Seattle has already birthed a couple of early stage companies trying to help shoppers track the price swings and model rollouts of expensive electronic gadgets. Well, add another one to the mix—thanks in part to the national battle between Amazon.com and big-box retailers over collecting taxes for online sales.

I’m talking about Shopobot, which just set up shop in the TechStars/Founder’s Co-op building in South Lake Union, right next door to Amazon. Shopobot crawls product and price data around the Web and helps shoppers decide where to get the best deal on cameras, laptops, TVs, and other products.

The company got started in January when co-founder Dave Matthews (no, not that one) left his job at Microsoft and moved to the San Francisco area to join co-founder and longtime friend Julius Schorzman, also a former Seattleite. They originally were targeting book shopping online, until Matthews’ passion for photography led to an experiment tracking the price of camera gear. Voila! Shopobot’s mission was clear.

Schorzman and Matthews

The startup got into the AngelPad accelerator program, and landed seed investments from Google Ventures, AOL Ventures, and others. The company’s public rollout was covered in the New York Times and other media.

With Seattle entrepreneur Dan Shapiro selling similar startup Sparkbuy to Google this spring, and Farecast co-founder Oren Etzioni now tackling electronics shopping with Decide.com, it was clear that this was now a hot area for startups to focus on.

So, everything seemed to be going fine—until the state-by-state battle over online sales tax collections re-emerged in California.

As I wrote in March, recession-hammered state governments are starting to eye online sales as a juicy source of revenue. That’s a problem because, until now, the national laws governing online sales tax collection meant that there was a pretty narrow set of circumstances in which officials could force a company to collect local taxes on its sales in a given state.

Amazon has been very aggressive in making sure the number of states in which it collects sales taxes is low, but bigger bricks-and-mortar retailers hate the price disadvantage and are pushing hard to make online sellers collect sales tax in more places.

In late June, California officials passed a law trying to force Amazon and other online sellers to collect sales tax on purchases from Golden State residents. Amazon promptly followed through with its threat to drop some 10,000 affiliate businesses, third-party portals that market Amazon products through their own sites.

That included Shopobot. Just like that, a major source of revenue for the little company was gone, stuck in a political battle between very big players. “All of a sudden, we were … Next Page »

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Today: a dollop of new funding deals, and a dash of older news we didn’t have time to tell you about on Monday and Tuesday.

—Red Robot Labs, the Palo Alto, CA-based maker of the mobile massively multiplayer online game Life Is Crime, has closed an $8.5 million Series A funding round with support from new investors Benchmark Capital and Shasta Ventures. Seed investors Rick Thompson and Charmath Palihapitiya also participated in the round, which brings Red Robot’s total funding to $10.5 million.

—Zetta, a cloud storage provider in Sunnyvale, CA, said it has collected $9 million in Series C financing in a round led by existing investors Foundation Capital and Sigma Partners. The company has raised $31.5 million all told.

—San Francisco-based mobile analytics startup Apsalar said on its blog that it has raised $5 million in Series A funding. Thomvest Ventures, Battery Ventures, and DN Capital led the round, which was joined by seed investors 500 Startups, Mark Goines, Morado Venture Partners, Founder’s Co-op, and Seraph Group. Thomvest managing director Don Butler has joined Apsalar’s board.

—The public/private Startup America Partnership announced at the Demo conference in Santa Clara, CA, yesterday that it has opened a section of its website where startups can apply for services, advice, and capital from 25 Startup America partners. Some of the newest partners providing services are Dell, Dun & Bradstreet, FoundersCard, oDesk, and Rapleaf. Xconomy covered the launch of the Startup America Partnership earlier this year.

—Xignite, a San Mateo, CA-based startup offering a cloud-based platform delivering financial market data, said yesterday that it has raised $10 million in Series B runding. StarVest Partners and Spring Mountain Capial partner John “Launny” Steffens led the round, which was joined by previous investors Altos Ventures, Startup Ventures, and Peter Caswell. The startup said it will use the funding to expand its marketing and sales operation and built out its technology platform.

—In M&A news, Hayward, CA-based Solta Medical (NASDAQ: SLTM), a developer of medical aesthetic procedures such as skin tightening and resurfacing, announced yesterday that it has agreed to acquire Medicis Technology Corporation division of Medicis Pharmaceutical Corporation (NASDAQ: MRX) for $15 million up front and up to $20 million in additional milestone-based payments. Medicis Technology Corporation is the maker of a “waist circumference reduction” technology called Liposonix.

—Irvine, CA-based wireless chipmaker Broadcom (NASDAQ: BRCM) said earlier this week that it will acquire Santa Clara, CA-based NetLogic Micrososystems (NASDAQ: NETL) for approximately $3.7 billion. Broadcom said NetLogic’s high-performance processors, which are mainly used to speed up wireless 3G and 4G networks, would “meaningfully extend” its product line.

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The Seattle startup that put hip-hop legend Sir Mix-a-Lot back in the national headlines is making a big shift. Giant Thinkwell, a member of the first Seattle TechStars class, has dropped its previous focus on making Facebook-based games for celebrities and is now digging into a new project called Flickmob.

It’s still in a semi-private beta testing, but it’s been possible over the past several days to get a glimpse if you follow the crew on Twitter.

Flickmob is a video version of Turntable.fm, a hot Silicon Valley startup that lets people log into virtual rooms and share music with others as cartoon avatars bop their heads and vote for favorites. In Flickmob, users earn points from the crowd by picking gems from YouTube.

Here’s a shot of me enjoying “Brooklyn We Go Hard” by Jay-Z:

The inspiration came from actually being bona fide power users of Turntable.fm: When they were promoting the Mix-a-Lot Facebook game, Giant Thinkwell came up with the marketing masterstroke of getting Mix-a-Lot himself to guest-DJ in a Turntable.fm room—and the team hacked together a custom avatar that pasted a Mix-a-Lot head onto his character.

The room was quickly flooded to capacity with fans. The combination of Mix-a-Lot’s fame and Giant Thinkwell’s creative promotion got the game a ton of press—including a mention in Jimmy Fallon’s “Late Night” monologue. The number of fans on Mix-a-Lot’s Facebook page exploded from about 1,200 to 21,000 in just one day, Giant Thinkwell CEO Adam Tratt says.

But very few of them were actually digging into the game itself, even though it offered exclusive personal prizes like a ride down Seattle’s Broadway in Mix-a-Lot’s Lamborghini. After all that labor, something wasn’t sticking.

“Our conclusion was, these 21,000 Mix-a-Lot fans, they love him for his personality, they love him for his music, they love him for his exotic cars—but they’re not going to start playing a social game just for the hell of it,” Tratt says. “The question at the end of that was: Do we try to go after a different celebrity that might have a better overlap with the social game demographic? Or do we do something new?”

That something new is Flickmob. Because it’s in a beta test, the … Next Page »

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Gamification as a concept in the broader business world is still in the toddler stage. But that’s soon enough for a little consolidation, right?

Guess so. Today, Seattle’s BigDoor Media is announcing the acquisition of San Francisco-based OneTrueFan, a company backed by 500 Startups that uses game mechanics to help website publishers keep their audience plugged in. BigDoor says the merger is “the first of its kind in the gamification space.”

Terms of the deal weren’t disclosed. BigDoor is still pre-revenue as it wraps up tests on its “engagement economy” white-label platform for large publishers. But the startup has raised about $5.5 million from investors including Boulder, CO-based Foundry Group and Seattle’s Founder’s Co-op, with most of that money announced last June. OneTrueFan’s CrunchBase profile says it raised $1.2 million in a seed round last September.

When I last checked in with BigDoor co-founder Keith Smith, the startup was up to about two dozen employees and had just relocated to the ground floor of the Founder’s Co-op/TechStars building in South Lake Union to accommodate its growth.

With the OneTrueFan acquisition, BigDoor is adding five more people, including OneTrueFan founders and co-CEOs Eric Marcoullier and Todd Sampson—but they’re not moving in.

OneTrueFan’s team will instead be BigDoor’s new Bay Area branch, adapting its technology into a BigDoor-branded service for “long tail” niche publishers to build audience engagement—and therefore advertising revenue. BigDoor plans to make money by getting its own advertisers to sponsor “quests,” or little virtual tasks that can be rewarded with badges and other trinkets, Smith says.

Up at the BigDoor mothership in Seattle, they’ll continue working on the “engagement economy” platform for larger publishers, which sounds like it might be ready for primetime in the coming weeks. Expertise from OneTrueFan’s team will help grow and improve that product as well. BigDoor is currently working with about 300 publishers, Smith says.

The two teams already had a fairly close relationship, helped along by Brad Feld of the Foundry Group, who sits on BigDoor’s board and is friends with Marcoullier. The OneTrueFan co-founders have some startup chops as well: Marcoullier was a co-founder of the game site IGN, and worked as co-founder with Sampson on MyBlogLog, which was acquired by Yahoo in 2007.

“They were deep, they were thoughtful, they were fun, they were quirky—they were weird as hell,” Smith says with a laugh. “I just really liked them.”

The growth of gamification has come “out of nowhere,” Smith says—a fact that speaks to the scramble content publishers are facing to make money on their online properties in an age of declining ad revenues.

“What’s interesting about it is, from a startup perspective, the hype around gamification has been fantastic for us because what its done is it’s landed a ton of great partners at our doorstep wanting to learn about gamification,” he says. “The downside is that with that hype comes a fair amount of cynicism. And in many cases, rightfully so, because I think a lot of the solutions that have been out there to date haven’t done a really good job of moving the needle … for businesses.”

BigDoor’s platform, however, is doing very well in tests, Smith says. In its beta test, BigDoor has seen users return to sites, stay engaged, share their experiences and register for a given site in far bigger numbers than the startup expected.

Users who get rewards through the BigDoor loyalty program, for instance, are 300 percent more likely to return to that site than users who aren’t being rewarded, BigDoor says—and overall site engagement goes up by 30 percent.

“It’s far better than what we expected,” Smith says.

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A couple of financing deals on the radar this week for Oregon-based cloud computing firms, with the money coming from Seattle-area venture capitalists. The first was the $6 million round for Portland’s Cedexis, which helps companies monitor cloud computing performance. Madrona Venture Group of Seattle was named as an investor, along with Palo Alto, CA-based Advanced Technology Ventures. Bellevue, WA’s Ignition Partners led the $8 million round in AppFog, a platform hosting service (AppFog was formerly known as PHP Fog). Ignition’s Frank Artale will join the board. Also participating were Madrona and Seattle’s Founder’s Co-op, along with First Round Capital.

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Can a company that hands out digital coins make real money? That’s the idea at Seattle’s BigDoor Media, a growing startup playing in the burgeoning field of gamification. In case you’ve missed it—which is possible, since the phenomenon is really less than two years old—gamification is the video game-inspired idea that businesses can get users to stick with digital content by giving them virtual coins and other rewards.

So, if your teenage daughter checks in to her favorite celebrity gossip site for the third time in a day, she could earn some digital bling that can be traded in for real swag, like a T-shirt or free song download. Sharing that activity with her friends through social networks earns even more.

All of those virtual transactions allow content owners to collect more data about their users and keep them coming back, and open up new ways of collecting advertising dollars. And BigDoor not only provides the system, but actually plays the game itself. It’s free to implement for publishers, with BigDoor taking a cut of the virtual currency as it’s dispensed and when it’s redeemed.

“At the end of the month, we trade that in for real dollars,” co-founder and CEO Keith Smith says. “And if we’re doing our job right, we have added enough new sponsorship dollars into the overall economy where we’re actually writing publishers a check, instead of them writing us a check.”

Competitors include Bunchball, Badgeville, and iActionable. BigDoor didn’t actually start out in the gamification arena. As we reported in 2009, the original idea was to give online publishers a popup-oriented way of drawing data and selling ads. That was a few months before game designer Jesse Schell gave a now-famous speech about gamification, a talk pointed to as one of the key moments in kicking off the trend.

BigDoor is certainly going all-in now. The company has raised about $5 million, with investors including Foundry Group and Founder’s Co-op. After taking up increasing amounts of desk space on the main floor of the Founder’s Co-op/Seattle TechStars office in South Lake Union, BigDoor recently relocated to its own suite on the building’s main floor (the landlords actually had to take out a wall to get them in there).

Now up to about two dozen employees and 200 active customers, BigDoor is testing its gamification platform called “the engagement economy” in a private beta. That’s the main driver of the company’s growth, which includes an ongoing talent search.

“We’re pretty much going to bust out of this place already. That’s our next worry,” says chief operating officer Ring Nishioka. (Nishioka, Smith, and co-founder Jeff Malek are all veterans of Zango, the former adware company that grew quickly and crashed back to Earth over concerns about invasive software. Check out our original BigDoor profile for the founders’ lessons from that episode).

I stopped by the new office late last week to see what was behind all the moving and hiring, and hear what kinds of things BigDoor was learning about this new way of making money for online publishers. One of the first things I wanted to know was Smith’s response to critics who say that gamification is quickly becoming an over-simplified approach that amounts to just slapping points and little achievement badges on any conceivable online activity, to the point where it’s just more Internet clutter.

“Is this stuff going to get old? I think if everybody just had points and a badge on every single site, yeah it’s kind of like, ‘so what?’” Smith says. “And I think we’re seeing that with Foursquare now—Foursquare now is a million leaderboards of one.” Smith notes that Foursquare is … Next Page »

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Premium goat-milk ice cream. Bouncy-house rentals for kids’ parties. Electronic medical records for psychiatrists. None of these sound like your textbook target for early stage investors, who are often found hunting consumer tech startups that can turn into billion-dollar home runs.

For ubiquitous Seattle investor and entrepreneur Andy Sack, that’s precisely the point. Those three very different businesses are companies supported by RevenueLoan, the alternative financing startup that Sack unveiled about a year ago in his mission to disrupt the traditional investment market. These days, Sack is repositioning RevenueLoan as Lighter Capital—a name change that he says reflects a broader focus and an overall attitude that’s much less buttoned-down than your average bank or venture capitalist.

I stopped by Sack’s Founder’s Co-op/Seattle TechStars office recently to get a better idea of what the changes will entail, and what the first year has been like for one of the more prominent experiments with an emerging investment model known as revenue-based financing.

Check out Xconomy’s story from last year for a more exhaustive rundown of how it all works, but here’s the short version: Revenue-based financing is a loan that’s repaid by sending investors a slice of top-line revenue, typically in the 1-10 percent range, up to a hard cap of three-to-fivefold return on investment. So, in exchange for taking no equity stake in the startup, an investor can make money without an IPO or acquisition. For Seattle-based Lighter Capital, loans typically top out at $500,000. The company was started with $6 million from Voyager Capital, Summit Capital, and Founder’s Co-op, and Sack says Lighter Capital might look to raise more money in a year or so.

The first year has seen 10 deals on a range of companies. About half of them have some kind of technology focus, such as lead generation or software-as-a-service—”stuff that is just never going to be a huge company, but solves a real problem for a set of customers,” Sack says.

One early investment was in Valant Medical Solutions, which helps psychiatrists and other mental health professionals streamline their administrative burden by shifting things like patient records, prescribing, and billing to Web-based software. The Seattle-based company was started by a pair of brothers: psychiatrist David Lischner and software developer Ben Lischner.

“It’s a niche,” Sack says. “They might get huge, but it’s more likely they end up at a $5 million-a-year, $10 million-a-year business.”

Other investments include Mimja, which operates a Web-based lead generation and rental company for those big bouncy houses that kids (and adults) like to hop around in; and Laloo’s, whose … Next Page »

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RevenueLoan, an alternative financing service for entrepreneurs, is changing its name and broadening its focus. Founder and CEO Andy Sack writes about the name change and hints at the larger implications in this blog post, which says the Seattle-based startup’s team has “realized there’s a lot more opportunity to disrupt the small business growth capital and lending incumbents.”
RevenueLoan debuted about a year ago, centered around an investment approach known as revenue-based financing. Basically, investors get a portion of future revenues in exchange for their capital, rather than equity or debt to a traditional bank. As Sack wrote a bit earlier on his blog, he’d determined that a change was in order because that particular investment vehicle was likely “a product and not a company.”
RevenueLoan previously raised $6 million from Voyager Capital, Summit Capital, and Founder’s Co-op, the seed-stage firm helmed by Sack and Chris DeVore.

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Seattle social-gaming startup Giant Thinkwell, which just unveiled its first official celebrity endorsed game with Seattle hip-hop legend Sir Mix-A-Lot, is also announcing that it’s landed a $600,000 seed investment round. The investment was led by Madrona Venture Group, with Founder’s Co-op and unnamed angels also participating.
Giant Thinkwell, part of the first Seattle TechStars class, was co-founded by former Microsoftie Kevin Leneway, artist and designer Kyle Kesterson, and Cranium veteran Adam Tratt. Their goal is to help celebrities—and eventually even regular Joes—connect with fans and friends through Facebook-based games like Mix-N-Match, the new offering with Sir Mix-A-Lot.

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Last year, the organizers of TechStars in Boulder, CO, decided to try a little experiment. Already stocked with 10 teams of entrepreneurs working on their proto-companies, the startup boot-camp saw a niche for extra hands to help knock out some of the startups’ technical projects.

So David Cohen, TechStars’ founder and CEO, brought in a young software developer and aspiring entrepreneur named Sam Herbert, who had applied to TechStars but didn’t make the cut for that year’s class. The TechStars brass gave Herbert a small stipend and let him circulate through the system, to see what kind of work might be available.If it works out, they figured, he could even wind up working for one of the companies.

“Two weeks into the program, he was recruited by one of the teams,” says Nicole Glaros, managing director of TechStars Boulder. “That’s when we were like, ‘Hmm … maybe this has a little bit more legs than we thought.’”

For Herbert, that open-ended engineering gig turned into a co-founder’s position with ADstruc, a venture-backed New York City-based outdoor advertising startup. “The last thing I thought would happen was I would be living in New York a year [later],” Herbert says. “But man, I’m so glad that happened. It’s been an adventure, and I just hope it keeps on going.”

And for TechStars, the experiment became HackStars—a recruiting program that puts entrepreneurial techies into a talent pool to help the accelerator’s fledgling companies tackle their projects, and maybe even land a new job.

The HackStars program, already in place at TechStars in New York and Boulder, is now making its debut in Seattle, where TechStars recently closed applications for a second class of entrepreneurs. Developers and designers in HackStars get the same $6,000 per-person stipend given to the co-founders of hosted startups. But they also get a chance to try the startup life even if they don’t have their own idea or team. As Seattle TechStars director Andy Sack wrote on his blog, it amounts to a way for techies to “hack into TechStars.”

Of course, software jockeys of all types are in high demand these days, both nationally and here in Seattle. We’ve talked about this situation many times at Xconomy, examining the relatively low rate of in-state college degrees, the continued growth of local tech behemoths and startups, and the many Bay Area companies establishing Seattle-area footprints to lure away talent from Microsoft, Amazon, and others.

The labor market for technical talent is also hot in Boulder, Glaros says. So why would an engineer give up nearly sure-fire job prospects for a few grand and three months of long hours with no … Next Page »

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When Dave Long first started pitching movie studios on a new way to market their old titles, he encountered a fair bit of skepticism. After all, what could a boardgame entrepreneur from soggy Seattle possibly teach Hollywood about selling its own stars?

Nearly 10 years later, the “Scene It?” brand—which builds trivia games around movie and TV clips—has been adapted to iconic titles like Seinfeld, South Park, James Bond, and Harry Potter. The company that Long co-founded, Screenlife, was acquired by Paramount in 2008 and has sold some 20 million games worldwide.

And Hollywood’s major players, Long says, have a different feeling about visitors from up north. ”There is a little mystique around Seattle,” he says. “I’ve had big executives say ‘Hey, what’s in the coffee up there? It seems like there’s a lot of creativity up there.’”

That kind of reception from entertainment bigwigs is helping to fuel an emerging cluster of Seattle companies that are taking innovative approaches to selling entertainment’s products and personalities. These entrepreneurs are building on the area’s traditional strengths in digital media and gaming, with hopes of helping the entertainment industry navigate the fundamentally shifted economics of the digital age.

The roster includes Hark, a startup that aims to spread bite-size chunks of content through the social sphere; Hypershow, a quietly profitable company enabling richly layered digital movies; and Giant Thinkwell, an incubator-stage company that wants to help celebrities of any stripe reach their fans through quirky social games.

Dave Long is back on the job as well. His new company, Exponential Entertainment, is working with the studios to develop promotional digital games—and this time, they’re starting with some major first-run movies.

Building bridges to the star-studded streets of Hollywood still has its challenges, even in a highly networked age. It’s simply harder to build relationships and keep your finger on the pulse of an industry when you’re hundreds of miles away from Sunset Boulevard.

But there are also advantages to being based in the Northwest, says David Aronchick, the founder and CEO of Hark.

“It’s far more cost-effective to work out of Seattle, and you obviously have an incredible depth of technical talent here that allows you to execute very quickly comparatively, and do some really cool things,” he says. “We’re not unique, but we certainly have a lot of cross-pollination because we’re a very migratory city. We pull in a lot of people from all over the place, especially people from on the West Coast. And this is a great place to set up shop.”

Here’s a deeper look at the startups I identified as part of Seattle’s emerging entertainment innovation cluster. I didn’t include folks who produce entertainment-themed content of their own, like the blog publisher Wetpaint, for example. The focus here is mostly on companies that are aiming for business partnerships with the entertainment industry.

Also purposely left off the list was a major name—the Internet Movie Database, or IMDb, which is owned by Amazon.com and headquartered in Seattle. Although it might seem kind of odd to think of … Next Page »

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The Seattle tech scene is getting tighter and more connected every day. Big Fish Games, the casual games developer and publisher, said today that Geoff Entress, the Seattle-area angel investor and venture partner with Voyager Capital, has joined the firm’s board of directors. He’s not an investor in Big Fish, but, as is typical with such board appointments, he is receiving shares of the company as compensation.

The move makes business sense, as Entress has experience with gaming companies as well as other consumer-focused and Web entertainment startups. He was an early investor in Cheezburger Network, the Internet company that raised $30 million in venture capital a couple weeks ago, and he has been an investor in Sandlot Games. All told, Entress is invested in some 40 companies, mostly in the Northwest. Last year he added about 10, including Bonanza and Sparkbuy, to his portfolio. One of his focus areas is mobile software—he’s an investor in Dashwire, Swype, and a number of other mobile startups in the Seattle area. That experience is a strategic coup for Big Fish, which has been planning to expand its mobile game offerings.

“Mobile is a major growth opportunity,” Entress says. “That’s something I can help with.” He adds that his experience with other consumer Web businesses will be helpful too, and that he hopes his new board position will “enable me to grow personally and be part of something beneficial to the Seattle community.”

As usual, there’s also a personal connection behind the business news. Entress first got to know Big Fish Games CEO Jeremy Lewis when the latter lived on Bainbridge Island (where Entress still resides). The two became friends, and last year, after discussing who might make a good addition to the Big Fish board, Lewis approached Entress about the position. Entress was happy to do it, saying he has “admired the growth of the company.”

Big Fish raised an $83.3 million financing round back in 2008, led by Balderton Capital. The company has been the subject of IPO rumors for some time, but Entress declined to comment on that. One interesting strategic point: Big Fish so far has largely resisted the pull of social games—those played over social networks like Facebook—and has stuck to its core strategy of developing and distributing casual games on its Web portal. There’s still a question of whether the business of social gaming is sustainable, Entress says. “Will social games really replace hardcore, console, or casual games, which are very established? I don’t know—I don’t think so,” he says.

I wrote a profile of Entress and his investments in May of last year. He still works part-time at Founder’s Co-op, the Seattle-based seed-stage investment fund and mentoring program, in addition to his duties with Voyager Capital and various company boards. In the past half year, he says, “I got a lot more busy than I expected.”

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It’s billed as the world’s largest startup competition and accelerator program, and it takes place right here in Boston. MassChallenge, coming off a successful first run in 2010, is gearing up to do it again this year—but not without some important changes and improvements to its structure.

Last year, the Boston-area nonprofit organized a $1 million global startup competition and housed more than 100 startups—across a dizzying array of sectors that included software, life sciences, cleantech, and social impact—during a three-month accelerator/mentorship program in its Fan Pier building. The program culminated in an awards ceremony in October to honor 26 finalist companies, of which 16 received money from the program (either $50,000 or $100,000 apiece).

But John Harthorne, MassChallenge’s CEO and co-founder, is hardly satisfied with those results. His goal is much bigger: to spur innovation in the Boston area, and beyond, by supporting entrepreneurs and connecting them with funding and other resources—thereby creating a large-scale spectacle that will draw more attention and more resources. “I’m convinced we are on the verge of a renaissance,” Harthorne says.

And he wants MassChallenge to be the catalyst. To that end, the program’s budget is increasing from $1.5 million last year to $2 million this year, Harthorne says. The total prize money will remain $1 million, and the extra money will be spent on improving MassChallenge’s website and its resources for entrepreneurs, as well as on hiring more technical and support staff. What’s more, this morning the White House announced the creation of a private organization, Startup America Partnership, that aims to accelerate entrepreneurship throughout the U.S.—and MassChallenge is a key partner in the effort.

In its inaugural year, the nonprofit received $500,000 from the Massachusetts state government in a one-time deal. (No state money is expected this year.) Harthorne has been busy securing the $2 million for 2011 from returning sponsors and some new investors—the overall list now includes The Blackstone Foundation, The Fallon Company, MassMutual, Johnson & Johnson’s Corporate Office of Science & Technology, Microsoft, Xerox, Foley & Lardner, and the Deshpande Foundation.

When you try to do something as ambitious as MassChallenge, of course, you’re going to get your share of criticism. Over the past few months, I’ve talked with entrepreneurs and mentors who took part in the program, and I’ve heard a lot of constructive feedback and suggestions for what could … Next Page »

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One of the most important decisions anyone makes is deciding where to live. Lucky for me, that decision has already been made. Since I’ll be graduating soon with an MBA from the MIT Sloan School of Management, I thought it would be great to head out West to where the software revolution began: the emerald city of Seattle, WA.

Now, I understand what some of you may be thinking: why the heck would anyone want to live in Seattle? I mean, doesn’t it rain like 10,000 inches per year? And aren’t they just a bunch of granola eating, rock band wannabes? What kind of job opportunities exist out in Seattle anyway?

I recently had the opportunity to help organize a “Seattle Tech Trek” for some of my MIT classmates (as well as the Harvard Business School, who helped set up a “startup mixer”). While many of us have roots in the technology scene, a large majority are obsessed about tech startups. Most are interested in either a) working for a small technology company, or b) starting our own venture (and if anyone is looking for good talent, please e-mail me for a list of resumes). Approximately 30 of us made the trip from Boston out to the Pacific Northwest and toured some of the area’s premier technology companies, both large and small.

I realize some of you may be biased toward the East Coast, especially since the majority of readers reside in Boston where Xconomy got started. But, I want you to keep an open mind especially if you’ve never been out West before. What follows is my “elevator pitch” for those who are contemplating whether they should move to Seattle, post-MBA.

First, and probably most obvious, Seattle is home to some of the most innovative technology companies. Yeah, sure, there are the “old timers” such as Microsoft, Amazon, and Expedia. I mean, everyone knows about those guys, right? Well, yeah—but there are also some up-and-comers which some of you may have never heard about: Impinj (RFID semiconductors), Farecast (travel, sold to Microsoft for $115 million), Isilon Systems (storage, acquired by EMC for over $2 billion), Big Fish Games (online games), DocuSign (digital signatures), AdReady (online display ads), Tableau Software (Web data), PayScale (salary data), Picnik (photos, acquired by Google), and Off & Away (travel deals). While the Bay Area may host its fair share of startups, rest assured Seattle is doing its best to stay in the running.

And, speaking of the Bay area, look at all the Silicon Valley companies who are opening offices in Seattle. Facebook recently opened an engineering center (currently the only other office besides its headquarters in the Valley), while Google, Cisco, Adobe, and Salesforce.com all have satellite offices in Seattle as well. There’s probably a host of others I’m forgetting, but these stand out to me. (Side note: my MIT Sloan colleagues also put together a “Silicon Valley Tech Trek” as noted here by MIT Entrepreneurship Center director, Bill Aulet. )

Second, and probably most important, is the Pacific Northwest “entrepreneurial … Next Page »

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Portland, OR-based PHP Fog said today it has raised $1.8 million from Madrona Venture Group, First Round Capital, Founder’s Co-op, and other prominent angel investors. The company, founded by developer Lucas Carlson, was established a year ago to make it easier to deploy and scale up applications of PHP, the popular programming language, via cloud computing infrastructure.

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Seattle-based AppStoreHQ, a mobile software startup, said today it has named Scott Blanksteen the company’s new CEO. Blanksteen, a wireless tech executive who was previously with IceBreaker (and is a member of the Qpass mafia), succeeds co-founder Chris DeVore from Founder’s Co-op in the chief executive role. AppStoreHQ helps consumers discover mobile apps for the iPhone, iPad, and Android devices; it also provides services for developers and publishers.

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Microsoft, desperate to become a real player in mobile, will do something bold like acquire Finnish wireless giant Nokia. CEO Steve Ballmer will ride off into the sunset. Amazon’s stock could soar to over $200 a share.

As the great Yogi Berra once said, it’s tough to make predictions, especially about the future. Yet, with a little prodding from moderator John Cook of TechFlash, a few of Seattle’s well known entrepreneurs and investors made some of those bold declarations last night at a gathering in Seattle pulled together by the Washington Technology Industry Association.

This year’s group of prognosticators included Greg Gottesman of Madrona Venture Group; Mike Buhrman, the co-founder and CEO of Finsphere; Chris DeVore of Founder’s Co-op; Sunny Gupta, the CEO of Apptio; and Mark Ashida of OVP Venture Partners.

The conversation got off to a fast start when Cook asked about what Ballmer can do to revive Microsoft in 2011. The answers were all over the place, and reflected some very interesting strategic insights. Here are the highlights:

—Ashida suggested that Ballmer take the company private. “The company and its employees would be transformed, and energized.”

—Gottesman had a more bearish take, saying the software giant has surrendered the premium slot in the mobile market and the mantle of low-cost provider to Google, meaning it is now “stuck in the middle” where great businesses go to die.

—Gupta heaped some praise on Microsoft’s Azure cloud computing platform as a “real competitor” to Amazon Web Services.

—DeVore said he was puzzled by why Microsoft always seems to be trying to move into consumer markets when its real strength is in the enterprise. “Microsoft is the nerdy kid in the corner who’s good at math, and he’s always trying to be the cool kid,” DeVore said. His advice: Microsoft should stick with what it is good at, and buy a “very boring” business that is a good strategic fit, like Redmond, WA-based Concur Technologies (NASDAQ: CNQR).

Nobody immediately chimed in when Cook posed the touchier question of whether Ballmer will still be at the helm at the end of 2011. Gottesman pointed out that Microsoft has shown amazing growth in revenue and profits in the decade that Ballmer has been in charge, yet the stock remains stagnant, as investors have lost their excitement for the company. (I don’t cover Microsoft, so I was shocked to learn it only commands a price/earnings ratio of 11 today, compared to cooler companies like Apple with a P/E of 20, and Google at 24).

“He must hate Wall Street,” Gottesman said.

Buhrman was the brave soul who … Next Page »

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Anyone who says software startups don’t bring in big investment dollars anymore, clearly hasn’t been paying attention to Urban Airship.

Beyond being one of a new and interesting class of startups that are part software, part mobile, the Portland, OR-based company is bringing in some major financing, including its $5.4 million Series B round led by Boulder, CO-based Foundry Group.

The investment, being announced today, comes only six months after Urban Airship inked its initial $1.1 million investment from True Ventures, and Seattle-based Founder’s Co-op. Both initial investors also participated in the Series B. As part of the deal, Foundry Group managing director Jason Mendelson has joined Urban Airship’s board of directors.

So what kind of powerhouse business does a new software company have to be involved in to get such uncharacteristically large sums of funding in this age of bootstrapping, and cheap pay-as-you-go cloud-computing infrastructure for startups? Two words: mobile messaging. Essentially Urban Airship builds software that gives mobile providers and app developers the ability to power “push notifications.”

If you’re a smartphone user, you’ve more than likely received a push notification or two, and you might be wondering what’s so special about something that is, essentially, a text message? The answer is that push notifications are not really like text messages at all. While they may look like SMS messages, they are actually sent over the data network, not the voice network. This makes them cheaper to send, and means they can be received by customers even if the particular app on the mobile device it correlates to isn’t open—hence the term “push.”

Since the company was founded in June 2009, it has attracted some big-name clients, including Universal Music Group, Dictionary.com, Virgin Atlantic Airlines, Mashable, LivingSocial Deals, Newsweek, the Democratic Party, and fellow tech startups Tapulous, Gowalla, and Z2Live. In September, the company teamed up with another Seattle-based company, Ground Truth, to offer its services to the Verizon Developer Community, a partnership with chief executive Scott Kveton says has made Urban Airship the “preferred provider for network notifications across their network of over 100 million subscribers.” Saying the company has grown fast would be an understatement.

Greg spoke with chief executive Scott Kveton back in March, and got the skinny on how the startup erupted into the mobile world and inked some of its big initial clients (here’s a clue: their strategy heavily involved donuts).

At the time, the company had just hired on two new employees, for a grand total of eight. Kveton says Urban Airship has hired another six in the past six months, and plans to use its most recent funding round to double that number in the next year, “to hire folks to meet the demand of the products.” And Kveton fully expects the growth spurt to continue. “We’ll have plenty of room to house our continued growth,” he says. The company has just signed a shiny new lease for a 2,500 square foot building in downtown Portland.

The company has performed well enough to justify the new digs. Last March, Urban Airship had 1,600 customers. Today they have more than 4,000.

“Since we did our Series A back in February, things have really continued to take off for us,” he says. “What we have built is a mobile services platform that app developers and publishers can build into their apps, giving them the ability to more easily engage, and monetize on their platform. And what we’re finding is that our customers really like the ability to directly engage with push notifications, and monetize on a regular basis.”

To date, Urban Airship has facilitated the sending of more than 1.2 billion notifications. The company is clearly riding the wave of growth in the broader smartphone market. An estimated 77 million smartphones were sold in the third quarter, a 78 percent increase over the same period a year earlier, Kveton says.

“We’re sending around five to ten million notifications a day, and we’ve seen that growth really take off,” Kveton says.

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