that the Seattle business community is incredibly generous when it comes to helping advise an aspiring yet naïve entrepreneur such as myself. Since I moved here 4 years ago from the East Coast to pursue my PhD in bioengineering at the University of Washington, I never knew the distinction between a biotech executive and a poor student could evaporate so effortlessly by simply walking into a coffee shop. Rarely have I been turned down by any person from industry scientist to CEO for an invitation to enjoy a cup and a conversation. I have met with countless of Seattle’s biotech and med device elite under the premise of me being an eager scientist wanting to learn how to turn ideas in the lab into a marketable product that helps people live better lives. Each time the conversation was as casual as the North Face attire some of them wore. I have tried to soak up every ounce of wisdom they have shared and am eternally grateful to each of them for their invaluable time they donated to my education.

I have noticed, however, that it takes a particularly aggressive student, especially in the life sciences, to recognize not only the possibility, but the necessity to educate themselves beyond the classroom. I was introduced to the concept through a student founded/run non-profit organization called the Science & Engineering Business Association (SEBA). Through SEBA, I am able to operate in the borderlands where university science education meets real world business and see firsthand the stagnant traffic flow between the two. On the student side, a majority are either intimidated by the prospect of meeting professionals outside the lab or under the false assumption that career success is solely dependent upon scholastic merit. On the business side, many seem to have an operator receiving calls but not too many making them. Each side seems to have its bias of the other which fortifies the walls between them and creates a culture that stifles the flow of information and growth of talent.

Many organizations have been trying to cross this cultural divide by generating both excitement and confidence in the students while providing a platform for the business community to share the advice it has to offer. The Center of Innovation and Entrepreneurship (CIE) has partnered with SEBA to host two annual events promoting and educating young innovators: Entrepreneurship Week and the Science & Technology Showcase. Entrepreneurship Week is a series of events and activities that brings individuals in the business community to the University as well as the students to the companies around Seattle. The Science & Technology Showcase is a poster/pitch competition hosted in collaboration with the Tech Transfer Office for young scientists to present their marketable innovations to venture capitalists, entrepreneurs and MBA students. Last year, the Washington Biotechnology and Biomedical Association recruited SEBA to expand the showcase to reach universities around the Northwest and present their ideas at the Pre-Emerging Poster Session at Life Science Innovation Northwest (formerly Invest Northwest). Other community organizations like the Northwest Entrepreneurs Network are also making efforts by providing student scholarships to attend their Entrepreneur University that reduces the tuition to $50 for individuals. Despite these efforts listed and many others not mentioned, there is still a false belief that the University as an entity is not willing to shed the confines of the ivory tower that have stood tall for years.

While, many people within the University are making great strides in moving towards a more integrated academic environment with the life science business community, it’s time for both university students and more members of the business community to do their part to reach out. For the real changes the Northwest life science industry needs, it’s time to forget the past, drop the bias and have a second look at what is happening at the University. It’s not just the place where basic science is explored, and a few startups are launched, but it’s an underutilitized training ground for talented young people who will help lead the local life sciences industry for years to come.

Comments (4) | Reprints | Share:        

EvoNexus, San Diego’s free high-tech incubator, announced that it has enrolled three more startup companies during ceremonies yesterday that officially marked the opening of its new facility.

CommNexus, the San Diego wireless industry group, announced five months ago that it was leading the creation of the free and “no strings attached” startup incubator, to be headed by wireless industry executive Cathy Pucher. EvoNexus, which is structured as a nonprofit organization, plans to eventually house 10 to 12 technology startups; it named its first three startups less than two months ago.

CommNexus and EvoNexus have both moved their offices into part of a 25,000-square-foot commercial office building that was previously occupied by San Diego-based Leap Wireless, (NASDAQ: LEAP), which sells prepaid discount mobile phone service through its Cricket Communications subsidiary. By providing the office space to EvoNexus for one year at no cost, Leap made the largest single contribution of more than three dozen companies and individuals that donated in-kind services and cash to the incubator, according to Pucher.

“San Diego is an innovation economy,” Leap CEO S. Douglas Hutcheson told the crowd. “We’ve spawned more new companies in San Diego than I think anyone would have believed, and it’s vital that we support that.”

For the startups that are lucky enough to get selected, the incubator provides free office space, including utilities, Internet service, office equipment, and volunteer business mentoring for up to two years.

“Other cities don’t recognize the collaboration that we have here,” San Diego Mayor Jerry Sanders told a lunchtime crowd of roughly 150 people who attended a ribbon-cutting ceremony for the incubator. The mayor was joined by other local dignitaries and industry officials, including CommNexus board chairman John Major, the former chairman and CEO of two San Diego wireless companies, Novatel Wireless and Wireless Knowledge. “As we entered into the recession of recessions, a lot of non-profits hunkered down, and frankly that would have been the easy thing for us as well,” Major said. “But that’s not the way we operate.”

Pucher, the incubator’s executive director, told me …Next Page »

Comments (2) | Reprints | Share:        

It’s not that I thought Vermont and New Hampshire were technological backwaters, because I knew from my years of working in Boston that the local venture capitalists were pumping millions of dollars into startups in the two northern New England states. But what I’ve found over the past year or so of living in both Vermont and the Boston area is that the only thing that really separates the startups in Kendall Square from those in Barre, VT, and Lebanon, NH, is that the former are way closer to good seafood. The level of innovation and sophistication among the entrepreneurs in both camps is pretty much equal.

While attending a business and innovation event called Vermont 3.0 in Burlington, VT, last week, I thought it would be fun and interesting to take a look back at all the northern New England innovation I’ve covered over the past year. Indeed, a perk of working north of the Massachusetts border is that I’ve visited the laboratories and research facilities of many exciting startups up here. I’ve had a chance to visit with faculty and researchers affiliated with innovation hubs such as Dartmouth College, Middlebury College, and the University of Vermont. I’ve also talked shop with venture capitalists at firms such as Borealis Ventures, based in Hanover, NH, and FreshTracks Capital in Shelburne, VT.

What follows are summaries of the northern innovation stories I’ve written for Xconomy in the order in which they were published. For each story description I dug into my notes and tried add something that wasn’t in the original piece (but I’m not one to withhold interesting details from my posts, so the supply of previously unreported material was a bit thin).

My plan is to dig deeper into the pockets of innovation north of Boston over the next year. But make no mistake, the majority of my stories will still emanate from the Hub.

—In northern New England, there are no technology clusters as dense as those found in Boston, but I found an emerging innovation cluster in Dartmouth College and environs earlier this year. My trip to Dartmouth in February resulted in a post about the key labs, people, and concerns that contribute to the startup ecosystem there. (I also learned that parking is as difficult to find on the Dartmouth main campus as anywhere in Cambridge, MA.)

—People may assume startups in New Hampshire operate in small buildings nestled in the woods, and in the case of Lebanon-based antibody discovery firm Adimab, those people would be right. I met the founder and CEO, Tillman Gerngross, at the Dartmouth Regional Technology Center, an incubator that hosts Adimab and other firms with ties to Dartmouth College. Gerngross, an engineering professor at Dartmouth, pointed out that a firm called GlycoFi that he co-founded and sold to Whitehouse Station, NJ-based drug giant Merck (NYSE:MRK) in 2006 was operating in separate labs in the same building.

—One of the first stops that startups make to find money in Hanover is Borealis Ventures. Borealis has done well investing in Dartmouth spinouts; its investment in GlycoFi alone made its first fund a big success, firm co-founder and managing director Phil Ferneau told me during a meeting. While there are many angel investors in New Hampshire, Borealis may be the only venture capital firm in the state. So, as you’d imagine, Ferneau and his partners are very popular among entrepreneurs in the state.

—After meeting with Gerngross and Ferneau, I wondered what exactly was under the hood at GlycoFi that would persuade Merck to maintain its operations in New Hampshire. It turned out that GlycoFi’s technology—which involves the use of bioengineered yeast to produce human proteins with lower structural variability than mammalian cell lines typically yield—is a centerpiece of Merck’s recent strategy to develop copies of biotech drugs. And many of the scientists who are developing the GlycoFi platform still reside in northern New England.

—Apparently, I’m not the only Boston-area innovation junkie who’s working in Vermont. John Danner, the CEO of Northern Power Systems in Barre, VT, told me during a meeting at his office that his primary residence is still in Massachusetts even though he spends most of his weeks in the Green Mountain State. Danner, a former engineer aboard nuclear submarines, is now engineering a turnaround at the Vermont-based wind turbine manufacturer. (The latest on Northern Power is that it’s aiming to …Next Page »

Comments | Reprints | Share:        

San Diego software industry executive Bob Nascenzi has joined ExtraBux a just-launched San Diego retailing website that combines cash back and rebate offers with comparison shopping capabilities. Nascenzi tells me he’s joining ExtraBux as both a board member and CEO. He previously was the interim CEO and a board member at San Diego-based ProQuo, former chief operating officer of TARGUSInfo, and CEO of Claritas, the marketing information resources company now operated by the New York-based Nielsen Co.

Comments | Reprints | Share:        

It seems like every few days since Labor Day weekend we at Xconomy get invited to attend or cover an entrepreneurship competition. This is a good thing. It means there are more and more opportunities for innovators in New England to gain exposure to the business community and investors—as well as a chance to win some cash and other prizes to help get their ventures off to a strong start.

Indeed, many startups in the Boston area have cut their teeth in the business plan competition circuit before raising rounds of venture capital or achieving other milestones. Take some of the past winners of the MIT $100K Entrepreneurship Competition: Cambridge, MA-based video game developer Harmonix Music Systems, creator of the hugely popular Guitar Hero franchise, and the dental imaging firm Brontes Technologies, which was acquired by 3M for $95 million three years ago. And Wilbraham, MA-based FloDesign, which won both the $200K MIT Clean Energy Prize and $100K Ignite Clean Energy competition last year, recently learned that it has been tentatively awarded $8.3 million from the U.S. government to advance development of its next-generation design for wind turbines.

There will no doubt be many more successful startups to emerge from entrepreneurship contests in the region in the years ahead. Some of these contests have been around for years. Others are brand new. But even for those that have been around for a while, schedules and prizes can change from year to year. So we thought it would be a good idea to round them up in one place with the latest information about them we could find.

So whether you’re an investor interested in new companies or an innovator searching for opportunities to transform your ideas or inventions into a startup, here is a list—not a ranking—of entrepreneurship competitions in New England that cater to ideas for businesses in the life sciences, clean-tech, and IT sectors. (Please note that the information came from the contest websites or organizers, and in all but one case I didn’t separate cash from in-kind services factored into the value of each prize):

—Babson College business plan competitions

Babson College holds annual business plan competitions for undergraduate and graduate students. In fact, this year the Massachusetts business college held its 22nd competition for graduate students, making it one of the oldest business plan contests in the state.

Undergraduate Track:

Deadline: Dates for the 2010 competition weren’t available online, but last year the deadline for entries was in winter and the finals were in spring.

Top prize: $5,000 (2009)

Graduate Track:

Deadline: Not dates specified for 2010 competition.

Top prize: $20,000 (2009) …Next Page »

Comments (2) | Reprints | Share:        

How does $300,000 an hour sound? Walking away with $5,000 for his 60-second pitch, the winner of Thursday night’s MIT $100K Elevator Pitch Contest (EPC), Rouzbeh Shahsavari, seemed pretty excited about it. His idea? Nanoengineered concrete that is twice as strong, cuts CO2 emissions in half, and is dramatically cheaper than typical concrete.

The EPC is the first of three contests that comprise the MIT $100K Entrepreneurship Competition. It will be followed by the Executive Summary Contest and the Business Plan Contest. Now in its third year, the EPC is growing at an incredible rate. With over 350 registrations, we had more submissions this year than in the previous two years combined. As for its capacity to produce innovative ideas, just ask Riccardo Signorelli, the winner of last year’s EPC. Last week the Department of Energy awarded his company, Cambridge, MA-based FastCAP Systems, a $5.3 million grant to develop nanotechnology-enhanced batteries.

As an organizer of this year’s EPC, the experience has been pretty incredible. I distinctly remember how much energy I felt in the room during our kickoff meeting, and things seemed to take off from there. I was repeatedly amazed at the amount of work and energy that my peers put into organizing the events. All of that work finally came together at the finale show Thursday night (for a taste of that energy, see the crowd shot below and the small photo gallery at the end of this post).

The finale really does have a lot theatrics to it. With ”Space” as this year’s theme, the emcees were dressed as astronauts against the background of a giant spaceship made out of PVC pipe (This is MIT after all, what else would you expect?). Audience members clapped thunder-sticks together and shouted “3, 2, 1, Liftoff!” before each presentation. In addition to the pitches, the show featured an interview with the winner of last year’s BPC, Waseem Daher. When asked about the interview experience, he said: “Being a speaker was a lot of fun—it was definitely strange being on the ‘other side’ so soon, because I definitely still see myself in the shoes of the participants…taking a bold new idea—in our case, rebootless software updates—and making the case for it to everyone who is willing to listen (and some who aren’t).”

The format of the event kept the excitement level pretty high as well. The top 10 finalists from each of six tracks (Energy, Life Science, Development, Mobile, Web/IT, and Products & Services) were announced before hand and asked to be in attendance. Of those 60, the top 2 from each track would then deliver their elevator pitch to the audience and judges. However, the finalists didn’t know who they were until their name was announced and they were called down to give their pitch then and there.

During the preliminary rounds I was mainly out front at the registration desk, so I didn’t get a chance to preview many of the pitches. Seeing them at the finale, I was astounded by …Next Page »

Comments | Reprints | Share: