We hope to make this a regular feature in our Xconomy cities. It’s a look at small financings of private companies in tech, life sciences, and cleantech. These are deals in the roughly $100,000 to $1 million range, and they’re increasingly where the action is for local entrepreneurs, yet they’re often harder to track than the bigger deals we tend to report on.

And there were at least 12 of these smaller financings in the Northwest in October (see table below), according to ChubbyBrain, a New York-based information services company tracking VC, angel, and other investments in private companies. ChubbyBrain gets its data from regulatory filings, user submissions, and other sources, and this is the second monthly installment of “under the radar” deals in the Seattle area (you can see the previous deals for September here). The data didn’t include the investors or the stage of financing.

A few quick observations: Like the previous month, most of the financings were in Washington (7 out of 12), but a significant number (5) were in Oregon. Most were equity deals (7), with the rest (5) being debt financings. The majority of financings (9) were in software, Internet, or tech, while a much smaller number (3) were in life sciences and healthcare, and no cleantech or energy deals made the list.

If nothing else, these lists are a cool way to hear about emerging startups we otherwise wouldn’t know about. For example, I’ve heard of Teranode, Nearlyweds, and 1000Museums before, but Zapproved and Intellisist are completely new to me.

Here are the 12 “under the radar” deals from last month:

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Qliance Medical Management, the Seattle-based company that operates primary care clinics that don’t accept insurance payments, has been selected for a one-year pilot program to offer services to members of Washington state’s largest employee union. The agreement is with the South Health & Wellness Trust, which provides health benefits to 50,000 union members and their families in Washington state, including those represented by the United Food & Commercial Workers. Members of the trust who join the Qliance plan will pay $3 a week—$156 a year—to get unlimited access to Qliance primary care services, and will also get full wrap-around insurance coverage for specialists or emergency services that Qliance does not provide.

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Healthcare deals are going one way, tech deals another. That’s my read from the past week in the Northwest, where we’ve seen some of the biggest biotech deals around, even as a prominent Seattle tech venture firm (and software financings in general) head south.

—Bothell, WA-based Alder Biopharmaceuticals scored one of the biggest biotech partnerships of the year, as Luke reported today. The company has formed a collaboration with Bristol-Myers Squibb (NYSE: BMY) to develop Alder’s experimental rheumatoid arthritis drug, ALD518, and the deal could be worth more than $1 billion. In exchange for granting Bristol a worldwide exclusive license to develop ALD518 for all uses except cancer, Alder will get $85 million upfront, as much as $764 million in development and regulatory milestone payments, sales-related milestone payments that could exceed $200 million, and royalties on product sales.

—I took a look at the venture and debt financings for Washington companies last month (and the previous two months), and concluded that large investments in software startups aren’t coming back anytime soon. The data, courtesy of New York-based ChubbyBrain, shows most of the money is in healthcare and life sciences.

—Kirkland, WA-based Clearwire has secured an additional investment of $1.5 billion from Sprint, Comcast, Time Warner Cable, and Intel, as first reported by the Wall Street Journal. Google, a previous investor, is not participating in the round. The money will support Clearwire’s (NASDAQ: CLWR) deployment of its WiMax broadband network.

—Verathon, a Bothell, WA-based maker of ultrasound technology, has been acquired by Sarasota, FL-based Roper Industries (NYSE: ROP) as part of a pair of transactions worth a combined $356 million, as Luke reported. The price of Verathon’s sale by itself was not announced. The company develops a 3-D diagnostic imaging tool that helps doctors diagnose bladder disorders.

—One of Seattle’s most prominent tech VC firms will not be raising another fund or making new investments. Len Jordan of Frazier Technology Ventures confirmed the news as he announced he’s moving to Madrona Venture Group at the beginning of next year.

—Bellevue, WA-based Light Sciences Oncology has lined up $35 million in follow-up financing to develop its drug-device treatment for cancer, as Luke reported. The investors weren’t disclosed, but the deal gives Light Sciences the right to access a $23.3 million line of credit, and $11.8 million more if investors choose to exercise warrants. The company raised $40 million from undisclosed VCs last year.

—Seattle startup Movaya Wireless has been acquired by Digby, a mobile commerce firm based in Austin, TX, for an undisclosed price. Movaya was founded in 2006 by Phil Yerkes and Stanley Wang, and focuses on making digital goods storefront applications for the iPhone, Android, and mobile Web platforms. The company’s development team in China will serve as the basis for Digby’s operations in Asia.

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Early-stage software and IT deals are a scarce breed these days. That’s my initial take from looking at the October funding numbers for Washington state, courtesy of ChubbyBrain, a New York-based information services company that makes tools for investors, startups, and entrepreneurs.

According to ChubbyBrain’s stats, Washington tech, life sciences, and cleantech companies raised a total of $69.75 million last month—down from $84.9 million in September, but still up from $51.4 million in August. There were six venture deals in October, worth a total of $59 million (see below), to go along with three debt financings (a total of $8.35 million) and an unattributed financing round of $2.4 million.

The venture deals were dominated by a $30 million Series A round for Integrated Diagnostics, Lee Hood’s early disease detection startup, and a $22.5 million financing for PopCap Games, the 10-year-old company’s first outside funding round. Looking at the past three months, it’s clear that large early-stage software deals aren’t coming back anytime soon. (You really have to look at the sub-$1 million deals to get an idea of the activity in software and IT, at least in the Northwest.)

In addition to the VC deals, there were three debt financings in the ChubbyBrain stats (and previously reported in Xconomy): Kennewick, WA-based solar developer Infinia raised $3.25 million; Seattle-based lab automation company Teranode raised $900,000; and Kirkland, WA-based health-tracking firm Veratect raised $4.2 million. Lastly, Spring Wireless, a Brazilian company that set up North American headquarters in Seattle early this year, raised an unattributed round of financing worth $2.4 million.

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Just came back from the Washington Biotechnology & Biomedical Association’s annual meeting in downtown Seattle, where 500-plus biotechies and distinguished guests (including more than a few local politicians) gathered for a quiche-and-berries breakfast and some keen networking.

The keynote speaker was Elias Zerhouni, the former director of the National Institutes of Health and now a senior fellow at the Bill & Melinda Gates Foundation. Just a few highlights from his talk here:

Zerhouni laid out the top five challenges in public health, as he sees it. Nothing too surprising, but a good way to frame the whole healthcare discussion:

1. The shift from acute to chronic conditions. (“This is a worldwide issue,” he emphasized. “This is the new global health horizon.”)

2. Aging population.

3. Health disparities.

4. Emerging and re-emerging infectious diseases. (Pandemics, for example.)

5. Emerging non-communicable diseases. (Things like obesity and depression, the latter of which the World Health Organization predicts will be the No. 1 cause of disability and dysfunction for people aged 25-44.)

As a world-class radiology researcher, Zerhouni also spoke to the scientific challenges the industry faces. He said the fundamental scientific barrier to doing “translational” research—that which leads to new products like drugs or devices—is the complexity of biological systems involved in diseases. “The explosion of data does not equate to explosion of knowledge,” he said. (This is a common theme across all fields of science and technology.)

On this front, Zerhouni stressed the importance of both external and internal sources of innovation. Meaning, the state of Washington should “find ways of bringing in collaboration on the translation or creation of knowledge.” He pointed out that “building relationships with the Asian Rim is probably your strategic advantage.”

For the politicians in the audience, Zerhouni noted, “Today when you get elected or not elected, the main driver is jobs, jobs, jobs.” He said his dream is that in a few years, biomarkers and healthcare stats will impact political campaigns, to the tune of, “In my district, Body Mass Index has dropped from X to Y.” (Luke previously reported on the issue of jobs being the driver of public support for biotech.)

The last issue Zerhouni addressed was a particularly interesting one: culture wars around science and technology. “Don’t be oblivious to the political, cultural, and moral aspects” of biotech and biomedical work, he said. “Be careful to not assume that everyone in the world believes what you do is holy and good.” Having dealt with the profound issues of evolution vs. creation in Washington DC—most notably in the context of stem cell policy—Zerhouni was sharing some hard-earned wisdom that everyone in the room could take home with them.

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IRobot (NASDAQ:IRBT), the Bedford, MA-based maker of robots such as the Roomba for vacuuming and the PackBot for the military, revealed today that it has created a healthcare unit to focus on developing robots that help seniors live independently in their homes. Technology veteran Tod Loofbourrow is heading the new healthcare unit as its president and will report directly to iRobot CEO Colin Angle, according to the company. Angle is expected to discuss the company’s healthcare strategy today at the TEDMED conference in San Diego.

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American Well, the Boston-based company that provides a Web-based system in use by several large health plans to let their members consult with doctors over the Internet, has raised $10 million in new equity funding, according to a regulatory filing today. The documents don’t name the funders in the round, continuing the company’s track record of secrecy around the amount of financing it’s raised and the identities of its investors.

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It was a light week for deals in the Northwest, but there were still some big investments in online advertising and social business software. (Not to mention we’re all trying to confirm the rumors of an Ontela acquisition of Photobucket.)

—Venture capital stats for the quarter ending Sept. 30 were released from multiple sources in the past couple of weeks. The latest report, from MoneyTree / PricewaterhouseCoopers / National Venture Capital Association / Thomson Reuters, says $242 million was invested in 30 Northwest companies. That marks a bit of a recovery for the region, as Seattle-area investors Andy Dale (Buerk Dale Victor), Thomas Hodge (Frazier Technology and Healthcare Ventures), and Scott Jacobson (Madrona Venture Group) told me about on Monday.

—Portland, OR-based Jive Software raised $12 million in Series B funding from the Silicon Valley venture firm Sequoia Capital. Sequoia had previously invested $15 million in Jive back in 2007. Jive Software makes social business software that helps companies and employees collaborate more effectively using social networks, as well as monitor and interact with online communities.

—Bellevue, WA-based AudienceScience confirmed it has raised $20 million from existing investors Mayfield Fund, Mohr Davidow Ventures, Integral Capital Partners, and Meritech Capital Partners. AudienceScience (formerly Revenue Science) makes software for targeted online advertising. Luke broke the funding news last week based on a regulatory filing.

—Bellevue, WA-based Visible Technologies, a maker of software that helps companies monitor social media and manage their reputations online, formed a strategic partnership with In-Q-Tel, the investment firm run by the CIA. Financial details weren’t announced, but the deal includes a technology development agreement. Last week, Visible Technologies said it had raised $2 million more from existing investors, bringing the company’s total funding to $23.5 million.

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Woe is me, said the VC. With the exit markets all but closed, fundraising in a logjam, and portfolio companies struggling to stay afloat, it is a tough time to be a venture capitalist. Yet the good ones will survive, and thrive. As will the companies they are building.

That’s the message I got from chatting with a few prominent Seattle investors yesterday, after the release of the third-quarter venture stats from the entity that I’ll call MoneyTree / PricewaterhouseCoopers / National Venture Capital Association / Thomson Reuters. Indeed, there were enough interesting investments made in Northwest companies to give local VCs some encouragement (see top 10 list of deals below). In fact, some $242 million was invested in 30 Northwest companies during the third quarter, according to the report. That’s the most dollars invested in a quarter since the third quarter of last year ($280 million in 44 companies).

“For four quarters we’ve had growth. Things are up off the bottom,” said Andy Dale of Buerk Dale Victor. “We’re still a top-five market.” Dale also maintained, as he pointed out last quarter, that 10 or more of the 15 members of the Evergreen Venture Capital Association are actively making investments.

Thomas Hodge of Frazier Technology and Healthcare Ventures is similarly hopeful. Frazier co-led the region’s biggest financing deal of the year, Seattle-based Calypso Medical’s $50 million round announced last month. “As the economy improves, and we’re seeing it already, VCs will put more money to work. We feel that in our gut,” Hodge said. “First-time financings for us aren’t as busy as a year ago, but they’re consistent with national figures.” He added that in the healthcare space, later financing rounds are getting bigger, because it takes even more money to get to profitability now, and there’s “a longer holding period because of volatility in the markets.”

Scott Jacobson of Madrona Venture Group pointed out that in the IT sector, consumer software could be making a comeback—he points to recent investments in companies like …Next Page »

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Did you know that Goldie Hawn, David Blaine, and Martha Stewart are coming to San Diego at the end of October to discuss…healthcare? Probably not, maybe because the exclusive TEDMED2009 conference is $4,000 to attend, and already sold out. TED stands for Technology, Entertainment, and Design, and its conferences aim to bring together people from different backgrounds to stimulate innovation. The TEDMED conference is independent from TED, but appears similar in style.

BIL conferences piggy back on TED conferences, offering a more informal, affordable, ‘grass roots’ option. BIL is not an ‘official’ acronym, and was honestly chosen based on the ’80s movie “Bill and Ted’s Excellent Adventure.” Perhaps to signify the BIL conferences’ universal appeal and inclusiveness, different words beginning with B, I, and L appear each time you visit their websites (for example ‘Beauty, Inspiration, Logic.’). BIL conferences have been described as ‘(providing) an irreverent counterbalance to the wide-eyed earnestness of TED.’ The BIL conferences are organized as so-called ‘unconferences’ which are free and attendee-driven, and BIL:PIL is the healthcare ‘flavor.’ A few of the BIL:PIL speakers are invited, and others submit their talks to be voted on. Like TEDMED, it will bring together visionaries from different fields and disciplines, including scientists, patient advocates, and leaders, to discuss healthcare. Indeed, some TED speakers have been known to leave its posh settings to have fun with the BIL attendees, which in this case would mean a trek from the Hotel Del Coronado to San Diego State University’s BioScience Center.

If the BIL:PIL conference is free, does that mean the speakers will be less qualified? Not really. What BIL:PIL lacks in hype, it makes up in the passion of its organizers, who champion the event. I met BIL:PIL founder Jonathan Sheffi, formerly of Amgen and currently attending Harvard Business School, in Washington DC, and he described his vision for the conference. What follows is Sheffi’s ‘pitch’ for the conference.

“Healthcare innovation is too important a topic to be left to a select few. Through the unconference model, we’re inviting all healthcare pioneers to share their work with the world. Whether it’s the latest innovation in stem cells, a new way for patients to find each other online, or a revolution in open science — the world is waiting to hear from you. More importantly, San Diego’s great promise as a world leader in healthcare makes it the ideal host for this event.”

Sheffi has been successful in securing many thought leaders in the so-called healthcare 2.0 movement, which aims to use tenets of new and social media to revolutionize the industry. Speakers range from those using lessons from Harvard Business School to lower healthcare costs, to virtual reality software, to online communities for patients. One of the headliners is Joe Trippi, well known …Next Page »

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Just about everyone loves a good pie…chart, that is. If you’re one of those, read on.

On Tuesday, we ran a story here in Boston about all the September venture deals in Massachusetts—and then my colleague Bruce followed that up a bit later that same day with a national roundup of third-quarter venture figures.

Both those stories relied on data provided by our partner ChubbyBrain, a New York-based information services company developing tools for investors, startups, and aspiring entrepreneurs. And they contained a few interesting charts and tables.

Today, though, I can’t resist sharing more of the details on Massachusetts from ChubbyBrain’s extensive third quarter report, “Pulse of the Innovation Economy,” which holds far more information about venture deals numbers, VC dollars invested, hot sectors, and stage of investments than we could cover in our more general posts on Tuesday.

So here we go. If your eyes are having a bit of trouble picking out the details, just click on any image to enlarge it.

The Bay State and New England are distant seconds—can anyone say “California?”—in both deals and dollars.

VC investment in MA showed a nice rise in Q3 vs. Q2 of 2009.

VCs took some vacations in August.

Burlington?

Healthcare and Internet dominate—but there is diversity of investment.

Whoever said early-stage deals are dead in MA is dead wrong.

We got our Web on.

No. 2 in mobile and telecom. Cowboys in Colorado and Texas closing in?

Has the bloom gone off the cleantech rose?

I live in Cambridge.

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Venture financing perked up last month, at least for a handful of Seattle-area startups and young companies. VCs and corporate investors poured $76.9 million into five Washington-based companies in September, according to data provided to Xconomy by ChubbyBrain, a New York-based information services company that develops tools for investors, startups, and entrepreneurs. There were also two debt financings worth a total of $8 million.

The total funding of Washington companies, $84.9 million, is up from $51.4 million in the previous month (and that figure included a couple of companies whose headquarters are out of state). But the September increase is largely due to one especially big transaction.

The largest deal by far was Seattle-based Calypso Medical’s $50 million Series E financing, led by Skyline Ventures and Frazier Healthcare Ventures. It’s the biggest venture deal in the Northwest so far this year, and you can read about the story behind the financing here—Calypso has overcome some challenges in the past year. The company makes a medical device that pinpoints radiation in ways that are supposed to help minimize the side effects of prostate cancer treatment.

The September deals were concentrated in medical devices and healthcare, with a few smaller deals in software and tech. The biggest financing in software was Bellevue-based VoiceBox Technologies, which raised about $13 million from corporate investors in Asia, including AutoNavi, Inventec, MiTAC, and the Morningside investment fund. But that money was raised over the course of the past year, with the company officially announcing it in September after a regulatory filing let the cat out of the bag. VoiceBox makes speech recognition systems for cars and mobile applications.

The venture deals (see Table below) were spread evenly among early, mid, and late-stage financings. The only Series A deal was Seattle-based Integrative Diagnostics, which raised $7.5 million for early cancer detection. The company was founded by biotech pioneer Leroy Hood.

In addition to the venture deals, Redmond-based Spiration (which makes a medical device for treating lung diseases) raised $7 million, and Kirkland-based SchemaLogic (which makes software to manage metadata) raised $1 million in a pair of debt financings.

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Laugh, and the world laughs with you. Weep, and you weep alone (as the old saying goes). Or maybe not. Maybe no one weeps alone anymore, what with Twitter, Facebook, and the like.

This week’s release of a “sentiment analysis” product from Seattle-based Appature made me think about what’s really going on at the intersection of social media and semantic understanding of the Web. Appature is an up-and-coming, already profitable startup that has made its name in helping companies in the healthcare industry better understand their customers, so as to deliver more effective marketing campaigns. It has made inroads with big customers, like Johnson & Johnson and Microsoft Health Solutions Group.

Appature’s latest offering “allows marketers to close the loop between the pulse on the broad Web and their non-Web business in an immediately actionable way,” says Kabir Shahani, Appature’s co-founder and CEO. “It’s the linkage between the broader Web and the other information you already have about a customer or prospect, with immediate action built on top of this, that is the key here.” In other words, it’s not just about market awareness, it’s about directly driving revenues—by monitoring and understanding positive and negative feelings about brands, products, and other industry topics, gleaned from blogs, Twitter, Facebook, other social sites, and Web documents.

It’s a fast-moving trend, and there are now enough Seattle companies working on this kind of technology to put the Northwest squarely on the “Web sentiment” map. (I haven’t talked to companies in Portland, OR, yet, though Jive Software comes to mind.) Here’s how it all works, in a nutshell. If you’re a marketer, you can buy software to help monitor and summarize what customers are saying about your brand on the Web. If you’re a big company, or an individual with a reputation to protect, you can even do things like change the visibility of search results that pop up on your name. And if you’re a regular old consumer, you can keep track of things like what percentage of people (and who) are saying positive or negative things about the iPhone, Microsoft, or Kanye West.

That kind of software is exactly what Seattle-based Evri rolled out in August. Evri’s calling card is that it scours the Web every minute of every day, trying to understand the semantic meaning of sentences on Web pages and documents. What’s more, its software makes connections between all the entities (names, places, products) it encounters on the Web. The broader goal is to give people a better way to browse and discover information.

“One thing we do which is really different is we actually say who or what is expressing the positive or negative sentiment, as opposed to simply remaining ambiguous,” said Deep Dhillon, Evri’s chief technology officer. “One of the reasons we can offer these more involved capabilities is due to the depth of our technology stack—because we know, for every sentence, who the subject, verb, object, etc. are.”

Which raises the question of just how far along the semantic technology …Next Page »

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When California Gov. Gray Davis created the California Institute for Telecommunications and Information Technology in 2000, it was part of a broad state initiative that spawned four new centers for science and innovation with a shared mission “to invent the future.” The specific mission for the institute known as Calit2 (Cal IT²), which is based at UC San Diego and UC Irvine, was to “radically expand the capacities of communications and information infrastructures.”

In the nine years that he has served as Calit2’s director, Larry Smarr has done all that and more. He describes the institute as a “collaboration framework” that enables researchers throughout the University of California to take a multi-disciplinary and systems-based approach to complex problems. As a result, Smarr says Calit2 has engaged hundreds of UC researchers, formed affiliations with over 300 federal agencies, and worked with more than 200 industry partners. “I have to say we’re pleased with the progress we’ve made,” he says. (Smarr talks about the origins of the Internet in Part 1 of my story here.)

But Smarr also is looking at the path forward. He tells me he’s spent the past six months “on a vision quest” to identify the large societal challenges that he anticipates the next decade will bring. And if there is a thread that runs through his vision, it is to harness the power of Calit2’s expanding resources—“to build across the successes that we’ve had”—to tackle four over-arching problems of the next decade. These are Smarr’s big ideas for what he calls the digital transformation of healthcare, energy, the environment, and of our culture itself:

—Healthcare. Smarr sees healthcare moving increasingly to “a prevention and wellness model” that relies on innovations in the emerging field of “wireless health” technologies and the digital transformation of medical care. In our conversation, Smarr compares the way it will work to an automobile maintenance schedule:

“I just bought a new car, a hybrid,” Smarr says. “It has 30 computers in it. It probably has another 60 or 70 sensors, actuators, and memory chips. So my car will easily run …Next Page »

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Seattle-based Appature announced late yesterday that it now provides “sentiment analysis” that lets healthcare marketers understand people’s feelings (positive or negative) about their brand, or other topics in their industry, from blogs and social media. Together with the rest of Appature’s marketing software, companies can do things like search against information in their Appature database about customers and prospects. Back in June, Appature released a Twitter search engine called Chatterfly. The company was founded in 2007 and is currently bootstrapped and profitable.

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The Northwest deal flow in the past week tended toward small partnerships and acquisitions. But there was still some significant activity in software, Internet, and entertainment.

—As ghostbuster Bill Murray once said, “Dogs and cats living together…mass hysteria!” Seattle-based Pet Holdings, operators of I Can Has Cheezburger (Lolcats) and other humor websites, formed an advertising partnership with San Francisco-based social network Dogster. Dogster will sell ads for the Cheezburger network in exchange for the greater traffic on Pet Holdings’ popular sites (which will hit 1 billion page views this week). Details of the revenue split were not given.

—The Washington Technology Industry Association (WTIA) joined forces with advocacy organization TechAmerica in Washington state, thereby broadening its membership to include more companies in hardware, electronics, and devices. WTIA has now become TechAmerica’s exclusive management and marketing partner in the state.

—Seattle-based Appature is getting close to securing its first round of venture funding. No deal has closed yet, but the bootstrapped and profitable healthcare marketing startup has generated a lot of interest in the VC community. Appature was founded in early 2007 and develops software that helps companies in healthcare, pharmaceuticals, and medical devices understand their customers better and do more effective marketing.

—Kirkland, WA-based Digeo, the home entertainment company backed by Paul Allen, was bought by Arris, a Georgia-based broadband communications firm, for $20 million in cash. Arris will acquire Digeo’s high-definition digital video recorder, called Moxi, along with about 75 Digeo employees and their expertise in video networking and multimedia services. About 10 Digeo staff members will lose their jobs in the transition, however.

—Seattle-based Maveron and Boston-based Spark Capital co-led an $8 million Series A investment in Altius Education, a San Francisco company deveoping online higher education programs through partnerships with nonprofit universities. The Noah Fund also participated in the funding. Maveron was founded in 1998 by Howard Schultz and Dan Levitan, and focuses on investments in consumer and tech companies.

—Microsoft (NASDAQ: MSFT) acquired the technology assets of Interactive Supercomputing (ISC), a parallel computing software firm in Waltham, MA, as Ryan reported. Financial terms of the deal weren’t given. ISC’s chief executive, Bill Blake, and the firm’s technical experts are moving into Microsoft’s New England Research & Development Center in Cambridge, MA.

—This was not a new deal, but I took a closer look at Bellevue, WA-based Ignition Partners’ investments in cloud computing and virtualization. The VC firm’s biggest win to date is XenSource, the Palo Alto, CA-based virtualization company that was bought by Citrix (NASDAQ: CTXS) for $500 million in 2007. Three other Ignition investments in the space—Skytap, InstallFree, and Xeround—are still in pretty early days, but are off to promising starts.

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Irish healthcare products giant Covidien (NYSE:COV) has reached an agreement to purchase Aspect Medical Systems (NASDAQ:ASPM), a Norwood, MA-based company specializing in braining monitoring technology, for approximately $210 million in cash, Covidien announced today. Aspect, founded in 1987, will become part of Covidien’s Oximetry and Monitoring product line inside the Medical Devices segment, according to a statement.

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Healthcare-IT is a hot topic in Seattle these days—and it’s about to get even hotter. Sources with knowledge of the company tell me Appature, a two-and-a-half-year-old Seattle startup focused on improving marketing and customer relationship management in the healthcare industry, is close to getting its first round of venture funding—and may even be the subject of a bidding war between venture capital firms in both the Seattle area and Silicon Valley.

I won’t reveal the identities of the VCs involved, because the deal hasn’t closed yet, but let’s just say they are some of the more prominent investors in software and tech. Appature was apparently considering a local deal (with a very different structure) when another Seattle-area venture firm swooped in with great interest—and probably a lot more money. Appature’s founders did not return e-mails seeking comment on the company’s strategy or funding status.

Appature is already profitable and has some big customers, including Johnson & Johnson and Microsoft Health Solutions Group. The company has been bootstrapped up to this point. In the past few months, we’ve reported on Appature’s Twitter search engine, Chatterfly, and CEO Kabir Shahani’s tech entrepreneurship award from BusinessWeek.

The startup is known for its marketing software, which helps companies in the broader healthcare industry do things like deliver targeted and personalized marketing campaigns (and measure their effectiveness in real time), track marketing activity and the performance of their corporate and community websites, and learn more about their customers via sophisticated business intelligence and analytics tools.

Appature was founded in early 2007 by Shahani and senior engineer Chris Hahn. They had met previously at Seattle-based social networking startup Blue Dot, which was backed by prominent angel investors including Richard Fade (now with Bellevue, WA-based Ignition Partners), and former Starbucks senior vice president Donald Valencia, who passed away in late 2007. In an early interview with Seattle-based nPost, Shahani said his startup’s main opportunity was in improving customer relationship management for medical device, pharmaceutical, and healthcare companies. Appature helps these companies “understand what’s going on in their organizations in regards to their customer segments and how they can drive more revenue,” he said.

Earlier this month, Appature was featured as “startup of the day” by Microsoft’s BizSpark program. In a published interview, Shahani said Appature has 11 full-time employees (five are developers), and is planning to expand its team by the end of the year. “We are in the fundraising process to commercialize our product and increase our time-to-market,” he said.

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Health care reform discussions almost always revolve around health insurance, as if care and insurance are synonymous. Understanding the difference can lead to the delivery of better care for less money, and help break the health care reform logjam in Congress.

An amendment introduced this week by U.S. Senator Maria Cantwell to America’s Healthy Future Act, currently being considered by the Senate Finance Committee, understands the difference. Senator Cantwell’s amendment would provide for coverage in a ‘direct primary care medical home’ plan, provided that plan is coupled with a quality wrap-around insurance program to cover non-primary care services.

What are direct primary care medical homes? They are primary care practices offering patients comprehensive primary care coverage outside of the traditional insurance system. They provide preventive and primary care, as well as chronic disease management and coordination of care with specialists and hospitals. Patients who elect this health care delivery model pay a flat monthly fee (ranging from $49 to $79 at my affiliated practice, Seattle-based Qliance Medical Group) for unlimited access to a primary care physician. This monthly fee covers everything from regular check-ups, women’s health exams, sprained ankles and broken arms to flu shots, and arthritis or diabetes management.

Direct primary care medical homes are already accomplishing what everyone wants health care reform to do:

• Lower costs

• Improve access

• Increase the quality of care

As a nation, we spend over $2 trillion a year on health care. We want to improve access, lower costs and expand quality coverage to the almost 50 million people who are currently uninsured – but we need to find a way to do this without breaking the bank.

There are ways to lower the overall cost of health care. An astonishing 40 percent of every dollar spent on primary care goes toward paperwork – either on the provider or insurer side – to complete the insurance reimbursement process. By eliminating the insurance payment mechanism and forming a direct relationship between a provider and patient, direct primary care medical homes have more resources available to spend on patient care.

The savings allow practices to offer more providers and longer office hours, even opening seven days per week. Smaller patient loads enable …Next Page »

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The role of information technology in healthcare reform is such a huge, sprawling topic that it’s hard to make any real progress in just an hour or two of discussions. Yet that’s just what transpired at a stellar event last night called “Healthcare-IT—Innovations That Will Transform Healthcare Now and in the Future.” It all took place at the Herban Feast in Sodo Park, South Seattle, and it was organized by the Washington Technology Industry Association.

Over some fancy appetizers, a distinguished panel of technologists, executives, and entrepreneurs debated everything from the technical and cultural issues of privacy and security in electronic medical records to who’s going to get a piece of the $19 billion in federal stimulus funding for digital healthcare; everything from whether consumers really want e-health enough to drive regulatory changes to—and this was particularly interesting to Xconomy—what the real opportunities are for startups in the space. The panel showcased some of the first-rate expertise we have here in the Seattle and Portland regions.

Moderator Joel French, the founder and managing director of Nephalios Group, a management consultancy, kicked things off by saying the whole healthcare debate boils down to four things: a cost problem, quality variability, access and coverage, and wellness. In each of these issues, IT plays an important role. “You can’t really share information if it’s not digital,” French said.

With that, it was open season on the panelists:

—Henry Albrecht, CEO of Bellevue, WA-based Limeade, an online health and productivity startup making software-as-a-service for employers (we reported Limeade raised money in July).

—Carla Corkern, CEO and chairman of Bellevue, WA-based Talyst, a company that makes software and systems to help pharmacies manage medications in hospitals and long-term care facilities (we reported on Talyst’s broader strategy and funding in June).

—Luis Machuca, CEO of Hillsboro, OR-based Kryptiq, a maker of collaborative software that lets healthcare providers share information with patients, labs, and physicians (we’ve reported on some of Kryptiq’s deals and customers, including NASA).

—Mohan Nair, executive vice president and chief marketing executive of Oregon-based Regence, the largest health insurer in the Northwest (he has a background in tech entrepreneurship).

—Michael Raymer, global market strategist and general manager for Microsoft’s Health Solutions Group (we’re reported on HealthVault, the company’s Web platform for medical records).

For the next hour, some tough questions flew out from the audience, and among the panelists. Here are my takeaways from the discussion:

1. “The magic pill is data liquidity.” That was from Luis Machuca, who argued that patients need to be able to own and access their own digital health information and use it to get better healthcare. “Universal health will fail, everything will fail, if we don’t have data liquidity and digitization,” Machuca said.

2. An open market, human behavior, and connectivity are important too. Nair argued that the present closed marketplace for healthcare services encourages entitlement instead of earned rewards. Albrecht noted that we should pay more attention to behavior, and less to technology. Raymer added, “Data liquidity needs to be coupled with tools to empower people to make changes, and connect people together.”

3. If you want better healthcare, go to jail. “We see the best compliance for …Next Page »

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