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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I can’t do justice to a comprehensive review of yesterday’s FiReGlobal (West Coast) conference at the Four Seasons Hotel in Seattle. Instead, I’ll just give a few of my key takeaways. The all-day event, organized by Strategic News Service, focused on how to solve some of the most pressing problems in technology, business, and society—in areas as diverse as broadband access, entrepreneurship, education, sustainability and the environment, political discourse, human health, and mobile devices.

The sweeping conference had the tagline, “Global technology driving local solutions.” Interesting, as that’s sort of the reverse of Xconomy’s mantra, which is reporting about local stories with global impact. But I think they’re two sides of the same innovation coin.

So, in “ESPN plays of the day” style, here’s my top 10 list from the conference (if only I had the video to go with it):

10. Setting up entrepreneurial zones. A panel led by Ty Carlson of Microsoft proposed denoting special “R&D zones” from Oregon to British Columbia geared toward supporting startups in fields like renewable energy, sustainable farming, and biotech. The idea would be to offer tax credits and other incentives to create a more entrepreneurial culture in the Northwest, especially in rural areas.

9. What government should and shouldn’t do. Investor and entrepreneur Martin Tobias of Seattle-based Kashless said, “Startups and investors can’t make a 10-year bet when you have a two-year tax credit.” Those conditions freeze out small companies, especially in costly ventures like energy. So government should create open markets and set minimum market sizes for new technologies, Tobias said. But it shouldn’t pick the technology winners themselves.

8. Northwest tech startups do the Olympics. Tom Guthrie, CEO of Seattle-based Twisted Pair Solutions, said his company has helped numerous agencies on the Olympic Peninsula inter-operate their radios—a key problem in disaster response and other scenarios. Twisted Pair, which is backed by Ignition Partners and other investors, is also working on a laser system to deliver broadband signals. Meanwhile, Paul Manson, CEO of Vancouver, BC-based Sea Breeze, talked about his company’s project to build a high-voltage, direct-current undersea cable between Victoria, BC, and Port Angeles, WA. This would be a fast, controllable power transmission component of a smart grid; it should be under construction by mid-2010, he said.

7. The world according to Dell. In a chat with Mark Anderson of Strategic News Service, Michael Dell said he is excited about China and the rest of Asia as fast-growing economies. He anticipates a U.S. recovery from the recession, but says, “I don’t think you’ll see an immediate snap-back.” And he likes South America as an emerging market (Dell does sales of more than $1 billion in Brazil alone). But Europe, not so much—he sees a lot of uncertainty in the workforce there.

6. Get ready for Dell smartphones. “Mobility is absolutely the theme,” Dell said. He was talking about the relative importance of desktop computers, laptops, netbooks, and mobile devices to …Next Page »

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The news has been breaking fast and furious here at Xconomy, just as we are putting the finishing touches on a terrific event on Monday that will explore the 20-year outlook for the Seattle region as a life sciences hub.

—Xconomy dug up an exclusive late Friday afternoon from a couple SEC filings that showed Seattle-based Dendreon has added two heavy hitters to its board of directors. They are Ian Clark, the incoming CEO of the Genentech unit within Roche, and Pedro Granadillo, the former senior vice president of manufacturing at Eli Lilly. Dendreon (NASDAQ: DNDN) announced the move officially, and the wire services picked up the report, on Monday.

—Amgen generates $15 billion a year in revenue, and plows back 20 cents on the dollar, or about $3 billion, back into research and development. But what does it really do with that money, and what ideas does it have to improve on the industry’s abysmal 1-in-10 average success rate for new drugs entering clinical trials? Senior vice president Joe Miletich offered up some fascinating insights on what Amgen is trying to do, and how Seattle and Boston teams contribute, in an exclusive interview.

—Leroy Hood, the biotech pioneer who has started more than a dozen companies, announced this week that he has raised another $30 million to launch a startup that embodies his latest vision—Integrated Diagnostics. This company will seek to develop instruments that can detect cancer and Alzheimer’s disease by looking at concentrations of proteins from a tiny droplet of blood.

—Seattle-based Omeros (NASDAQ: OMER) pulled off the first IPO of a true biotech company anywhere in the U.S. since February 2008. The company netted about $62 million, part of which will go to support pivotal trials of its treatment to help improve recovery from knee surgery. But other biotechs watching this as a bellwether have to be a little concerned after seeing Omeros price its offering at $10 a share, the low end of its forecasted range. The stock has been heading downhill ever since it started trading, to $7.44 at yesterday’s close.

—Chris Henney, the co-founder of Immunex, Icos, and Dendreon, offered up a very entertaining list of six tips for investors on how to spot a winning biotech company. He made these remarks at a luncheon event organized by the CFA Society in Seattle, in front of about 100 investing professionals.

—Medical device startups are feeling a lot of pain this year, for a lot of reasons, and it was all laid bare this week in a sobering report by Ernst & Young.

—One of the more fortunate medical device companies in Seattle, Uptake Medical, secured an additional $1.2 million in equity financing, meaning it has now raised $4.6 million out of a venture round that could be worth as much as $13.3 million. The company is developing a minimally invasive technique for treating chronic lung diseases by using hot vapor to seal off damaged parts of the lung so air doesn’t get trapped there.

—Lots of people are wondering whether Roche will retain most of the talent at Genentech in the wake of its acquisition this spring. Bothell, WA-based Seattle Genetics (NASDAQ: SGEN) pried loose at least one important player from the industry’s pioneering company, naming Bruce Seeley to the newly created position of executive vice president, commercial, with responsibility for future sales and marketing. Seattle Genetics will lean on him to spearhead what it hopes will be a successful commercial rollout of its “empowered antibody” for Hodgkin’s disease.

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The deals rained down on the Northwest this past week. We saw some strong activity in biotech, gaming, and software.

—Integrated Diagnostics, the new biotech company founded by Lee Hood, has secured $30 million in venture funding from Menlo Park, CA-based InterWest Partners, the U.K.-based Wellcome Trust, and Germany-based dievini Hopp Biotech holding, as Luke reported. The startup aims to detect cancer and neurodegenerative diseases like Alzheimer’s in their earliest (and most treatable) stages.

—Washington state’s venture funding numbers for the third quarter of 2009 fell to $144 million, down from $275 million in the previous quarter, as Bruce reported. And one deal in September, the $50 million investment in Calypso Medical, a Seattle-based developer of technology that pinpoints radiation therapy for cancer to minimize side effects, dominated the state’s third-quarter figures.

—Decho, the Seattle-based subsidiary of EMC (NYSE: EMC), formed a partnership with British mobile network operator Vodafone to develop new data backup services for European markets. Financial terms weren’t given. The products will be built using Mozy, the online backup service operated by Decho.

—Redmond, WA-based Bionavitas formed a partnership with Seattle-based Blue Marble Energy to make biochemicals from algae, as Luke reported. Financial terms of the deal weren’t announced, and the companies didn’t say exactly what they plan to make under this alliance.

—Seattle-based Evri formed a partnership with media giant Hearst to power its new website and news aggregator, LMK (which stands for Let Me Know). Evri, a Paul Allen-backed startup that uses semantic analysis and natural language processing to find connections between entities on the Web, is providing the content-filtering software for LMK.

—Omeros, the Seattle biotech company developing a treatment to improve recovery from knee surgery, completed its initial public offering last week, raising $68.2 million, as Luke reported. The state’s first IPO in more than two years was underwritten by Deutsche Bank and Wedbush PacGrow Life Sciences. Omeros (NASDAQ: OMER) opened trading at $10 a share and closed its first day at $8.73, giving it a market valuation of about $186 million.

—Seattle-based Amazon (NASDAQ: AMZN) participated in a $19 million Series C investment in Engine Yard, a cloud computing and software automation company based in San Francisco. Amazon was a previous investor in Engine Yard, along with Benchmark Capital and New Enterprise Associates. The latest deal also included new investors DAG Ventures, Bay Partners, and Presidio Ventures.

—Seattle-based PopCap Games raised $22.5 million in its first outside funding round since its founding in 2000. The investment was led by Meritech Capital Partners, based in Palo Alto, CA, and also included participation from investors Larry Bowman and John McCaw. The money will be used to help accelerate PopCap’s global expansion and distribution of its games.

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It’s hard to believe Leroy Hood—a guy busy enough to employ not one, but two full-time executive assistants—is turning 70 today. But it’s true.

This milestone seemed to be as good a reason as any to catch up with the biotechnology pioneer. So I stopped by his office at the Institute for Systems Biology (ISB) along North Lake Union in Seattle for a 45-minute interview last month. I gathered some revealing insights into his life, and walked away thinking that while business executives his age are usually put out to pasture, Hood has more fire in the belly than ever.

“I’m doing the most ambitious things, by far, that I’ve ever done in my career. Right now,” Hood says.

For those who don’t already know, Hood is recognized around the world for leading the team at Caltech in the 1980s that invented the high-speed DNA sequencing machines that made the Human Genome Project possible. Hood has won some of the world’s highest honors for invention, like the Lemelson-MIT Prize, Kyoto Prize, and Lasker Award. He’s also co-founded 13 companies by his count in a recent essay, including Amgen, Applied Biosystems, and Rosetta Inpharmatics.

To celebrate his life, and to dream of what’s still to come, about 300 friends are gathering in Seattle tonight for an invitation-only gala dinner at the W Hotel downtown. Some of biology’s biggest names, like Harvard’s George Church and Stanford’s Irving Weissman, are scheduled to be there. There will also be a 10-minute video tribute to Hood’s life, featuring interviews with his family, colleagues, and a video appearance from Microsoft chairman Bill Gates, who recruited Hood to the University of Washington from Caltech in 1992.

This will not be about a bunch of graybeards telling old war stories (although I do hope to hear a few good ones when I stop by there tonight.) Much of the discussion will revolve around ideas being pursued at Hood’s ISB, a nonprofit research center he co-founded in 2000 with Alan Aderem and Reudi Aebersold. It’s designed to be a hothouse for cross-disciplinary scientists trying to push the frontiers of biomedical research, largely by using computers to sort through vast amounts of genomic data. Hood has been busy forming all sorts of collaborations this year with partners who have a need for ISB’s skills.

Just in the last few weeks, ISB has formed a partnership with Swedish Neuroscience Institute in Seattle to study the genomes of brain tumor samples, and has made a deal to fully sequence more than 100 human genomes in 2009 with Mountain View, CA-based Complete Genomics. Hood has unveiled plans to Xconomy for a new company called Integrated Diagnostics which will spot tiny cancers in the blood while they are at their most treatable stage. And just yesterday, ISB announced another big deal, a $14 million, five-year grant from the National Institutes of Health to study how the immune system interacts with dangerous pathogens like H5N1 bird flu.

Like the voter in New Hampshire who famously asked Hillary Clinton about how she holds up on the campaign trail, I wanted to know how Hood does it, at age 70. …Next Page »

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Quote of the week in Seattle life sciences goes to Xconomist Clay Siegall: “For biotechnology, it sometimes feels as if we are always in a financial crisis,” he says. While the world faced the possibility of economic catastrophe, the headlines from Seattle biotech suggest it wasn’t all that unusual of a week, as companies continued to report incremental progress.

—ZymoGenetics, the granddaddy of Seattle biotechs, is getting ready to release data on an experimental drug for hepatitis C designed to have the viral killing power of standard interferon drugs, but without the nasty side effects. This is a “sleeper” drug in the ZymoGenetics pipeline, but early results from six patients suggest it is doing what the company wants, at a lower-than-expected dose.

—We’re in a financial crisis? If you’re CMC Icos Biologics, it’s the time to invest $35 million in an expansion of its biotech drug factory in Bothell, where it manufactures genetically engineered medicines for other companies under contract. We’ll have more to report on this strategy next week.

—The Technology Access Foundation (TAF) looks to improve computing skills among kids of color, but that’s not the only kind of tech it has in mind. TAF is helping teachers prepare lessons to get high schoolers excited about cutting-edge biotech, like new concepts in development for treating diabetes. Sure beats dissecting frogs.

—Leroy Hood gave Xconomy the exclusive story on his newest company, Integrated Diagnostics, in part of a wide-ranging interview. This company aims to develop tests that analyze drops of blood for early telltale signs of an emerging cancer, while it’s still at a treatable stage. A financing deal is expected to close in two or three months, Hood says.

—Siegall, the CEO of Seattle Genetics (NASDAQ: [[ticker:SGEN]), offered his perspective on what it takes to keep innovation alive in times of crisis. Read this, and your blood pressure will drop a few points, guaranteed.

—One fascinating local company that flies below the radar, Bothell, WA-based Halosource, said last week it is expanding into China. We wrote back in July that their water purification technology has started catching on in a big way in India, providing clean, cheap drinking water to more than 1 million people there. We’ll see if they can build on that momentum in the world’s most populous country.

—Lastly, we found a bit of evidence that credit markets haven’t ground completely to a halt. Omeros, a Seattle-based biotech company that backed away from an IPO this year, raised as much as $20 million in a debt financing. When something as risky as a biotech company with no marketed products can borrow money, it makes me wonder how much the commentators really know.

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Leroy Hood has a big idea for a new company. The legendary scientific entrepreneur, who invented the high-speed DNA sequencer that made the Human Genome Project possible, wants to develop a new generation of screening tests that are so precise at examining a drop of blood that they will usher in the era of what he calls P4 medicine—shorthand for predictive, preventive, personalized and participatory medicine. The startup would be called Integrated Diagnostics. It’s just one of many things Hood (an Xconomist) discussed with me in a wide-ranging interview this month at his office at the Institute for Systems Biology in Seattle.

“This company is going to transform medicine, I guarantee you,” Hood says.

Plenty of key details are still being worked out, like how much money the company is raising, what sort of intellectual property it is starting with, what sort of proof of concept exists, and who will end up backing it. Hood, who has co-founded Amgen (NASDAQ: AMGN), Applied Biosystems (NYSE: ABI), and Rosetta Inpharmatics, among other companies, said he expects to close the initial financing for Integrated Diagnostics within a couple months.

The new company is still keeping a low profile, and doesn’t have a website. It is being co-founded, according to Hood, by David Galas, a faculty member at the Institute for Systems Biology, who was trained as a theoretical physicist and is now a pioneer in computational biology. He is joined by Jim Heath, a chemist at Caltech, who is the inventor of two technologies that improve measurement of blood proteins, Hood says. One is a microfluidic chip that “will do for proteins what DNA chips did for messenger RNA or DNA fragments,” says Hood. The other is a set of simple chemicals Heath has developed to replace antibodies in diagnostic tests, which are hard to make and too unreliable, Hood says.

The vision here is that within five years, Integrated Diagnostics will have tests precise enough to diagnose emerging cancers so that doctors can combat them before people have physical symptoms, Hood says. Every one of the body’s major organs dumps unique proteins into the blood, which can give early warning signs of a disturbance in the body’s biological networks, Hood says. The company’s tests will allow doctors to separate patients into distinct groups to match their form of, say, breast cancer, with the most appropriate therapy. The work has been demonstrated in mouse experiments, Hood says.

Something similar to this early concept was bankrolled in 2005 at Accelerator, the Seattle-based incubator of life sciences companies. The company, then called Homestead Clinical, was supported by MPM Capital, Amgen Ventures, OVP Venture Partners, Arch Venture Partners, Versant Ventures, and Alexandria Real Estate Equities. That company hasn’t emerged from the Accelerator to raise more capital, and I didn’t have time to ask Hood in detail about what has changed to make Integrated Diagnostics such a compelling bet.

When the company is ready to talk in more detail, it will have to answer some big questions, like how it intends to go about the Herculean task of changing the culture of medicine from a reactive one that treats serious illness, to one that thinks first about catching disease before it shows obvious physical symptoms. Hood conceded that “this idea has been slow to catch on,” but it didn’t discourage him in the least.

“I think it’s going to be a company that spins off four or five other major companies before it’s finished,” Hood says.

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