Over the last week, 10 lucky companies have been getting the calls from HAXLR8R: they’ve been admitted to the inaugural session of the startup world’s newest venture incubator. Following the popular model pioneered by TechStars and Y Combinator, HAXLR8R will provide teams with a stipend of $6,000 per founder and about three months of mentorship, in return for a 6- to 10-percent equity stake. At the end of the session in June, companies will pitch their businesses to investors at a “demo day” in San Francisco.

There are just two big differences between HAXLR8R and all the other incubators. First, the program isn’t admitting software or Internet startups. It’s designed for companies building real stuff, rather than the usual mobile apps or consumer Web services. Second, it’s not actually located in San Francisco or any of the other typical U.S. startup hubs, like Boston, New York, or Boulder. In fact, it’s not even in the same hemisphere. HAXLR8R will gather its first class of startups at the Shiling Industrial Park in the Nanshan district of Shenzhen, a high-tech manufacturing city north of Hong Kong.

A recruiting poster for HAXLR8R

The theory behind the new program is that successful gadget builders—whether they’ve developed a toy, an appliance, or some kind of consumer device for health, fitness, or travel—will eventually have to figure out where to mass-produce their products. And chances are the answer will be China. Despite the new scrutiny being applied to U.S. consumer electronics companies over labor conditions in Chinese plants, China still has the world’s richest supply of low-cost manufacturing facilities, along with the engineers who know how to get them tooled up to make new things.

But to get something built in China, you have to know who to talk to, and the program at HAXLR8R is intended to smooth the way. Startups in the program will be “coming into an environment where they can work on their product and figure out how to manufacture it,” says Cyril Ebersweiler, one of the program’s co-founders. “They will get instant access to relationships which would take a year or more to develop on their own.”

HAXLR8R finished its selection process last week and began notifying the admitted companies. Ebersweiler says the program received “way more applicants than we expected,” from all over the world. The majority of the applications came from U.S. startups, but the organization also heard from companies in Europe, Asia, and India. The mix of applicants included “startup entrepreneurs, hackers, makers, and [people from the] open source movement; social entrepreneurs as well,” Ebersweiler says. “Most of the applicants have a working prototype.”

The 15-week HAXLR8R program starts on March 1. Teams will spend the first 13 weeks in Shenzhen, building their prototypes and gathering feedback from potential customers. Then they’ll decamp to San Francisco, where they’ll … Next Page »

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In a typical year, research at the University of Washington will spawn about a dozen promising young companies. In the next three years, the school’s new president wants to see that output double—and ground zero for a lot of those startups will likely be a new incubator space unveiled this week.

When renovations are complete, the UW’s New Ventures Facility will have space for about 25 startups, with some 23,000 square feet of space split roughly evenly between laboratories and offices.

The initial floor of office space is finished now, and the first startups are expected to begin stocking its cubicles and conference rooms in the coming weeks. Renovation of lab space will take a little longer—it’s expected to be finished in 2014.

UW officials aren’t waiting to start trumpeting what they say is another big step toward dramatically increasing the entrepreneurial output of the state’s largest higher education center. It coincides with efforts like the new W Fund, an early stage investment pool pegged at about $25 million that will concentrate on companies emerging from public universities in the state.

Young

Michael Young, the UW’s president, said the incubator on UW’s campus should help keep young companies and entrepreneurs in Washington by making sure they don’t have to hit the streets too early, where they might find a need to relocate to Silicon Valley.

“When businesses spin too quickly out of their university geography, the reasons for staying in the state begin to reduce, and all of the sudden sunny climates and higher degrees of venture capital and so forth begin to appeal,” Young said Wednesday. “And that is despite the fact that the real value-add is staying connected with the university for some period of time until it really has proved its worth, and has shown what that market niche is, and has developed that technology that truly is significant and truly is transformative.”

Rhoads

Young speaks from experience, having helped the University of Utah become a national leader in spinning out university research. Linden Rhoads, head of the UW’s Center for Commercialization, said Young’s “assignment” of doubling the school’s startup output will also focus on quality—”not just companies, but successful, thriving companies that will be a benefit to the community and a credit to the university. So really, we look at the applicants with that assigment in mind.”

Startups have to apply for the incubator, and once they’re in, will pay to rent spaces—a typical office setup would be about $220 per month, with a one-year contract. The incubator already has seven startups ready to move in, and is expecting a handful more to join the parade soon.

One of those companies is Envitrum, a startup founded by mechanical engineering students Grant L.S. Marchelli and Renuka Prabhakar. Envitrum turns waste glass that is too dirty to be recycled into bricks that can be used in finish construction, namely building facades. The bricks that Envitrum produces are 95 percent glass, but consume a third less energy to produce than typical construction bricks, while also showing that they’re stronger in tests, Prahakar said.

Envitrum is about two years old, and presently operating on grant funding. ”It’s this great green technology. But the question is, how do we actually make the other type of green?” said Ryan Buckmaster, who’s working with Envitrum through the Center for Commercialization.

As the New Ventures building fills up, that’s the kind of question that people should be asking a lot more often in the next few years.

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Long hours, breakneck deadlines, high stakes, and conflicting advice—it’s all part of the package when entrepreneurs submit a few months of their life to an incubator program in hopes of creating the next big thing. Not surprisingly, some groups crumble under the pressure, says TechStars Seattle director Andy Sack.

“The number one risk facing your company—whatever your business is—is internal combustion. That means team breakdown,” Sack said last night at a preview of the Mirosoft Kinect Accelerator program in Seattle.

Microsoft is partnering with TechStars for the three-month accelerator, which will be housed in Microsoft offices in the South Lake Union neighborhood—right next to Amazon headquarters.

Teams that qualify for the program will be developing businesses that use the Kinect on the Xbox 360 video game console and the Windows operating system. They’ll get access to a star-studded cast of mentors, including people inside Microsoft who are pushing some of the boundaries of the Kinect device, and a $20,000 investment from TechStars in exchange for 6 percent of the company.

Applications are due by tomorrow (Feb. 8), and hundreds have already poured in, with ideas ranging from advertising and entertainment to healthcare, education, and even manufacturing. The final 10 proto-companies to make the accelerator will begin their work in Seattle on April 2.

Sack and 2011 TechStars Seattle alum Russell Benaroya, co-founder and CEO of EveryMove, were on hand to give possible accelerator applicants an idea of what’s required to thrive in a TechStars-style program. They didn’t pull any punches, describing an intense experience that doesn’t always end well.

“There is nowhere to hide when you are surrounded by nine other teams that are, while collaborateive, also competitive,” Benaroya said.

One unnamed team in the last TechStars Seattle group “blew up” on the first day, Benaroya said. Another, LikeBright, broke apart shortly after the program’s Demo Day in November and has regrouped with one of the original founders taking on a new technical partner, Sack said.

Even groups without significant internal conflicts can run through huge changes to their idea or approach at a dizzying pace, and face what Sack called “mentor whiplash” from getting opposing advice from seasoned entrepreneurs and investors helping out with the program.

It’s the entrepreneurs’ job, Sack said, to take all the criticism and advice, but make their own decision about the best path for their startup. That instantly reminded me of this recent story about TechStars Seattle 2011 grad Romotive, which said a lot of mentors didn’t think their concept for a smartphone-driven toy robot would fly until a campaign on Kickstarter showed significant support for the idea.

But I don’t want to give the impression that their advice was all a huge buzzkill. It was candid advice for people considering taking the plunge into an intense experience that can hone their ideas into viable businesses. Seven of the 10 TechStars Seattle companies from last year have already raised financing, Sack said, with another apparently on its way. That includes Benaroya’s company EveryMove, an online platform where workers can earn rewards for healthy behavior—it’s raised $1.5 million so far, and is on track to make about $500,000 in revenue this year, he said.

“I guarantee you will put in more energy and effort—I don’t know if I’ll say more than you ever have in your life … but we are going to have fun while we work hard,” said Dave Malcolm, a former Microsoftie and TechStars mentor who is directing the Kinect Accelerator.

Here’s a short video of Microsoft’s JP Wollersheim showing off the Kinect hardware with Windows via the iClone 3D animation software from a company called Reallusion.

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

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

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

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

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

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

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

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

Still, there are signs of a freshening breeze.

David Cohen last week at UC San Diego

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

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

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

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The explosion in incubators for early stage tech companies has spawned a familiar startup storyline: A team of bright founders hits on a promising idea, builds a prototype, and applies to one of the big-name programs. After they get accepted (or sometimes even if they don’t), it’s off to the races for a few intense months of coding, meetings, demos, late nights, long weekends, and camaraderie.

And when it’s over, a big demo day where everyone shows off their hard work—and hopefully lands some investment to really get things going. Not as much ink is spilled about that day-after reality, when the wunderkind founders get to work actually building a business.

That brings us to Seattle-based FutureAdvisor, a startup that graduated from the summer 2010 batch of Y Combinator—biggest of the big-name startup incubator programs. Among the other companies produced in that group are Hipmunk, the travel-booking site, and Contagion Health, which has since merged with another company to form Habit Labs, also based in Seattle.

FutureAdvisor is a Web-based software service for individual investors who want help maximizing their retirement savings, but don’t have enough money to get the attention of a traditional financial advisor who typically focuses on bigger fish—all the better to earn fees.

FutureAdvisor focuses on index investing, a growing trend that eschews professional mutual fund managers in favor of pegging investments to stock market indexes compiled by financial firms, like the S&P 500 or the Russell 1000. FutureAdvisor is still in a beta phase, but says it’s now able to offer services to employees at the 15 biggest companies in the greater Seattle area, with many more in the pipeline.

The company was founded by Bo Lu, 28, and Jon Xu, 32, who met while working at Microsoft on a “skunkworks” project called Catalyst, which eventually became part of the new Windows Phone system—Lu worked on the technology that would become the all-in-one social networking feature on Windows Phone 7, and Xu helped build the system that tied together instant messaging and text messaging.

Once they knew they worked well together, and felt they’d been bitten by the entrepreneurial bug after working on a 40-person team inside the behemoth of Microsoft, Xu and Lu ran through some side projects until hitting upon the idea that would become FutureAdvisor. It’s actually based on a problem that Lu, an active investor since the age of 16, had seen with friends: People wanted his advice on how to allocate their money, but didn’t have the time, patience, or acumen to keep up with the homemade spreadsheet he’d been using since he was a teen.

“Immediately, Jon and I were like, ‘That looks like a software problem,’” Lu says. “So we made something, and we applied to Y Combinator with a super-ghetto prototype that, at the time, had my Fidelity credentials in the code base.”

“But at least it was fast,” Xu says with a smile.

That was the spring of 2010, and the idea that would become FutureAdvisor was just taking off on its wild ride. Fast forward to today, with a team of eight people pretty evenly split between financial and technical expertise, working out of a historic building in Seattle’s Pioneer Square.

They’ve landed financial backing from Silicon Valley venture capitalists, although the amount and investors haven’t been publicly announced yet, and are advertising on social and professional networking sites to recruit more customers.

And they’re still working to add more companies to their database—a painstaking task that requires importing all of the retirement account options available to any given company’s employees, so that when new customers log in, their options show up automatically. (As they note below, FutureAdvisor recently added a big fish to the collection in their old employer, Microsoft.)

Here are Xu and Lu’s lessons from the first few months of living out in the wild.

BUILDING A BUSINESS
BO LU: ”You spend a lot of time in the incubator building a product … once you’re out of the incubator, you spend a lot of time on scalable economics. Which is not something that we as hackers ever did. So rather than staring at code all day, we felt like we stared a lot more at spreadsheets. How much it costs to acquire a customer, how would this channel do, and all of those things.”

HELP WANTED
JON XU: “Shortly after Y Combinator … we were faced with, ‘Well, do we come back here? What do we do? And I think we’d always thought that this was a good area to start a company, but also, more importantly, we knew our technical networks were pretty deep up here, having been from Microsoft.”

BO LU: “This is a unique vein of talent. And we found … after comparing notes with our batch-mates who stayed in the Bay, that it was easier for us to recruit here. We had a much higher accept rate of offers, and it just wasn’t as nuts. So over PG’s [Y Combinator founder Paul Graham] strident objections, we moved.”

JON XU: “Really, you’ve got to get down to actually building a team. Building a machine that generates the actual products.”

BO LU: “No one learns how to hire during the incubator. They all learn how to hire afterward. And they all learn it on their own. … And when you compare notes, some teams do really well and some teams do really, really poorly.”

HAND-TO-HAND COMBAT
JON XU: “A lot of times to get your business started, you need to do some hand-cranking. It’s not going to be a skyrocket all the way, but there’s definitely this grind of hand-cranking the engine to get it started.”

“Because we deal with retirement products, quite often it’s knowing what investment options are in people’s 401(k) plans. … So we’re hand-cranking, essentially company by company in the Seattle area, and we actually launched Microsoft—that was a big milestone for us.”

BO LU: “Every day’s just like every other day. You make your own progress, and you make your own headway. So there are great days, like when you launch to a new company, and there are not-so-great days, like when you launch to a new company and a bunch of bugs are discovered. So that’s where we are.”

STAYING CONNECTED
JON XU: “The way I’ve heard it put, from one of our friends who founded Posterous, was that quite often after the Y Combinator experience where you have such a deep network of like-minded entrepreneurs that you’re dealing with, you kind of go your separate ways to build your own teams, and you kind of have to establish a culture for your own team. So very much by design, you have to spend a lot of time building that up rather than being interconnected with various other companies.”

COMPETITION (OR NOT)
BO LU: “People are always like, ‘Oh, what’s it like competing against financial advisors?’ And the answer is, we don’t compete with financial advisors—financial advisors love us. Which I never thought—that was super-surprising.”

“We meet with a financial advisor, and they’re like ‘Oh my God, I wish that I could give some service to the people who come to me who don’t have enough money for decades. But I can’t do it, my friends won’t do it, no one will help these people, and so I end up doing pro bono work just to be nice and be part of the community.’ But he’s like, ‘Man, if somebody could help these guys cost-effectively, that would be awesome, because I don’t have a business model to do that with.’”

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

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

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

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

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

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

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

Antengo: Real-time mobile classifieds.

BigSho: Social webcam game show.

Chatmeter: Online reputation management.

Fashioning Change: Shopping experience for eco-friendly apparel.

Saambaa: Social media app for finding things to do.

SwoopThat: Online textbook shopping by course.

TapChow: Cloud-based restaurant experience manger.

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

UgliApps: Mobile apps focused on food.

Voluware: Saas healthcare information software.

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

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

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

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

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

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

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

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

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

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

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In short order, startup incubator Rock Health has become one of the Bay Area’s hubs for entrepreneurs working on technology ideas that could change healthcare delivery.

Formed last year to test whether the startup accelerator model pioneered by organizations like Y Combinator and TechStars will work in the healthcare industry, Rock Health has already graduated its first class of 13 startups and assembled a high-powered group of entrepreneurs, investors, and other advisors to mentor the early-stage companies in its network. (A second group of startups enters the program this month.)

Rock Health drew on this community to fill a banquet hall at Farallon in downtown San Francisco this Sunday, on the cusp of the annual JP Morgan Healthcare conference, which draws much the leadership of the U.S. biotech and pharmaceutical communities. Loosely designed to recognize the 50 leading influencers in digital health, the dinner also served as a prime networking opportunity—and, for some entrepreneurs, a chance to show off their wares. AliveCor chief medical officer David Albert, for example, gave live demonstrations the company’s portable cardiac monitor, which is built into an iPhone case (see the third image in our slide show below).

“We organized the event to recognize and celebrate the leaders making things happen in digital health,” says Leslie Ziegler, creative director at Rock Health. “We hope the format of the evening allowed these diverse minds to talk freely about the future of the space, meet and support newcomers, and find new ways to collaborate.”

San Francisco-based photographer Toni Gauthier was on hand to document the event, and Rock Health has shared some of the resulting images with Xconomy, which was a media sponsor of the event. The dinner’s main supporters were Rock Health partners Silicon Valley Bank and Fenwick & West.

	NEXT IMAGE >>
	L to R: Michael Esquivel (Fenwick & West), Leslie Ziegler (Rock Health), Jackson Wilkinson (WeSprout).
	Photo by Toni Gauthier

… Next Page »

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In a grand test of whether the Silicon Valley startup accelerator model can help university scientists get promising new technologies to market faster, 21 teams hand-picked for the National Science Foundation’s new Innovation Corps (I-Corps) program converged on the Stanford University campus last week. The goal: to review the progress they’d made during an eight-week crash course in entrepreneurship, and share the details of their newly battle-tested business models with a panel of NSF leaders and venture capital partners.

I sat in for the first half of the review session, which took place Wednesday at Stanford’s School of Engineering, and listened to presentations on everything from hydrophobic materials for preventing ice buildup on airplane wings to a method for growing transparent sheets of graphene that could be used in next-generation computer displays. It’s too early to say how many of these innovations will turn up in the marketplace—but it was remarkable to see how thoroughly the traditional walls between academia and business had melted away in the minds of the program participants.

It all made for an event unlike any demo day I’ve seen before. The I-Corps teams—who hailed from Seattle, Tucson, Pittsburgh, Boston, and everywhere in between—were the antithesis of the hip, young, polished entrepreneurs you see coming out of venture incubators like Y Combinator or TechStars. Instead, these were geeks on a mission: bench scientists who are convinced that businesses can be built around the technologies they’ve invented, and who’ve decided to take the leap themselves rather than wait for a corporate licensee to wander along, as in the old model of university technology transfer.

For most of these scientists, the I-Corps program was their first real exposure to the startup mindset, and they had plenty of self-deprecating stories to share about the lessons they’d learned while talking with potential customers. One University of Connecticut team developing a nanocomposite material for explosives detection had pivoted not once but twice—from a landmine-detector product to an airport security product, then back to landmines. “The most important thing we learned from I-Corps is how important getting out of the building is,” principal investigator Yu Lei said.

It was no accident that that phrase—”getting out of the building”—came up in every presentation I saw. It’s practically been trademarked by Steve Blank, the serial entrepreneur famous around Silicon Valley for his “customer development” methodology, which says that the highest priority for any startup is to gather feedback from potential customers and continually refine its product or its target market or both until it finds a fit. NSF officials tapped Blank to lead the I-Corps program after watching him teach customer development to students in his “Lean LaunchPad” course at Stanford.

The teams chosen for the I-Corps program—each of which consisted of at least one principal investigator with a history of NSF grant-getting, one younger “entrepreneurial lead” (typically a graduate student or postdoc), and one business mentor—first came to Stanford in October for a few days of startup bootcamp. They were then sent home with instructions to get out, talk to customers, and, if necessary, throw out their original business models and start over. Last week’s session was both an opportunity to share what they’d learned and an audition for Phase II of the program, in which a few of the teams will be selected for NSF grants to help them continue their commercialization efforts.

How well did the teams adapt to customer-development thinking? “I think they hit it out of the park,” Blank told me at the review session.

The evidence was in the before-and-after “business model canvases” that each team shared during their presentations. An invention of strategy consultant Alexander Osterwalder, a business model canvas is a template that helps fledgling startup teams envision who their most natural customers are, how they’ll deliver value to those customers, and how they’ll manage costs, revenues, and partnerships. With help from mentors, and with feedback from the more than 2,000 prospective customers they interviewed during the eight-week program, the I-Corps teams redrew their canvases … Next Page »

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A decade ago, scooters and mopeds made up the bulk of motorized transport in India. Today, motorcycles and cars of all makes are a common sight, from Harley Davidson and French carmaker Renault to Suzukis. India is undergoing important socio-economic shifts that are resulting in the segmentation of existing markets and the opening of previously nonexistent ones.

Even though India seems full of opportunities and market potential for almost any foreign product, it requires a lot of sensitivity and awareness because the complexities arising from its heterogeneity make it a challenge for companies looking to copy-paste business models from abroad. In addition to experiencing growth in the consumer market, India is also the stage for an emerging entrepreneurship sector.

Big retail is a prime example of how the diversification of India’s class structure is creating new market opportunities. As little as five years ago, the viability of giant retail stores operating in India would have been seriously questioned. In her book Winning in the Indian Market, published in 2006, India’s leading market strategist and consumer analyst, Rama Bijapurkar, explains that large discount retail outlets in Indian cities have failed for multiple reasons. The principal one being that supermarkets cannot cater to India’s lower income groups because they live day by day and do not have the discretionary income for volume purchases, even at a discounted price. The model adopted by manufacturers of fast moving consumer goods (FMCG) is small quantity at an even smaller price. An example of such would be hotel-like sachets of shampoo for two rupees (0.04 USD); these small packaged goods accounted for 40 percent of the sales of FMCG. Nonetheless, India’s rapid growth has given rise to a new socio-economic group that is filling the demand void, allowing hypermarkets to set up shop in India.

India’s middle class has grown tremendously over the years, due in part to substantial investment in education, and a booming job market fueled by foreign investment. India is outputting almost half a million engineers a year, amongst others skilled employees. Salaries are on the rise with 11.7 percent hikes in 2010 and a projected growth of 12.9 percent in 2012, according to consulting firm Aon Huwitt. Devinder Mahna, general marketing manager at Mechelonic Engineers, explained that it is no longer infrequent for engineers graduating from top schools to find jobs with salaries closely matching those they would find in the U.S. Even though this is not the norm and many will only earn between 400 and 700 dollars a month, it is still preferable for them to buy their groceries at a one stop-shop location rather than waste time purchasing their goods in the various specialty stores.

Even though many of these young wage earners shop at big retail outlets and drive a Chevrolet, it does not translate into a general infatuation with western goods, for the simple reason that Indian and western consumers have diverging tastes. Satya Bonala, head of Delhi-based market research firm Vox Populi, argues that many multinational companies have often made this mistake. India, having 20 officially recognized languages, with dozens more regional tongues, each with its own culture, is an extremely heterogeneous market requiring products tailored to each segment’s needs. Bonala went on to explain that The Coca Cola Company learned this lesson when it attempted to re-introduce its product in India after almost a 20-year absence, by … Next Page »

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The offices have been laid out. The applications are flowing in. And come next spring, 10 proto-companies will meet in Seattle for a three-month bootcamp focused on new uses for the Kinect, Microsoft’s breakthrough motion- and sound-sensing system.

For Redmond-watchers, that may not seem like such a big deal. Microsoft already cultivates startups through its BizSpark program, and is putting plenty of steam behind the Kinect as a next-generation user interface. I have no idea how much money Microsoft is paying to bankroll the new Kinect Accelerator program, but it’s certainly in the realm of a rounding error.

But the thing that makes this Kinect program really interesting is Microsoft’s partner: TechStars, the startup accelerator with branches in Seattle, New York, Boston, and Boulder, CO.

TechStars is a top-tier example of the startup incubator programs that are sweeping the country right now, a phenomenon that challenges the established education and entrepreneurship systems. Those programs have already gotten plenty of interest from entrepreneurs, the press, and early stage investors. But now, mammoth tech companies are taking a longer look, too—and doing more than just offering free software or a few mentors.

“Corporations have been trying to create innovation ecosystems forever. Historically, those that do it themselves have tended to struggle in general,” TechSars co-founder David Cohen says. “We believe we can help Microsoft get it right. It appears to be working so far—we have some amazing applications and the interest is very high.”

“Traditionally, it’ll be, ‘Hey, here’s a toolkit and here’s some terms and conditions, and, essentially, have fun. Good luck,’” says Microsoft Studios general manager Michael Mott, the company’s point person for the Kinect Accelerator. “Now, we’re saying, here’s that same set of technologies … and here’s a little bit of expertise and guidance, not only from us but also from this great incubator of startups, TechStars. In that case, I think it’s a little bit more of a wraparound approach and a little bit more hands-on than we maybe have done in the past.”

The Kinect Accelerator will look very much like a typical TechStars class, with 10 companies chosen to participate in an intensive three-month program of product-building, testing, and business development. At the end, there will be a big demo day party, where the entrepreneurs can show off their work to insiders and potential investors.

But this version is a wholly Microsoft endeavor, and focused on one technology, the Kinect. “This is Microsoft’s program,” Cohen says. “We’re powering it, which means we’re responsible for making sure it’s awesome.”

That’s a first for TechStars, which, like other independent accelerator programs, chooses its own class of entrepreneurs from a wide-open field of applicants. This year’s Seattle class, for example, produced startups tackling everything from smartphone-powered robot kits to international money transfers.

That’s a totally new way of thinking about something like TechStars: Not only does it run bootcamps of its own, but it can be hired out to help the world’s biggest companies develop their own entrepreneurial ecosystems.

It’s a huge validation for the TechStars model and its people, and there’s a more concrete upside as well. Just like in a regular TechStars program, the companies will get an investment: $20,000 from TechStars in exchange for 6 percent equity. (Significantly, Microsoft will not take a stake in the startups or their intellectual property.)

When it was announced last month, the Kinect and TechStars partnership instantly reminded me of Google’s recent two-year deal to be a global sponsor of Startup Weekend, the Seattle-based entrepreneurship program that has been steadily growing beyond its signature hackathons.

Google’s deal with Startup Weekend is more than just a check. Googlers will also host developer workshops ahead of Startup Weekend events, and bring promising entrepreneurs from the global Startup Weekend network back to Google headquarters for a week of collaboration. In short, it’s tapping into the Startup Weekend network of more than 250 events worldwide to find promising talent—and make sure they’ve got Google on their minds.

Kinect Accelerator is different on the details, but it has the same flavor. It’s probably a smart move for a lumbering technology giant that is often criticized for being too bureaucratic to get out of its own way and innovate. Not coincidentally, Xbox and Kinect are very prominent examples of consumer offerings that Microsoft has actually done very well.

The Kinect Accelerator will be directed by Dave Malcolm, a former longtime Microsoftie who has been a TechStars mentor in Seattle. The startups will operate out of Microsoft office space in South Lake Union, a block away from the growing Amazon campus.

Teams will get Xbox kits, Kinect hardware, and the upcoming Windows software development kit for Kinect, along with the usual array of developer tools and software. Products that might have phone and tablet interfaces or other applications are also welcome, Malcom says: “The solutions these 10 companies create simply have to leverage the Kinect in some form.”

“We are looking for the 10 teams who have the most compelling, big ideas that we think, post this program, they have the best chance of getting follow-on funding and building real businesses that scale and have an impact,” Malcolm says. “We would like people to think big when they come to us with applications.”

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Will the startup accelerator model that’s proved so popular and successful in the Web and mobile sectors also help to boost entrepreneurship in other industries, such as healthcare and cleantech? In a tottering economy that needs all the job-creating companies it can get, that’s a crucial question. And here in the Bay Area, it’s been getting a thorough test this year.

Back in August I reported on the first class of 13 startups graduating from Rock Health, a new health-tech incubator with offices in San Francisco’s Chinatown. In just five months, the startups came up with a dazzling array of products and services, ranging from diabetes-prevention programs to iPad fitness training to meditation aids. I won’t be surprised if several of these Rock Health alums strike it rich.

Just as Rock Health was winding down, another new accelerator, Greenstart, was getting underway a few blocks down the hill, in San Francisco’s Financial District. Greenstart invests in cleantech companies, with the goal of promoting renewable-energy technologies and reducing the nation’s carbon footprint. Four companies participated in Greenstart’s inaugural 12-week session, and yesterday they made their formal “demo day” pitches to investors (though one of them, Tenrehte, didn’t need the money—it had just signed a Series A term sheet with unnamed venture investors).

Greenstart's Demo Day session ended with a networking party. At far left: Tenrehte founder and CEO Jennifer Indovina.

Once again, I was impressed by all that these companies had accomplished. Their founders gave polished presentations, and seemed to have a solid grasp on the potential markets for their products, which include self-tinting windows (SmarterShade), an inexpensive way to mix biofuels with diesel fuel (Sylvatex), an online game designed to heighten consumers’ awareness of their energy consumption (Wa.tt), and a wireless system for managing the energy flowing through electrical plugs (Tenrehte).

So while the sample size is still small, there’s starting to be some evidence that accelerators are effective, even in slow-moving fields like healthcare and energy.

That definitely wasn’t a foregone conclusion. The most famous tech accelerators, such as Y Combinator, TechStars, AngelPad, and 500 Startups, are able to churn out dozens of promising new companies every year in part because their canvas is generally limited to the Internet and the world of Internet-connected devices. In that realm, a magic confluence of infrastructure components such as open source software, cloud computing, and app marketplaces has made it drastically easier and cheaper to start new companies. The healthcare and energy industries, by contrast, are about as Neolithic as they come. Software and the Internet are only beginning to have a real impact in these businesses. More money is at stake, the big players are far more deeply entrenched, and getting a new product to market means negotiating a daunting maze of existing supplier-customer relationships.

Rock Health and Greenstart have both found formulas that help get their companies off to a strong start despite the long odds against them. One of Rock Health’s main techniques is to avoid a frontal assault on the healthcare system, and instead deploy companies building various health-related Internet and mobile products to nibble around the edges. (Blueprint Health, a new accelerator in New York, is adopting a similar strategy, but with a focus on enterprise software rather than consumer products.)

Greenstart’s key tactic, I gathered from attending yesterday’s event, is slightly different. It aims to succeed mainly by … Next Page »

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[Updated 12/12/11 11:20 am to clarify terms for startups. See below.] After spending much of her career in the tech sector, Melinda Richter has been pondering a provocative question for the life sciences industry.

“Billionaires are a dime a dozen in tech,” she says, “but it’s hard to find an entrepreneur in the life sciences who is a billionaire. I can’t think of a single small biotech company CEO who became a billionaire.”

Richter says she founded San Francisco-based Prescience International at least partly with the hope of addressing such inequities. Prescience helps start and manage life sciences incubators, institutes, and other research centers.

Melinda Richter

Mostly, though, Richter says she wants to make it possible for life sciences entrepreneurs to take advantage of the sort of low operating costs that make it so easy for a handful of tech entrepreneurs to start a Web 2.0 company with a few hundred thousand bucks. It’s that kind of minimal capital requirement that can enable biotech entrepreneurs to prove their concept, giving them something more than a business plan when they seek venture funding. The low-cost model might even help entrepreneurs hold onto a bigger ownership stake in their startups.

“You look at these IT companies,” she says. “You give a couple of guys a couple hundred thousand, and after a couple of months they’ve got a new iPhone app and they’re ready for business. But it’s not curing cancer or HIV.”

So Richter was on the ground floor, so to speak, as executive director when the San Jose Redevelopment Agency spent $6.5 million to start the San Jose BioCenter, a life sciences incubator that opened in 2004. The BioCenter officially hired Prescience to manage the facility in 2005, and Prescience took over management of a cleantech incubator, the San Jose Environmental Business Cluster, in 2009.

Now Prescience is in San Diego. Johnson & Johnson has hired Richter’s firm to manage the incubator it has been creating at its San Diego R&D facility, now known as the Janssen Labs at San Diego. Under a plan unveiled in October, J&J plans to host 18 to 20 startups at its new innovation center, which has various size wet labs and offices for individual companies, and common areas for shared use. Janssen Labs has emphasized that space in its innovation center comes with no strings attached. The startups that enroll will not be required to give up an equity stake or intellectual property rights. They simply have to pay a monthly fee under a 90-day lease agreement.

When we met recently, Richter told me she got into the business partly for personal reasons.

After graduating from the University of Saskatchewan (she is a Canadian), Richter joined Nortel Networks, where she says she spent more than eight years on a fast-track executive program that took her to corporate posts in the United States, Europe (she got her MBA in France), Latin America, and China.

While in China, however, Richter had what you might call a life-altering experience. She says she got very sick and was … Next Page »

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In a segment featured Tuesday night on the PBS NewsHour, correspondent Hari Sreenivasan brings an outsider’s curiosity to the strange, wonderful world of startup accelerators. The eight-minute report features Sreenivasan’s interviews with entrepreneurs and mentors at TechStars, AngelPad, and Y Combinator—archetypes of the venture incubator wave (or is it a bubble?) that we’ve been chronicling here at Xconomy for the last four and a half years.

This is a must-watch piece, for at least four reasons:

1) It’s the best short summary of the startup accelerator concept you’re likely to find—and a great example of mainstream media interest in what’s long been a fringe phenomenon, unknown to middle America.

2) Sreenivasan talked with celebrities of the startup world like AngelPad’s Thomas Korte, TechStars’ David Cohen, Blackbox Ventures’ Max Marmer, and Duke University’s Vivek Wadhwa. It’s fun to see them all on camera.

3) The piece featured a bunch of cool startups that you may not have heard of yet but probably will, including Order.In, LendFriend, and Tapviva.

4) There’s a one-minute segment featuring me. It starts at 4:45 mark in the video; in the clip Sreenivisan used, I’m talking about the technological changes that have made it so much cheaper for mobile and Internet startups to get off the ground, and the bubbly conditions this change seems to be fostering in the Silicon Valley startup scene.

PBS NewsHour Shoot at Xconomy San Francisco

Sreenivasan does a thorough job of explaining why startup accelerators exist and how they work, and he conveys authentic flavor by talking to real entrepreneurs. It’s all framed in a way that will make the accelerator phenomenon clear to TV audiences in Idaho or Vermont who’ve never heard of Y Combinator. But there’s also a savvy to the reporting that’s a clear legacy of Sreenivasan’s days as an anchor and correspondent for CNET during the first Internet boom, from 1996 to 2002.

My only role in the NewsHour report was to spend an hour talking on tape with Sreenivasan, here at Xconomy San Francisco back in early October (the photo above shows the KQED crew setting up for the shoot). Another couple of minutes from our conversation made it into a supplement to the broadcast report, published on the PBS NewsHour website under the title “What is a Startup Accelerator?” Both the main report and the supplemental clip are embedded below.

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“You will have meltdowns on a regular basis. You will have those moments. Make sure you have people you can talk to when you have those moments.”

That was Brad Feld, the tech entrepreneur-turned-venture-capitalist, on Friday afternoon, speaking to a room of Boston and New York entrepreneurs and angel investors, at an event organized by Silicon Valley Bank. The setting was the Microsoft NERD center in Kendall Square, Cambridge, MA. Feld was talking about the experiences that all founders (especially CEOs) go through with their companies.

Feld is the co-founder of Boulder, CO-based Foundry Group and TechStars, the seed-stage startup accelerator with programs in Boulder, Boston, Seattle, and New York. He relates very well to early-stage tech entrepreneurs, because he’s been there and done that himself. In his typical style, Feld spoke casually (and candidly) about the challenges of building a company. None of it was particularly earth-shattering, but it’s interesting to revisit these sorts of tips every once in a while, because different things jump out at you at different times.

Feld’s advice boiled down to two things: products and people.

1. “Be obsessed about your product.”

“The most important thing to focus on, early in the life of your company, is your product. In year two, it’s your product. In year 20, it’s your product,” he said. “If you focus on your product, most of your other problems will go away.”

But he has a broader definition of product—it’s not just the software you release, or your technology, or even your interface with customers. “The whole of the company becomes the product,” he said. “The whole lifecycle of what you do.”

That means entrepreneurs should be totally passionate about what they are building—not just starting a company to be their own boss, say—and they should be true to themselves. Feld admitted that with his first company, he got bored after four years. “I didn’t love the thing I was doing,” he said. (He sold it after seven years.)

2. “You cannot motivate someone.”

“The idea that a CEO can motivate people is a fallacy. All you can do is create an environment where people are motivated or not,” he said. Companies will make bad hires—talented people who aren’t a good cultural fit with the rest of the team—and they should get rid of those employees quickly, according to Feld. “You can’t change them,” he said, and you can’t “try to motivate people to work harder” through things like performance reviews. That simply doesn’t work, at least not for small startups.

Instead, founders need to continually make sure they are bringing on the right people for their team, communicating openly, “building the language of the company,” and tying that formative context and culture very closely to their product, he said. This will mean very different things for different companies, and it’s certainly not an exact science.

Feld said he sees a common mistake in young startups. “The CEO ends up doing a lot of the work,” he said, and “the non-CEOs don’t do the right work.” The CEO’s chief responsibility, over time, is to make sure “everyone is doing the right thing.”

Oh, and one more responsibility: “Don’t run out of money,” he said.

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When last we checked in with Gordon Jones, it was six months ago and he had just been appointed the inaugural director of the Harvard Innovation Lab. It was May, the birds were singing, the Red Sox had pulled out of their season-starting slump, and anything seemed possible.

Now the cold, dark days are upon us, and we need a place to rejuvenate our spirits as we gear up for the holiday season. Students and young entrepreneurs especially need such a place. The Harvard i-lab, as it is called, might be that place—a $20 million center whose mission is to support all Harvard students interested in entrepreneurship. And it is officially open for business as of today, complete with a ribbon-cutting ceremony, school administrators, and politicians.

The important news is that the i-lab is real, and it marks a serious and ambitious effort to foster entrepreneurship on a grand scale. The unstated goal is to keep the next Bill Gates or Mark Zuckerberg from leaving town (and Harvard) and building a multibillion-dollar company somewhere else. Will it work? Who knows, but you have to start somewhere.

Back in May, Jones talked with me about just trying to get his baby to first grade—the idea being, walk before you run. He has been heads-down since then, but I recently caught up with him about the i-lab’s opening, and the progress and challenges to date. (And yes, he hosted Zuckerberg’s recent visit to the lab.)

“I’ve been pleasantly surprised so far,” Jones says. “It’s genuine, the interest here, and the level of engagement across the Harvard schools is strong.” He says that the overall support from the university and the enthusiasm from the academic and business communities “exceeds what I expected.”

Jones adds, “When we first talked six months ago, there was this question of, ‘Is Harvard late to the game?’ I think this is a great time to be doing what Harvard is doing.” And that is, in his words, “trying to bring the best of Harvard’s knowledge and network and make it available to students. And being part of the Boston innovation community.”

Here are my takeaways going into the first day of school at the i-lab:

1. Jones isn’t going anywhere. Yes, he has an extremely challenging job. (You try being accountable to seven different deans across Harvard, for starters.) The fact that he’s still alive and kicking—not to mention attending lots of entrepreneurship events and getting to know students and the local business community at every turn—bodes well for the lab’s future. “You’ve got to pick your battles,” he says.

2. The lab is already active. It officially opens today, but stuff has been happening there for months already: a “startup weekend scramble,” guest speakers (the series includes Eric Ries, Peter Thiel, and Jeff Taylor), Harvard courses on entrepreneurship and global innovation, special panels, startup workshops (Alex Taussig led one about mistakes entrepreneurs make; Eric Paley did one on career choices), and one-on-one consultations with “experts in residence” and “innovation partners” … Next Page »

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When I entered Harvard as a freshman, there was no central focus on startups or entrepreneurs. Student groups were splintered and stagnating, and there were no main faculty members whom I could approach about entrepreneurship. I was intimidated to approach students or faculty from Harvard’s graduate schools, and there was no cross-campus collaboration. Harvard’s startup scene was almost completely underground. Students worked on their “side projects” alone in their dorm rooms. As far as I can tell, that pattern of the insular Harvard entrepreneur has been true for years.

Yet despite all of these hurdles, Harvard has graduated some of the world’s most successful entrepreneurs. Everyone knows of Zuckerberg and Gates dropping out. But what about Tony Hsieh (College ’95), co-founder of LinkExchange and CEO of Zappos.com? Or Tim O’Reilly (College ’75), founder of O’Reilly Media? And what about Scott McNealy (College ’76), co-founder of Sun Microsystems, or social entrepreneurs like Paul Farmer (HMS ’88, Ph.D. ’90), founder of Partners in Health? Do we consider Trip Hawkins (College ’76), founder of Electronic Arts; Mark Warner (HLS ’80), co-founder of Nextel Communications; or Thomas Stemberg (HBS ’73), co-founder of Staples?

These individuals demonstrate two distinct facts about entrepreneurship: first, it’s not necessary to drop out of school to found and grow an amazingly successful enterprise. Second, Harvard has been the birthplace of innovations across industries since its inception.

On Friday, Harvard enters the next era in its quest to graduate successful entrepreneurs, when the Harvard Innovation Lab officially opens its doors. It is both a new facility and new programming that promises to help Harvard students take their ideas as far as they can go. The 30,000 square foot space features a large and easily re-configured space for students to work on their ideas. Nearly every wall is covered with whiteboard paint for students to sketch out their plans. Conference rooms give students more privacy, and a large classroom will host workshops and classes that help students hone their entrepreneurial abilities. Programs already underway include workshops, classes, access to experts-in-residence, mentoring, and student co-working areas. Many of the events and resources are open to the Boston community as a whole.

There has never been a more exciting time to be a student entrepreneur. College is inherently an environment ripe with new connections. During a conversation at 2 AM or a random meeting with a professor, ideas are born. And in a city as alive with innovation as Boston, students have no excuse not to find an idea and run with it.

It’s easy for new university initiatives to launch and be forgotten. The innovation lab is different. The i-lab wasn’t only created to generate interest in entrepreneurship; it was developed to serve the immense interest already present in the student body. The i-lab is here to stay.

So on Friday, welcome the Harvard innovation lab to the Harvard and Boston communities. Stop by and take a look around. Most importantly, speak to some of the students working there. You’ll like what you hear.

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TechTown has undergone some changes recently as Leslie Smith transitions into her new role as executive director. Nothing drastic, she says, but rather an expansion of its incubator business model to include targeted outreach to a few Detroit neighborhoods in order to make its entrepreneurial mission more accessible, an increased focus on microenterprise and procurement opportunities, and an increased partnership with nearby anchor institutions such as Henry Ford Hospital.

“We’ve come to understand that, in order to serve some of our constituents, we have to meet them where they are,” Smith says.

One thing TechTown plans to do is to increase its focus on connecting companies with procurement opportunities at the three anchor institutions in Midtown: Wayne State University, Henry Ford Hospital, and the Detroit Medical Center (DMC).

TechTown also wants to increase the number of high-growth IT companies in its portfolio from 20 percent to 3o percent. Smith says one way to do that is to commercialize more of the technology coming out of Henry Ford and the DMC.

“If there’s a new, innovative device or tool or process, we want to help commercialize that,” Smith says. “For example, Henry Ford has an Innovation Institute. We want to be on the receiving end of that pipeline.”

Smith says TechTown has doubled down on its commitment to help create a more vibrant city through stronger relationships with its local and regional partners. Part of that commitment involves going into communities with strong leaders and organizations already in place. Steve Tobocman, a former state legislator who has lately been spearheading the Global Detroit initiative, has been tapped to lead an effort to stabilize neighborhoods through a microenterprise training program geared towards immigrants and people of color.

Based on a model that was implemented successfully in the Twin Cities, the Detroit program will focus on … Next Page »

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If you want a glimpse at the leading edge of tech startups, TechStars Demo Day is a fine place to go prospecting. In just 60 minutes of total pitch time, you’ve got a damn good idea of the industries, customers, ideas, and technologies that top entrepreneurs and investors think are ripe for innovation.

And the accelerator phenomenon itself is certainly part of that picture. Organizers say attendance at pitch day was up significantly this year, as was the number of applicants—700 startups vying for just 10 spots, compared with 400 in 2010′s inaugural Seattle class. That growth comes as we’ve seen a big spike in the overall incubator/accelerator scene nationally, with increasing competition for getting into the top programs.

I’ve already posted the most complete rundown anywhere of Seattle Demo Day 2011, and you can also find quick snapshots, links, and founder contacts at this handy page put together by the group.

Today, we’re throwing in some extra insight from the head honchos themselves: TechStars CEO and founder David Cohen and TechStars Seattle director Andy Sack, who we interviewed right after the pitches wrapped up Thursday night.

One clear trend in the companies presenting in this year’s class, Cohen said, is the use of social media as platforms to build businesses that could have some substance, coming up with “new and interesting ways to actually monetize” all that sharing.

“So companies like Bluebox or Vizify are taking advantage of this proliferation of consumer data and the sharing that’s going on to drive that value back to businesses,” Cohen said. “That’s certainly a trend that continues to be the case. I think four years ago, it was all the social stuff coming out. This is the actual application of it for business.

David Cohen

Another reflection of the mood of investors is the presence of “very real businesses that have very clear revenue models—things like EveryMove. There’s a lot of money being spent in health care. Those guys are tapping into that,” Cohen said. “I think what investors want today are businesses that have a revenue model that they can understand, but that take advantage of the cool, hot, new, and social to really leverage it.”

“The other trend that you’re going to see more and more of—I know TechStars is looking at it—is the area I would call human-computer interaction. Broadly, I would throw robots into that, which you saw with Romotive,” Cohen said.

“You take this guy,” he said, holding up a smartphone, “that we’ve all spent money on, and you figure out other cool stuff to do with it. Or you take the iTouch that your kid has and you figure out how to … Next Page »

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