Companies in the health IT, electronics, and biotech spaces have all been making deals headlines this week.

—Wilmington, MA-based Lilliputian Systems, a maker of tiny fuel cells for powering cell phones and laptops, took in $11.1 million of a targeted $21 million equity- and rights-based financing from 14 investors, according to an SEC filing.

—Vigix, a Cambridge, MA-based maker of kiosks for dispensing goods from loyalty cards to iPods, nabbed a $1.5 million Series A-1 round, led by Waltham, MA-based Still River Funds.

—South San Francisco-based Genentech paid Cambridge-based Forma Therapeutics for the exclusive worldwide rights to a small-molecule drug program designed to starve tumors by blocking a molecular target involved in cancer cell metabolism. Genentech will also provide support for research, cover all the development costs, and agree to make milestone payments if the drug hits certain development goals. The kicker is that if the Forma drug reaches its development goals, Genentech can acquire the full rights to it, making an asset buyout payment that would be distributed to Forma’s investors, plus further milestone payments to Forma if certain sales goals are met, though Forma would miss out on the royalty stream.

—Nimbus Discovery, a Cambridge-based startup focused on computer-aided drug discovery, raised $24 million in Series A funding. The money came from Microsoft’s Bill Gates (a Nimbus seed investor), as well as lead investors Atlas Venture, SR One, and Lilly Ventures.

—-MC10, a Cambridge-based developer of products like biomedical sensors and consumer electronics that can bend and stretch, pinned down $12.5 million in funding. The Series B deal was led by new investor Braemar Energy Ventures, with participation from previous investors North Bridge Venture Partners, Osage University Partners, and Terawatt Ventures.

—InfraReDx,a Burlington, MA-based developer of medical devices, raised $24.1 million in funding from existing investors to help support clinical trials for expanded applications of its new coronary imaging system.

—Beverly, MA-based health IT firm Eliza snagged an investment from Parthenon Capital Partners, marking the company’s first institutional financing round. The funding will go toward providing partial liquidity to certain shareholders and to funding future growth initiatives for Eliza, which offers technology for communicating healthcare information to patients.

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Lilliputian Systems, a Wilmington, MA-based developer of fuel cells small enough to power mobile phones and laptops, has brought in $11.1 million of a potential $21 million offering of equity and options, an SEC filing shows. The money comes from 14 investors. Lilliputian raised $25 million in 2009, from Stata Venture Partners, Altira Group, Atlas Venture, Fairhaven Capital, Rockport Capital, and Kleiner Perkins Caufield & Byers.

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Let’s count the juicy consumer-Internet trends piled up in Seattle startup Lockerz: Social networking, photo sharing, gamification, deals, and original content. That’s a mouthful, and investors apparently like what they see—Lockerz’s $30 million venture round is by far the biggest equity deal in Washington state for the month of April, according to data compiled by research firm CB Insights.

Lockerz is led by Kathy Savitt, a veteran of Amazon.com. Also in April, Lockerz added another former Amazonian, Mark Stabingas, as chief operating officer. The site claims 18 million users, who earn points for watching videos, uploading photos (Lockerz previously acquired Plixi) and other social-networking interactions. The aim is to redeem those points for deals on consumer products. Lockerz is very well-financed for a Seattle tech startup—it previously had raised $30 million.

There was a tie for second-largest equity financing in April, with two companies raising $6 million each. One was Decide.com, a stealth-mode startup that says it is focusing on online consumer electronics shopping. The company was co-founded by University of Washington professor and Internet search expert Oren Etzioni. It’s led by CEO Mike Fridgen. The pair worked together on Farecast, the airfare-prediction startup that was acquired by Microsoft.

The other $6 million startup in April was Spokane-based ReliOn, which makes commercial and industrial fuel cells based on “proton exchange membrane” technology. The company has been around since 1995, but went through a name change in 2004, according to the corporate website. ReliOn says it has about 3,500 kilowatts’ worth of cells worldwide, and serves public and private customers.

Coming in fourth was Xeround, which raised $4 million. Xeround, based in Bellevue, WA, offers cloud-computing software to help businesses, primarily in the telecommunications industry, to help them manage their data. The company says it has developed an “intelligent data grid” that allows customers to put all their information in one place instead of having it scattered across multiple databases.

Rounding out April’s top five was Mpire, a Seattle-based advertising company that raised $3 million. That wasn’t the end of the company’s news last month: Mpire also named a new CEO, and changed its name, switching over to AdXpose—adopting the moniker of its marquee product. That was the completion of a switchover that the company started about a year ago, when it announced it was ditching its previous Widgetbucks advertising network to focus on the AdXpose technology, which is dedicated to “optimizing” ad spending online.

Check out the table for the rest of the month’s Washington equity deals, and a few debt financings to boot.

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Sunnyvale, CA-based Bloom Energy, a maker of solid-oxide fuel cells powered by natural gas, today introduced a power purchase agreement option called Bloom Electrons under which large organizations can install the company’s so-called “Bloom Box” fuel cells and lock in electricity rates over a 10-year period. At the same time, Dow Jones VentureWire is reporting that Bloom Energy has raised an additional $100 million in equity financing, adding to the more than $400 million it had already raised from Kleiner Perkins Caufield & Byers, New Enterprise Associates, and Morgan Stanley. The company has not commented on the new financing, but said in today’s announcement that 200 Bloom Boxes are being installed by customers such as the California Institute of Technology, Kaiser Permanente, Walmart, Coca-Cola, and Staples.

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Adaptive Materials, an Ann Arbor, MI-based developer of solid oxide fuel cells for use by the military and in recreational vehicles, has been acquired by UK-based Ultra Electronics Holdings. Adaptive Materials announced in a news released today that it will continue to develop and manufacture its propane-powered fuel cell systems from its current Ann Arbor facility.

Adaptive Materials is considered to be a Michigan success story, having taken its product from a University of Michigan lab to military contracts totaling about $45 million in the last decade, all without taking a dime of venture capital or angel funding.

Michelle Crumm, co-founder and chief business officer, explained to me in a two-part interview last spring (Part 1 and Part 2) that the company’s success was due to a decade of building relationships with military customers and refusal to accept “other people’s money.”

Crumm also told me the company was poised for big growth, moving from hundreds of units sold to the Department of Defense and the U.S. Air Force to thousands, in part because of a need for long-lasting fuel cells for “eyes in the sky” missions over Afghanistan. She told me that Adaptive was having some trouble finding qualified engineers in the area to fill nine vacant positions. Today’s news release says that the company still needs to fill 10 positions.

Crumm and her husband, co-founder Aaron Crumm, will retain their positions in the company, according to the release. Ultra Electronics COO Rakesh Sharma said in a news release that the takeover will allow the company’s Ann Arbor workers more of an opportunity for career advancement. Adaptive currently employs 65 workers.

Ultra Electronics serves niches in the defense, security, transport and energy market sectors.

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A complicated financing deal led by New Energy Capital of Hanover, NH, has provided $23.5 million for a renewable energy project in San Diego that uses methane gas from a sewage treatment plant to generate electricity from advanced technology fuel cells.

Construction is scheduled to begin next month on a “biogas” purification system developed by BioFuels Energy, an Encintas, CA, startup founded in 2007 to process gas generated at landfills, sewage treatment plants, and at large livestock facilities into usable methane. The plan calls for installing the gas processing at the Point Loma Wastewater Treatment Plant and the South Bay Water Reclamation Plant, which are both operated by the City of San Diego. The city currently flares methane gas generated during the sewage treatment process.

Molten carbonate fuel cells made by Danbury, CT-based FuelCell Energy (NASDAQ: FCEL) will be installed at the two treatment plants and on the campus of UC San Diego, according to Byron Washom, UCSD’s director of Strategic Energy Initiatives.

The fuel cell power plants at the three locations will be configured to provide heat and electricity, and excess methane gas will be injected into the natural gas pipeline delivery system operated under an energy credit initiative approved by the California Public Utilities Commission.

Methane needed to operate the largest fuel cell, a 2.8 megawatt plant at UCSD, will be supplied by San Diego Gas & Electric under the arrangement. Washom said the energy credit scheme, which is a first in California and probably nationwide, is comparable to withdrawing cash from an ATM in San Diego after making a deposit elsewhere. In this case, methane gas from the sewage plant is being processed to meet utility standards and injected into a gas pipeline near the sewage treatment facility in Point Loma. Meanwhile UCSD is withdrawing a similar amount of gas elsewhere for its power plant in La Jolla. The City of San Diego also plans to withdraw gas to power a sewage pumping station in Otay Mesa.

“We’re taking a waste product that is currently being flared and using it to … Next Page »

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Most of the time, we find out about companies that have collected venture investments one at a time, via announcements or regulatory filings from the companies themselves. Today Santa Clara, CA-based Intel Capital shook things up a bit, unveiling a big bundle of investments all at once.

The venture wing of the giant chipmaker said in an announcement at the Intel CEO Summit in Huntington Beach, CA, that it has invested $77 million across 18 companies spanning 11 countries, including  Brazil, China, Germany, India, Israel, Malaysia, the Netherlands, Russia, Taiwan, the Ukraine, and the United States. All of the companies on the list are working on technologies that relate to Intel’s core PC and server processor business, or to what it called “adjacent” areas of computing such as Internet-based video delivery and consumer electronics.

The amounts Intel invested in each company weren’t revealed. Four of the companies hail from Xconomy home cities, including Ortiva Wireless in the San Diego area (as Bruce reported); Lilliputian Systems in New England; and Verismo Networks and YuMe in the Bay Area. Here’s the full list:

Adaptivity (Charlotte, NC)—IT design and implementation
Althea Systems (Bangalore, India)—Cloud-based video discovery
Anobit (Herzeliya Pituach, Israel)—NAND flash memory products
boo-box (São Paulo, Brazil)—Social media ad distribution
De Novo (Kiev, Ukraine)—Ukraine’s first enterprise-class data center
IPTEGO (Berlin, Germany)—network optimization software
Layar (Amsterdam, Netherlands)—augmented reality platforms for mobile devices
Lilliputian Systems (Wilmington, MA)—small fuel cell batteries for consumer electronics
Ortiva Wireless (La Jolla, CA)—mobile video delivery
Rock Flow Dynamics (Moscow, Russia)—hydrodynamic modeling software for underground oil and gas reservoirs
Select-TV (Kuala Lumpur, Malaysia)—Internet-based television deployment
SilkRoad Technology (Chicago, IL)—SaaS-based talent management for businesses
Taifatech (Jhubei City, Taiwan)—chip design for digital video delivery systems
Videon Central (State College, PA)—software services for digital media product development
Verismo Networks (Mountain View, CA)—open Internet TV platform
WinChannel (Beijing)—information and sales management software for the consumer industry
YuMe (Redwood City, CA)—vide ad delivery across mobile, desktop, and television Yummly.com (Palo Alto, CA)—semantic search and recommendations for food

Intel also said it had made follow-in investments in five firms: Fonality, GainSpan, JackBe, TecTotal, and Wortal. As Bruce noted, Intel said that it’s been an “excellent” year so far for companies in Intel Capital’s portfolio, with 28 companies exiting this year through either an IPO or acquisition. In 2009, Intel put $327 million into 107 companies, about half of which were outside the United States.

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Mechanology, an Attleboro, MA-based cleantech company, has raised $5.8 million in an equity offering that could total $6.5 million, according to an SEC filing. Four investors participated in the financing, according to the federal documents. Mechanology, first founded in 1989, has previously received funding from the Department of Energy to design a more efficient air management system for automotive fuel cells, using its compressor and expander technology.

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There’s a new cleantech player in town. As we and other media outlets reported last week, Watertown, MA-based A123Systems (NASDAQ: AONE) has spun out a new company called 24M Technologies, which is developing a new kind of energy storage system that combines aspects of lithium-ion and flow battery technologies. The company announced today it has raised $10 million in Series A venture capital from Charles River Ventures and North Bridge Venture Partners. It also said it is collaborating with MIT and Rutgers University on a project supported by a $6 million grant from ARPA-E, the relatively new research agency within the U.S. Department of Energy.

The announcement is a strong PR push for Cambridge, MA-based 24M as a separate entity, but the company isn’t giving many details about its technology or business strategy just yet. A123 and North Bridge Venture Partners did not respond to requests for comment last week. (It’s not totally clear to me why A123 would spin this company out instead of keeping it in-house, where it would seem to have enough resources.)

Here’s what we know so far. 24M’s technology originated at A123, the lithium ion battery maker, and was further developed at MIT. It combines aspects of rechargeable batteries, fuel cells, and flow batteries. A flow battery pumps liquid electrolyte (often stored in external tanks) through an electrochemical cell to produce electricity. 24M says it is targeting energy-storage applications such as transportation—presumably hybrid and electric vehicles—and the power grid.

The latter is certainly a long-term problem in renewable energy; solar power and wind farms won’t go very far without more efficient ways to store the electricity generated. It sounds like 24M, like many other companies, is looking to develop technology that will store more energy in a given amount of space, for less cost than existing batteries.

A123 has an unspecified equity stake in 24M, which is led by president and co-founder Throop Wilder, who is a veteran of the IT world. Wilder was previously involved with Crossbeam Systems and American Internet Corp, among other tech companies. His fellow 24M co-founders are MIT scientists Yet-Ming Chiang (co-founder of A123) and W. Craig Carter.

“We believe that 24M’s technology has the potential to reduce energy storage costs for transportation and grid applications, and we look forward to helping the company as it leverages our research innovations for the development of commercially viable systems,” said A123’s CEO, David Vieau, in a statement.

Some other interesting details about 24M have been reported elsewhere. For those interested in the technical aspects, Martin LaMonica of CNET pointed to a patent for a “redox flow device” filed by Chiang, Carter, and others on behalf of A123 and MIT. This may or may not be related to the technology that 24M is working on. And 24M’s Wilder told Scott Kirsner of the Boston Globe that he originally met Chiang through North Bridge (which invested in A123), while Wilder was an entrepreneur-in-residence at Charles River. Wilder also said that 24M will be expanding to 10 to 20 employees within the next six months.

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Many software entrepreneurs and investors are looking to replicate their successes in cleantech. They are in for a surprise. While investors often have enjoyed quick returns in software, many of the opportunities in cleantech require longer-term commitments and overcoming some of the challenges outlined below.

Long Development Cycles. There is a reason it’s called hardware. Perfecting cleantech products takes longer than developing software. Bloom Energy took eight years to launch the Bloom Box, a solid oxide fuel cell that generates electricity at the site of use. Several years might well be required for prototyping, testing, monitoring beta products, and developing showcase projects. By comparison, the founders of YouTube raised $11.5 million and sold the company for $1.65 billion within 18 months.

High Capital Requirements. Cleantech start-ups require significant capital outlays to prototype and manufacture products. While engineering talent is the major cost for software startups, cleantech startups must also pay for materials, equipment, and fabrication. These costs can be substantial for the first run of a product that might require the development of proprietary manufacturing tools and cannot immediately benefit from volume discounts available to mass manufacturers. In 2008, venture capitalists invested $4.9 billion into 800 software companies and $4.1 billion into only 250 cleantech companies.

Ambiguous Policy Environments. Government policy can affect the software sector. But government policy can dictate the development of the cleantech sector, which remains plagued by ambiguity and uncertainty about the long-term availability of incentives. The development of a multibillion-dollar solar industry in not-so-sunny Germany demonstrates that steady government commitment can help to build the industry. The issue is further complicated by the fragmentation of incentives across different levels of government. While it’s beyond the scope of this article to argue for or against policies that favor certain technologies over others, it’s clear that incentives can create a window of opportunity for the development of new industries, while policy uncertainty can stall the development of new technologies as entrepreneurs and investors wait to see which technologies will receive favorable treatment.

Distorted Economic Incentives. A study by the Environmental Law Institute found that between 2002 and 2008, the U.S. federal government subsidized fossil fuels by about $72 billion and renewable energy by about $12 billion. Even with recent incentives and rebates for green energy, large and ingrained subsidies for fossil fuels distort the cost difference between non-renewable and renewable energy sources.

Certification Requirements and Building Codes. In January 2009, Greentech Media listed 150 solar companies. By May, the list had grown to 219. The proliferation of green technologies has led to waiting lists for certifications and confusion about technologies approved by building codes. Processing could be accelerated for system components that are equivalent to products already available on the market. For example, a product manufactured from a material rated safe by fire codes might get expedited approval.

Challenges to Growth. There are many challenges to ramping up production. Despite the discussions about green-collar job training, there aren’t enough workers trained in the business, manufacturing, and technical aspects of cleantech. In addition, it can often be time consuming and expensive to estimate project costs in cases in which the projects are not standardized. For example, installers must evaluate each site for a potential solar project to ensure that the conditions allow for the installation. In other words, just qualifying prospects is an expensive process.

Lack of Easily Scalable Channels of Distribution. Unlike software, which can be distributed relatively easily, cleantech products face geographically fragmented markets, distribution channels that have many layers, and the challenges of dealing with physical products, such as transportation and storage. This increases the costs and time required for new technologies to penetrate the market on a large scale. Power purchase agreements (PPAs) decrease the up-front costs of adoption for photovoltaic technologies, but the sales process is still significantly more involved than enticing potential customers to exchange videos of kittens riding a vacuum cleaner.

These challenges may lead you to conclude that the cleantech landscape is bleak, but I would like to argue otherwise. The renewable energy market alone is expected to grow to $254 billion by 2017, presenting an immense opportunity for entrepreneurs and investors. Patient ones.

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A collaborative program coordinated by the San Diego mayor’s office will provide a total of $150,000 in grants to help commercialize cleantech technologies being developed by three research teams at UC San Diego and San Diego State University.

The pre-seed funding comes at a time when local VC funding has evaporated, and many local technologists and entrepreneurs are struggling like hard-scrabble farmers to raise capital. The three $50,000 grants awarded by the San Diego Clean Tech Innovation and Commercialization Program are intended to fund proof-of-concept studies and prototype development, according to Jacques Chirazi, cleantech program manager for San Diego Mayor Jerry Sanders. Each of the three university research teams also will get business mentoring services from advisors working through the William J. von Liebig Center for Entrepreneurism at UCSD’s Jacobs School of Engineering.

The three grants, which were culled from 13 proposals, represent the second round of funding since 2007, when the city launched a cleantech initiative in collaboration with the von Liebig Center. The program awarded its first three $50,000 grants in late 2008, when it was called the The Clean Tech Innovation Challenge, as the nationwide recession was tightening its grip and the San Diego regional economy was in a free fall. The three recipients are:

—Software technology developed by UCSD computer science and engineering professor Rajesh Gupta and UCSD research scientist Yuvraj Agarwal helps reduce energy consumption in computer networks and server farms by enabling the machines to “sleep” when they’re not in use.

—Scripps Institution of Oceanography’s Alexander Gershunov, postdoctoral scholar Kristen Guirguis, and Stephen Bennett have developed new ways to forecast severe cold weather by as much as 40 days. The researchers’ technology could be used to develop customized risk assessments of supply chain management and energy consumption by using decision-support software that links weather and climate research.

—San Diego State University chemistry professor Douglas Grotjahn is developing and testing low-cost catalysts for generating hydrogen from water. The catalysts can be used in a system that uses water and sunlight to produce hydrogen.

The San Diego Clean Tech Innovation and Commercialization Program is a collaboration that includes the city of San Diego, UCSD’s von Liebig Center, San Diego State University, Cleantech San Diego, and UCSD’s Sustainable Solutions Institute. Lead sponsors of this year’s program include the Sempra Energy Foundation, the Kaplan Family Trust, the Ewing Marion Kauffman Foundation, and the Knobbe Martens Olsen & Bear law firm.

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Yesterday, we ran Part 1 of my interview with Michelle Crumm, co-founder and chief business officer for fuel cell manufacturer Adaptive Materials of Ann Arbor, MI. We discussed how it took a decade of old-fashioned hard work to get to a point where the company is signing deals to supply the military with the fuel cells needed for unmanned aerial vehicles and robots helping to fight the war in Afghanistan. Today, in Part 2, Crumm talks about how, despite the 7,100 resumes she received for nine open engineering positions, the company has had difficulty finding workers who fit her company’s culture.

Xconomy: I’ve not only been reading about these recent contracts Adaptive Materials has been getting, but also the fact that you’re hiring new engineers.

Michelle Crumm: If you can put that in there, I’d love to have a great systems engineer.

X: Absolutely. You know, the way I first heard about your company was that it had been Tweeted a few times that you were on a resume-gathering blitz, looking to hire nine new engineers. How many resumes have you collected?

MC: We had 7,100 resumes during that resume blitz. We pulled in 90 people to come in for short interviews, then we pulled in 20 of those to come in for day-long interviews, and we ended up hiring five people. So, we still have four open positions that we’re trying to fill.

X: You must have a pool of a lot of qualified candidates. There are a lot of talented engineers in the area who are out of work. How was the quality of the resumes?

MC: Well, I think the biggest challenge is that there are a ton of really smart engineers out there—and some of them are employed and some of them are not employed, unfortunately. The biggest challenge is can we find the right cultural fit, and that is a lot harder than just having a smart engineer that’s out of work. You know, it’s so much bigger than that. Do they have the right attitude? Can they come in and make decisions? Are they an empowered thinker? How quickly can they learn? So, it’s all those things that we’re interviewing for. It’s the core values of the company that’s our weed-out process. They’re all intelligent, they all have their plaques on their walls, there are great, talented, wonderful people out there, but just because they’re great, talented, wonderful people does not mean that they’re a great cultural fit for our organization. We’re still small enough that every single person, you know, they have to fit in culturally. Otherwise, they can tip over the apple cart.

X: Sounds like you still have that startup mentality. People have to be flexible, think on their feet.

MC: Yes, that’s the way we hire. Our technicians out on the floor, they may have a high school diploma but they need to have a strong enough personality to push back to the engineers and say, “This is not a manufacturable design. Let’s work on this together to try to get something that I can actually put together a lot easier.” I don’t need a technician. I need a technician that’s confident enough that they can stand up for themselves, that they can talk to the engineers and work together to get these products so they design for manufacturability. So much of it is just a personality issue.

X: Let me broaden the conversation a little more and talk about the funding environment. Venture capital in this area has been pretty dismal for a while. It’s improving a little bit, maybe for early stage companies or companies right out of academia. But you’ve mentioned before that there is gap for companies like yours. What needs to be done, culturally, to change that in this area?

MC: I’ve never thought that it made sense to have venture capitalists—we always call it OPM around here, Other People’s Money. Well, Other People’s Money, to me, is something that you take … Next Page »

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Something strange has been happening over at Adaptive Materials, a fuel cell developer based in Ann Arbor, MI. During the past few months, as everybody talks about how to get things moving forward in Southeast Michigan, Adaptive has been, well, actually moving forward.

A contract worth a few million from the Department of Defense here, an award worth another few million from the Air Force there, and more money to develop a product for the recreational vehicle market.

And then there’s the company’s recent resume-gathering blitz, hiring nine new engineers. That’s news in these parts (the company received an amazing 7,100 resumes for those nine plum jobs). So, I decided to find out what kind of magic is going on over at Adaptive Materials. I talked to Michelle Crumm, co-founder and chief business officer, and found out that there is no magic happening there at all. The success is the result of a decade of old-fashioned hard work and building of relationships.

Crumm also tells me that Adaptive just might be a victim of its own success now. The company made a decision 10 years ago not to seek angel or venture capital funding. She did not think it was right to use what she calls OPM (Other People’s Money) to fund a “wild and crazy idea.” A decade later, it’s no longer a wild and crazy idea. It’s a business getting ready to move from manufacturing a few hundred units to thousands. And the company could really use some non-government funding at this point. Trouble is, they’re just not wild and crazy enough to attract VC-style investors.

I’ll let Crumm explain what she means in her own words. Here’s an edited transcript of my recent talk with Crumm. Below is Part 1. We’ll run Part 2 later in the week.

Xconomy: First, let’s talk about your company, then we can broaden the conversation a little bit. Can you tell me the “elevator pitch” version of what your company does?

Michelle Crumm: Adaptive Materials started 10 years ago, and we’ve been focused on solid oxide fuel cells development. So, we’re an alternative energy development company. Our focus is portable power. In our early stage, we were primarily focused on military portable power for soldiers. Early successes in those programs, in the early 2000s, led us to getting to other power ranges—enough to power robots and airplanes.

So we provide [products] to “eyes-in-the-sky.” They get more power  when they’re flying unmanned aerial vehicles and longer duration capabilities when they have robots in the field. So, to protect them from IEDs [Improvised Explosive Devices], they can send robots out. About 12 hours is our most recent demonstration. So, about 10X longer mission for a robot in the field than a battery.

X: Is that being used in the field now?

MC: We have a small number of units out in different locations throughout the world for unmanned aerial vehicles and unmanned ground vehicles.

X: From what I’ve heard, there’s more of an emphasis on small, portable robotics in Afghanistan because of the mountainous terrain.

MC: Exactly. That’s been significant, just the change between the two wars. There’s definitely … Next Page »

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Welcome to Xconomy Detroit, a continuing chronicle of what this city is “becoming.”

The word “Detroit” has always been immersed in meaning far beyond the physical borders of this great and tragic city. At one time, there was no need to define what one meant by the phrase “coming out of Detroit.” It was synonymous with the very best of American ingenuity and progress. Time passes, and the D-word is almost an epithet.

Here’s what I think: “Detroit” is a verb.

It is constantly in the process of doing, of becoming, of moving from one state of being to another. This is true despite what you may hear or read about Detroit’s historic complacency as a one-industry town.

I have lived in Michigan most of my life. I know that Detroit is always seeking to become—even within the confines of its now-maligned “one industry.” There is a great deal of “becoming” contained within the knowledge, talent, creativity, and sheer willpower of the late, great automotive industry.

Even back in the mid-’80s, when I went to school at Wayne State University in Detroit, there was talk of renaissance, a common buzzword in Detroit. But it has taken just about my entire adult life for me to actually see the seeds of true renaissance.

A few weeks ago, I went back to my old Wayne State campus—where my father before me attended, as well—and was impressed by the bustle over at TechTown, a business incubator that has seen unbelievable growth just in the past year. I saw young go-go business types walking with bookish-looking scientists as they toured their new digs together. With 160 tenants, TechTown is full. TechTown Two is just being launched inside, appropriately enough, a shut-down old Cadillac dealership.

There is a hunger here. It comes out of necessity, certainly, as many talented people find themselves out of work, forced to become instant entrepreneurs. Hobbies become livelihoods. Long-held ideas are taken out of drawers and, thanks to incubators like TechTown, have a chance to breathe.

But TechTown is only the beginning of a new narrative for Detroit. And when I say “Detroit,” I am also talking about Northern Ohio and Southeastern Michigan, including Ann Arbor and the University of Michigan, which is placing more emphasis these days on spinning out companies and partnering with industry. University of Michigan President Mary Sue Coleman has a variation on an old academic mantra. At U-M, it’s “partner or perish” as the university aggressively pursues business relationships to turn academic ideas into business realities.

Lawrence Molnar, director of U-M’s Economic Development Administration University Center, recently told a congressional panel that universities are playing a key role in turning local economies around.

It is pretty to say, this idea of a turnaround, but it is hard to convey just how enormous the task is. Michigan lost about 80,000 manufacturing jobs just in the last year alone. Unemployment is the highest … Next Page »

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Adaptive Materials, an Ann Arbor, MI-based developer of solid oxide fuel cells, announced on March 29 that it has been awarded $3 million through Michigan’s Centers of Energy Excellence Program. The company said it will use the money to help commercialize its fuel cells in the recreational vehicle market, powering TVs, laptops, microwaves, and other appliances in RVs. The company also recently announced a series of grants supporting the other side of its business, providing fuel cells for the U.S. military.

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Adaptive Materials, an Ann Arbor,  MI-based developer of solid oxide fuel cells, announced today that it has been awarded $4.7 million to develop a 300-watt fuel cell system for the Department of Defense. This grant comes just three months after Adaptive Materials announced it had been awarded $3 million to develop 60-watt fuel cells for the U.S. Air Force. The grants have prompted the company to issue a call for resumes as it looks to hire nine new engineers to help fill the orders.

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You know how Hollywood always goes overboard with gizmos and hijinks when it’s trying to represent young people doing science? (I’m thinking especially of 1980s movies like WarGames, Real Genius, and Weird Science.) Well, the MIT Museum in Cambridge, MA, looked exactly like that last Friday as the annual “MIT Energy Night” event showcased dozens of energy-related research projects and entrepreneurial ventures, from photon-trapping dyes for solar concentrators to a Matrix-like project for extracting electrical energy from human body heat.

Organized by the MIT Energy Club and sponsored in part by local venture firms General Catalyst Partners, Polaris Venture Partners, and RockPort Capital Partners, the packed-to-capacity event was a celebration of the amazing variety of energy-related labs, projects, initiatives, clubs, and prizes at MIT. I wandered in around 6:00 p.m., got my green drink-ticket wristband, and spent the next couple of hours checking out the demos on solar, wind, and geothermal energy; building technology; electric vehicles; nuclear power; and even the out-of-favor but far-from-outmoded coal, oil, and gas industries.

Student-led poster presentations were the main dish at the event, but I was even more interested in the local energy companies who sent employee-ambassadors to the event. A quick rundown:

A123Systems—This Watertown MIT spinoff (NASDAQ: AONE), which makes advanced lithium ion batteries for electric vehicles, power tools, and the like, has garnered plenty of news lately for its wildly successful IPO. Like most of the other companies present, it seemed to have recruited its youngest employees to run its table—most of them looked like undergrads.

DyPol—I first ran into this membrane technology startup, a spinoff of Paula Hammond’s chemical engineering lab at MIT, at a venture-sponsored university research symposium last April. They’re working on a green, layer-by-layer method for building polymer membranes that, the company hopes, will be used in the next generation of methanol fuel cells to make the devices more efficient. But Juliet Duffy, an MIT Sloan MBA student who’s working for the company, told me that in order to generate revenue while methanol fuel cell technology matures, DyPol is also investigating nearer-term applications for its membranes, such as water filtration. Duffy says the company is seeking a seed investment so that it can rent and equip local lab space.

EnerNOC-–This Boston-based public company (NASDAQ: ENOC) has pioneered the area of “demand response”—Internet-mediated management of electrical demand, which helps utilities forestall construction of new energy generation plants to meet peak demand. It isn’t an MIT spinoff, and oddly enough, there isn’t a single MIT degree among its senior management team. But it’s involved in MIT’s energy entrepreneurship culture as a sponsor of the 2009 MIT Clean Energy Prize competition.

FloDesign Wind Turbine—Based in Wilbraham, MA, FloDesign won the $200,000 MIT Clean Energy Entrepreneurship Prize in 2008 and continues to test prototypes of its new jet-engine-like designs for wind turbines that sidestep the “Betz Limit.” (That’s the physical law that prevents open-fan wind turbines from extracting more than about 59 percent of the available energy from wind.) A staffer told me the turbine designs portrayed on the company’s posters, videos, and web materials are actually quite outdated, and that it isn’t showing off its latest designs in deference to … Next Page »

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It was a fairly quiet week for deals in the Northwest, with just a trickle of activity in software, computing, cleantech, and life sciences. But there was a hint that the IPO window may be about to open.

—Seattle-based Cray (NASDAQ: CRAY), the supercomputing company, acquired some assets from SiCortex, a Maynard, MA-based computing firm that shut down in May. Financial terms weren’t given, but Cray purchased compiler technology that could help it improve its own products and gain new customers.

—Luke reported that Seattle’s Infectious Disease Research Institute, a global health nonprofit, licensed technology from Israel-based NanoPass to use “microneedles” to stimulate immune system cells just below the skin surface, which might make new vaccines more protective. Financial terms were not released.

—Hillsboro, OR-based ClearEdge Power raised $15 million in equity financing, according to media reports, which cited a regulatory filing. The investors were not disclosed, but ClearEdge Power has been backed by the Kohlberg family, Big Basin Partners, and Applied Ventures. ClearEdge develops fuel cell systems for homes.

—Seattle-based Trubion Pharmaceuticals signed a global partnership with Redwood City, CA-based Facet Biotech to co-develop and market an experimental treatment for leukemia, as Luke reported. As part of the deal, Trubion (NASDAQ: TRBN) will receive a $20 million upfront payment, and Facet (NASDAQ: FACT) has agreed to buy another $10 million worth of Trubion stock. The news sent Trubion shares up more than 40 percent, to $5.45, about six minutes after the opening bell on Friday morning.

—Seattle-based Tuusso Energy, a solar power plant developer, has raised a $2 million financing round from Pivotal Investments, a Portland, OR-based venture capital fund focused on cleantech and sustainability. Tuusso’s first solar plant is scheduled to be completed in the California desert in 2011. The deal represents the first investment from Pivotal’s new fund.

—Omeros, a Seattle-based biotech firm, is preparing a renewed push for an IPO this fall, as Luke reported in an Xconomy exclusive. The offering, which could happen as soon as this month, would be the first IPO from a Washington company in more than two years (since Kirkland, WA-based Clearwire went public in March 2007). Omeros, which is developing a treatment to help people recover faster from knee surgery (among other products), previously tried to go public in January 2008.

—Xconomy broke the news that Seattle-based Marketfish, an online marketing startup, has raised an undisclosed amount of funding from private investors led by the Alliance of Angels. Marketfish, which was founded in July 2008, has developed a Web interface for connecting marketing agencies with list owners.

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Hillsboro, OR-based ClearEdge Power, a developer of fuel cell systems for homes, has raised $15 million in equity funding, according to PE Hub, Northwest Innovation, and others, which cite a regulatory filing. Investors in the current round were not disclosed, but ClearEdge was previously backed by the Kohlberg family, Big Basin Partners, and Applied Ventures.

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From Amazon to Zappos, it was an exciting week for deals in the Northwest. A lot of the news was dominated by Amazon’s biggest acquisition to date ($920 million), but there was plenty of other action in energy, biotech, software, and gaming.

—Xconomy broke the news that General Fusion, a Burnaby, BC-based clean energy company, raised $9 million out of a $12.5 million equity offering. The investors were undisclosed but include a syndicate from the U.S., U.K., and Canada, as Luke reported. The company’s board of directors includes members of GrowthWorks Capital and Chrysalix Energy in Vancouver, BC, Braemar Energy Ventures in New York, and Entrepreneurs Fund in London. General Fusion is developing a novel method of energy production called magnetized target fusion, and is currently working on a four-year, $50 million demonstration project.

—Bellevue, WA-based Limeade, a health-IT company, raised $2.4 million out of a $3 million equity offering, as Eric reported. The investors were not announced. Limeade makes software to help companies encourage their employees to reach wellness goals like losing weight or quitting smoking.

—Seattle-based Calypso Medical Technologies formed a partnership with Varian Medical Systems of Palo Alto, CA, to develop products that incorporate Calypso’s radiation-pinpointing technology into Varian’s software and devices for cancer treatment. Financial terms of the deal were not disclosed.

—Amazon (NASDAQ: AMZN) made its biggest acquisition to date, buying Henderson, NV-based online shoe retailer Zappos for some $920 million, as Eric reported. The blockbuster deal is expected to close this fall, and most of the money will come from about 10 million shares of Amazon stock. Meanwhile, Wade contributed an interesting (and surprising) take on how the deal affects a Boston-area robotics company, Kiva, that works with Zappos. Finally, Xconomy provided some more context for … Next Page »

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