Seattle-based DocuSign announced today it has received a strategic investment from Second Century Ventures, the VC fund of the National Association of Realtors. The amount was undisclosed, but the cash will be used to speed up and extend DocuSign’s efforts with residential and commercial real estate customers. DocuSign was founded in 2003 and makes software to automate and control the process of electronic signatures.

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[Updated 11/18/09, see below] This post is about how to get a better deal from VCs investing in your first round of financing. It is also about how to make the deal into a win-win. The idea for the post came from an exchange with @bakespace about some of the resources for entrepreneurs on FastIgnite.

This is About Series A Deals

Seed investments can be all over the map in terms of size ($50K – $1M+), structure (convertible debt or common/preferred equity), valuation, and investor rights. It’s hard to make generalizations about seed deals.

First-money-in Series A deals, on the other hand, tend to be much more cookie-cutter. Before we talk about why this is the case, let’s put a rough definition around the types of Series A financings I’m referring to:

• Not much has been raised previously—at most a few hundred thousands and ideally nothing.

• The product has not been (fully) built.

• The size of the round is at least $3M but preferably larger.

• You are talking to professional VCs with funds > $100M.

These deals tend be cookie-cutter because they are driven more by the cap table (the list of shareholders in a startup and how many shares they own) than by what the company might be worth independently.

What is Your Startup Worth?

This is a question entrepreneurs think a lot about. They come up with all kinds of arguments for justifying their notion of value pre-funding. The trouble is, most of the arguments are bogus because they miss an important point: a company that needs several million dollars today to build a business is not worth much at all without the dollars.

Say the goal is to stick a flag on top of Everest. You are a great alpinist but you have no money for the expedition. Your friend Bob loves what you do, happens to be excited about you climbing Everest and has tons of dough. Which is more important? Your ability to climb or the financing? You ability to climb is certainly scarcer and hence commands a certain premium, but in the end it’s a partnership. Money without an alpinist can’t get to Everest. An alpinist without funding can’t get to Everest either. It is the combination of the scarce talent (climbing) and the resources to make this talent productive (the dollars) that creates the value.

The Series A Valuation Process

What this means for your Series A deal is that, to a large extent, the value of your company is going to be reverse-engineered from the cap table. Here is how this works:

1. You and your investors agree you need $X ($3M, for example)

2. The investors want to own a certain percentage post-financing (I%) (2 x 20% = 40%, for example if two VCs are syndicating the deal)

3. The post-money valuation is now $X/I% or $3M/40% = $7.5M

4. You negotiate the size of the option pool (P%) (25%, for example)

5. Your true pre-money valuation (what the founders’ stake is worth) is $X*[(1-I%-P%)/I%] or $2,625,000.

There are two things to notice about this process. First, at no point did it require justifying the value of the startup. Second, the margin for negotiation is somewhat limited as (a) the option pool size should be budget-driven and (b) most investors, rightly or wrongly, are pretty set on the percentage ownership they require. (The reasons for this have to do with the business models of venture firms—which are too complicated to cover here.)

Without meaningful deal competition, you’ll be unlikely to affect the investor(s) target ownership percentage. So if you really want to get your VCs to take a lower percentage, you’ll have to work a lot harder to generate interest from multiple firms. Either that, or you’ll have to …Next Page »

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StudentBusinesses.com, a startup founded by a group of Harvard College graduates nearly two years ago to help entrepreneurial university students network with potential investors, advisors, and collaborators, has been acquired by the Ewing Marion Kauffman Foundation of Kansas City, MO, according to CEO and co-founder Travis May. The purchase price was undisclosed. The company’s online directory of student businesses and entrepreneurs, which is free to students and available by subscription to investment professionals, is being used by more than 30 universities, May says. The Kauffman Foundation, which will assume management for the site in Kansas City, “will be able to expand on the success we’ve seen so far,” he adds. “We are very pleased with the outcome, and we have successfully accomplished our dual goals for the venture: generating a strong return for our shareholders while also generating a positive impact.”

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The venture capital model is being remade. It must happen from the ground up, via its relationship with entrepreneurs, as Daphne Zohar has previously described here. But it must also happen from the top down, via its relationship with limited partners (the investors in venture funds).

Limited partners in venture capital funds aren’t very happy these days. After a decade of indifferent performance, 10-year returns for venture capital as an asset class are set to turn negative this year when the last of the dot-com exits disappear from the rolls. When that happens, the industry’s main performance peg will no longer hold up the venture capital marketing tent. Limited partners will find it even harder to allocate money to venture capital, and funds will find it more difficult than ever to raise money.

[Editor’s note: This article by San Diego Xconomist Paul Kedrosky continues the thread started last month by Boston Xconomist Daphne Zohar in Venture Model Makeover & Diet Plan---Step One]

Of course, that doesn’t mean that investors should abandon venture capital. There will always be good performance available from skilled investors adept at making early investments in illiquid private companies in emerging growth markets. The venture capital industry is not disappearing, nor is investor interest in the asset class. There is, however, an opportunity for investors to force change on a broken industry— there are specific changes that limited partners should force on partners at venture funds.

One perennial problem at venture funds flows from the compensation system. The standard compensation model for venture capitalists is “2 and 20”: Partners get a management fee of 2% of the assets under management, and then earn 20% (the “carry”) of any investing gains. To understand one reason why that model needs to change, it helps to take a walk through the math. On a $100-million fund, a 2% management fee provides $2 million in annual income for the partners, come good investing or bad. Given a reasonable numbers of partners, associates, administrative personnel, and office expenses, that isn’t anywhere near penury, but it isn’t entirely unreasonable either.

If you scale the fund size up, however, the same cannot be said. A 2% fee on a $500 million venture fund means $10 million in annual fees for the partnership. But you don’t have five times the operating expenses on a $500 million fund that you do on a $100 million fund. Costs go up, but nowhere near that much. What happens to the extra money? It typically turns into higher salaries for the partners, with it being common for senior partners at some of the largest venture funds to receive seven-figure incomes from fees alone. That is, of course, egregious and wrong, enabling partners to become at least moderately wealthy without making a single successful investment. It is a serious misalignment of incentives between limited and general partners.

What is the solution? Rather than shrinking the management fee percentage from 2% to …Next Page »

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The Oregon Entrepreneurs Network (OEN) has announced its lineup of 12 presenting companies for the Venture Northwest 2009 investment forum, to be held on Oct. 29 at The Nine’s Hotel in Portland, OR. The Seattle-area companies are Calidora Skin Systems, Doxo, Lucid Commerce, and MicroGreen Polymers, while the Portland-area companies are Advanced Inquiry Systems, Cularis, DesignMedix, Elemental Technologies, Giftango, Prolifiq, Second Porch, and Wicked Quick.

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Every once in a while, an investment model comes along that turns the innovation community on its head. The venture capital industry, still less than 50 years old, is one example. Now an emerging paradigm called royalty-based financing, applied to early-stage startups, may be another. The approach has its roots in the Boston area, and is starting to generate some serious buzz in the Northwest. If you’re a VC, angel investor, or entrepreneur, it definitely needs to be on your radar.

The concept of royalty-based financing is simple. Instead of buying equity in a young company, an investor agrees to receive a percentage of the company’s monthly revenues—up to a limit of, say, three to five times his or her investment. Instead of waiting five or 10 years for a startup to go public or get acquired, an investor can start seeing returns almost immediately. This approach means investors should be able to fund a much wider range of startups than just those that typically receive venture backing—the ones that have potential to grow huge, fast. The downside is that your returns are capped, so if you do end up backing the next Google or Amazon, you still only get five times your investment back. Meanwhile, for entrepreneurs, it provides startup money without having to give up an ownership stake in the company.

Royalty-based financing is not new, but it’s only been in the past few months that investors around Seattle, including the seed-stage fund Founder’s Co-op, have been openly exploring the model. In New England, a few investment firms are actively using it, led by Lexington, MA-based Royalty Capital Management, Wakefield, MA-based BDC Capital, and Portland, ME-based Rockwater Capital. Harvard Business School professor Clay Christensen (of The Innovator’s Dilemma fame) is a supporter of the model, and views it as disruptive to the venture capital industry.

The idea actually dates back to mining companies getting financed to dig for oil, natural gas, and minerals, and government-funded economic development programs. But it is getting renewed interest from VCs and angel investors who increasingly need returns fast, in a tough climate for exits. Indeed, royalty-based venture financing “has the real potential of becoming a major new sector in the private capital market,” says Arthur Fox, the founder of Royalty Capital Management, who first used the approach with startups in the early 1990s.

Back then, Fox was an advisor to several startups; he’s an MIT alum and was previously an engineer with HP and Westinghouse before co-founding three tech companies of his own. He first tried out the royalty-based idea as a way to get compensated by the companies he was mentoring, instead of taking some stock. He found that this made them more efficient with his time, plus he would get paid every month. So he decided to try out the strategy as an investor. “It changed everything, because the normal criteria in selecting companies as a venture capitalist is a high-growth one,” Fox says. “When you invest in a company, buying stock and equity, you have no way of getting out unless they become significantly large enough to have a liquidity event.” With the new approach, he says, “every month you get a check, and it doesn’t matter if they ever have an IPO, or get bought out.”

Fox’s two previous funds have returned good profits. His biggest win was Andover Advanced Technologies, a multimedia software startup that had no revenues when he originally invested $100,000 in 1993. After two years, Fox had gotten back $125,000 in his cut of the revenues, and he invested in a second round with an angel investor, in which he took some equity. The company (renamed Andover.net) went on to ride the dot-com wave with a successful IPO in 1999, and was acquired for $1 billion by VA Linux Systems in 2000. Fox’s stock ended up being worth $15 million. It’s an example, he says, of how …Next Page »

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Seattle-based Getty Images, the creator and distributor of online photos, videos, and other digital media, announced today it has made a strategic investment in Daylife, a media and content services company based in New York City. The two companies have also formed a partnership to create products that let customers more easily incorporate visual content on their websites. Terms of the deal were not disclosed, but All Things Digital, citing a regulatory filing, reports Getty invested $4 million in Daylife.

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Last month sure seemed like a busy one for Seattle-area startup financings, especially for summer. But the hard data paints a much more modest picture. Venture capitalists invested $25 million into four companies headquartered in Washington state last month, according to data provided to Xconomy by ChubbyBrain, a New York-based information services company that develops tools for investors, startups, and entrepreneurs. There was also one debt financing for a Washington company, worth $10 million. Two other firms with Seattle offices, but whose headquarters are elsewhere, raised $16.4 in venture funding.

The deals were spread evenly across software, mobile, gaming, and energy. The biggest one was Bellevue, WA-based Apptio’s $14 million Series B financing from Madrona Venture Group, Greylock Partners, and new investors Shasta Ventures and Andreessen Horowitz Fund. Apptio makes software to help businesses manage their IT costs.

A couple of notes about the companies that did not make the table below. Bellevue, WA-based Smith & Tinker’s most recent venture round, which we and others reported in August, didn’t make the list, as it closed in July. (The company has raised $29 million in funding to date.) Jambool, a virtual currency startup founded in Seattle and now headquartered in San Francisco, raised $5 million led by Madrona. And Profibrix, a Netherlands-based healthcare company focused on stopping surgical bleeding, which has a Seattle subsidiary, raised $11.4 million led by Gilde Healthcare Partners.

Four of the six venture financings in firms with ties to Washington state were Series B rounds, versus one Series A round—Madrona’s $3 million investment in mobile social gaming startup Z2Live—and one unspecified round, Portland, OR-based Pivotal Investments’ $2 million backing of Seattle solar developer Tuusso Energy (an early-stage deal). Madrona was the most active Seattle-area VC firm in August, being involved in three of the Washington deals.

In addition to the venture deals, Seattle-based NewPath Networks, a wireless infrastructure company, raised $10 million in debt financing from Square 1 Bank, to help expand its distributed antenna systems in the U.S.

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Redmond, WA-based Microvision (NASDAQ: MVIS), a display technology company, announced today it has received a $15 million investment from Taipei-based Walsin Lihwa, a wire and cable manufacturer. The deal comes in the form of a sale of common stock to Walsin Lihwa’s subsidiary, Max Display Enterprises Limited, as well as a warrant to purchase more shares.

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Seattle-based Foodista, an online cooking encyclopedia and wiki, has raised Series A funding from Amazon and other angel investors. The news was reported by PE Hub and TechCrunch, which said the amount of funding was $550,000. Foodista was launched in December by Amazon veterans Barnaby Dorfman and Sheri Wetherell.

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The Washington Technology Industry Association announced today its list of 24 local startups that will participate in its Fast Pitch Forum and Technology Showcase on May 27. The WTIA’s investment forum, which has changed its format this year, will include presentations from AdReady, blist, Bonanzle, BuddyTV, Daptiv, DataSphere Technologies, Gist, Konnects, Liquid Planner, Ontela, Pet Holdings, Picnik, Reality Gap, Redfin, The Robot Co-op, SEOmoz, Swype, Talent Spring, Teachstreet, Vantos, Visible Technologies, WhitePages, Widevine Technologies, and Widgetbucks (Mpire).

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If following the stock market’s swoon hasn’t been enough to sink your confidence in capitalism and the financial industry, you may want to try your hand at currency trading on the foreign exchange market. Enormous amounts of money slosh from border to border on the “forex” market, as it’s called—the equivalent of several trillion dollars each business day. Giant investment banks like Deutsche Bank, UBS, and Citi are the biggest traders, but thanks to the emergence of “retail” forex brokers such as FXCM—the currency-trading equivalents of online trading houses E*Trade or Schwab—it’s possible for individuals to play the forex market as well.

But currency trading can be a lonely, scary pastime for individuals. For good reason: most forex brokers allow account holders to leverage their trades at ratios of 100:1 or more (meaning they can put 100 borrowed dollars to work for every dollar of their own), so they can turn a tiny percentage change in the value of one currency against another into a huge gain in a matter of minutes—but just as easily lose their entire stake. As the FXCM website blandly states, “Trading foreign exchange with a high or even moderate level of leverage may not be suitable for all investors.”

Now there’s an online community based in Boston’s historic North End where forex traders can collaborate, share strategies, educate one another about the opportunities and risks of currency trading, and exchange kudos (or sympathy notes). It’s called Currensee. It’s currently in an invitation-only, beta-testing phase, but CEO Dave Lemont says the site will open to the general public this summer.

“It’s a very exciting asset class to trade in,” Lemont says of the forex market. Unlike the stock exchanges, currency trading isn’t plagued by bear markets, since a decline in one currency always means a gain for some other currency. (Making a profit is just a matter of picking the right side.) But one problem for traders, says Lemont, is that they’re alone a lot. “Currency trading is a 24-hour opportunity, because the markets rotate in their opening hours. So you might be at home on your computer at night while the kids are asleep, still trading,” he says. “Like anything you do, it’s an important decision, and you’re using your own money, so you want validation from other people. We are social people—we like to have interaction.”

Blogs and message boards provide some of that interaction. But it’s hard to know whether the people sharing their opinions online are putting their money where their mouths are. “I could be telling you to go long on the euro, but maybe I haven’t made a trade in two years,” says Lemont. “We would like to get other people’s opinions, but we like the opinions of trusted sources—information that is backed up by someone’s own trading history.”

The whole idea with Currensee—and the source of the name—is that members must be active currency traders, and are encouraged to let other members see information about their trading positions and performance, in the form of account data streamed directly from the sites of their online brokers, such as FXCM.

Currensee has many of the trappings of a Facebook or a MySpace, including personal profiles and friend networks, but Lemont says the company doesn’t use the social networking label. “We call it a ‘forex decision-making network,’” he says. “What we mean by that is that we try to take the real trades that people are making and provide information about those trades—either the trades themselves, or aggregated data—back to members, to help them make decisions about the trade they’re in or the next trade they’re going to make.”

Currensee’s co-founders are Israeli natives Avi Leventhal and Asaf Yigal. Leventhal is a longtime independent currency trader who offers forex courses and lectures around the world. (Which is a big business unto itself, by the way: “It’s easy to be unsuccessful just by doing it wrong,” Lemont says, so it’s advisable to seek training before you start trading with real money.) Yigal is a software engineer and former Israeli Navy researcher who …Next Page »

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We all know that just about every type of financial performance index for the last year showed a sharp turn downward. This definitely held true for venture capital. The National Venture Capital Association and Thomson Reuters today released Q4 2008 venture capital performance numbers showing that VC funds as a whole—early, balanced, and later stage combined—tumbled some 21 percent last year.

But if you dig deep enough into any pile of data, or go back far enough in time, you can usually find some good news. In this case, all you have to do is go back and average returns over the last three years to make the numbers come out positive. Compare that to, say, the NASDAQ or S&P 500, which doesn’t even generate a positive return when you go back 10 years—and there is the silver lining in the venture cloud. It was bad, the NVCA said, but not as bad as it could have been.

Here’s the table.

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Investors put $215 million into mobile technology companies in the Boston area in the first quarter of 2009, according to figures released today by Mobile Monday Boston, the local chapter of the global association for mobile professionals. That’s the largest amount raised by the mobile sector in the last five quarters, and it went to 11 companies.

“Despite reports of widespread venture capital decline, mobile investment in Massachusetts is still on the rise,” Mobile Monday Boston co-founder and organizer Kate Imbach said in a statement. “Boston is quickly establishing itself as the worldwide hub of mobile and wireless.”

The lion’s share of the funds raised came in the form of a $175 million sale of 17.4 million shares of stock by Nuance Communications (NASDAQ: NUAN) of Burlington, MA. Companies that raised venture funds in the quarter included Quantia Communications (Newton, MA, amount undisclosed), Onset Technology (Waltham, MA, $3 million), Vela Systems (Burlington, MA, $550,000), Quattro Wireless (Waltham, MA, $10 million), Extreme Reach (Needham, MA, $1.5 million), Black Duck (Waltham, MA, $9.5 million), Mintera (Acton, MA, $390,000), Everyday Solutions (Concord, MA, $500,000), Ember (Boston, $8 million), and MedAptus (Boston, $6 million).

Here’s a chart from Mobile Monday Boston illustrating quarterly mobile investments in the region:

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So the first quarter venture funding data were just released and the news for entrepreneurs was decidedly bad. It is pretty clear the party for “easy money”—particularly for cleantech companies–is emphatically over. Venture-backed companies raised only $3.9 billion in Q109, which is basically half what they raised this time a year ago. New England companies raised only $375 million. There were slightly fewer than 500 deals nationally this past quarter–and some analysts calculated that almost two-thirds of those investments were “insider-only” financings. Therefore, the rate of new company formation arguably has fallen dramatically. Anecdotally, not much appears to have changed in this current quarter, as the environment continues to be reasonably hostile to entrepreneurs and VCs alike.

Leading the downward spiral were consumer services and cleantech deals, down 70 percent and 59 percent, respectively, from the prior quarter. Right on their heels were information technology and business services investments (down 52 percent and 50). Perhaps somewhat surprisingly, healthcare was down a more modest 34 percent on a dollars invested basis; this is surprising because there are nearly 125 public biotech companies with less than a year of cash, and that does not even account for the many multiple hundreds of private biotech companies presumably still seeking capital—which, one would have thought, would have scared away investors.

But what should we have expected given the calamitous fall and winter of 2008? Clearly there was going to be an “echo boom” from the meltdown that was going to wash over the venture capital market. And these corrections are going to continue to be painful. One should expect unprecedented company closures over the next 12 months—particularly in the supply-side cleantech sector. The legacy company burn rates, lack of follow-on equity and debt capital, undefined business models, $45 barrel oil, and significant technical risks weigh heavily on many cleantech businesses now.

So where does that leave the New England marketplace? Amongst the rubble I see some good news. In difficult periods the venture marketplace tends to contract back to regions of historic strength. New England has always been a distant but steady number two to Silicon Valley. Over the last year this region has attracted between 10-15 percent of all venture capital (the Valley was between 35-40 percent). Of particular note, though, is that many venture firms in this region (Charles River Ventures, Atlas Venture, New Atlantic Ventures, .406 Ventures, RockPort Capital Partners, just to name a few) have been able to raise new funds—admittedly smaller than prior funds—which is clearly not the case for firms in secondary markets.

New England has a very diverse set of venture funds. The New England Venture Capital Association (of which I am the current Chairman) boasts 137 member firms, of which approximately 50 have made more than three new investments in the last year. This is a broad and diverse investor base which mirrors the many industries represented in this region, and it should serve us well in the days ahead.

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The silver lining in the big black rain clouds that were this weekend’s first quarter venture capital investment reports was that New England actually did better than just about anywhere else. As Bruce reported on Saturday, the nation’s venture outlays in Q1 tanked more than 50 percent, to their lowest levels in more than a decade. But thanks to some big deals (see below), led by A123Systems of Watertown, MA, venture investments in the region only slipped 15.5 percent.

That’s the glass half full view, of course. But the New England figures, from Dow Jones VentureSource, showed $594 million pumped into 61 regional deals during the first quarter, against $703 million invested in 83 deals in the same period of 2008. Compare that to, oh, say, the San Francisco Bay Area (which includes Silicon Valley in the VentureSource data). It still led the nation, with $1.14 billion invested in 139 deals. But the dollar figure was 57 percent off the first quarter of 2008, when $2.67 billion was pumped into 254 deals—and Q1 2009 saw the area’s lowest totals, in both dollars and deals, in at least a decade, according to VentureSource.

You can get the full story of first quarter venture investments in Bruce’s account here. But below are the Top 10 New England deals of the first quarter. Seven of the 10 are in healthcare/biotechnology, two (A123Systems and Lilliputian) are in energy and power, and just one, enterprise data protection company Sepaton, in pure information technology.

A123Systems (Watertown, MA) — $69 million
(Investors: GE Capital, GE Energy Financial Services, Conoco Phillips, Detroit Edison, Espirito Santo Ventures, North Bridge Venture Partners, CMEA, Alliance Bernstein, Qualcomm, Sequoia, Novus, and MIT)

Proteon Therapeutics (Waltham, MA) — $38 million
(Investors: MPM Capital, Intersouth Partners, Prism VentureWorks, Skyline Ventures, TVM Capital, Individual Investors)

Still River Systems (Littleton, MA) — $33 million
(Investors: Venrock, CHL Medical Partners)

Aveo Pharmaceuticals (Cambridge, MA) — $30 million
(Investor: Biogen Idec)

Lilliputian Systems (Wilmington, MA) — $27.9 million
(Investors: Altira Group, Atlas Venture, Fairhaven Capital Partners, Kleiner Perkins Caufield & Byers, RockPort Capital Partners, Stata Venture Partners)

Hydra Biosciences (Cambridge, MA) — $22.2 million
(Investor: MedImmune)

Marinus Pharmaceuticals (Branford, CT) — $20 million
(Investors: Canaan Partners, Domain Associates, Foundation Medical Partners, Sofinnova Ventures)

Sepaton (Marlborough, MA) — $15.5 million
(Investors: Focus Ventures, HarbourVest Partners, Jerusalem Venture Partners, Menlo Ventures, Valhalla Partners)

Surface Logix (Brighton, MA) — $15 million
(Investors: Arch Venture Partners, HBM Partners , Intel Capital, MPM Capital, Unilever Technology Ventures, Venrock)

Stemgent (Cambridge, MA) — $14 million
(Investors: HealthCare Ventures, Morgenthaler)

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It was a relatively busy week for deals in the Northwest, with plenty of action in software, biotech, and alternative energy.

—Seattle and San Francisco-based Twilio, a startup that provides cloud-based tools for building voice applications over the phone, raised its first institutional round of funding from Founders Fund and computing pioneer Mitchell Kapor. The amount was not disclosed. Twilio co-founder Jeff Lawson talked with me about the deal and how it will help the company expand its services.

—Seattle’s Principle Power, a wind energy startup, is in the process of raising $20 million to develop the world’s first floating wind farm in the deep waters off the coasts of Oregon and Portugal. Principle Power’s CEO, Alla Weinstein, wouldn’t say who the company’s strategic investors are, but she did say that no VC firms or Seattle investors are involved. The deal is expected to close in the second quarter of this year.

—Luke broke the exclusive story of Merck’s Stephen Friend raising $5 million in anonymous donations to pursue the vision of open-source drug development at a new Seattle nonprofit called Sage. The idea is to provide an open database of patients’ genomic profiles that researchers, doctors, and drug companies can access in order to make better drugs.

—Bellevue, WA-based Ignition Partners led a $10 million investment in Zenprise, a mobile-management software startup in Fremont, CA. Existing investors Bay Partners, Mayfield, and Shasta Ventures also participated in the round. Zenprise makes automated software to help businesses fix IT problems with smartphones.

—Seattle-based Arzeda, a University of Washington startup that designs custom-built enzymes, has secured commitments from OVP Venture Partners and WRF Capital to anchor its $12 million …Next Page »

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Bellevue, WA-based Intellectual Ventures said today it has formed an alliance with Telcordia Technologies, a networking and telecommunications firm in Piscataway, NJ. Intellectual Ventures has acquired the rights to license about 500 of Telcordia’s patents, and in return, has also agreed to fund inventions from Telcordia’s R&D lab. Financial terms of the deal were not given.

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Here are a couple of compelling tidbits from around the horn about the exploits of some of our favorite Seattle-area billionaires. A strange window into an alternate reality, if you ask me.

—Paul Allen, co-founder of Microsoft and head of Seattle-based Vulcan, has his investment portfolio examined by CNET. The article kicks off by mentioning the recent bankruptcy filing by Charter Communications and layoffs at Vulcan. It argues that some of Allen’s investments in media companies—DreamWorks SKG and Oxygen Media, which he put a total of around $1 billion into—have fared better than his technology bets, such as ZoomInfo, Infinia Networks, and Radar Networks. The article doesn’t mention Vulcan’s more recent investments in promising Seattle startups like Gist and Evri.

—Charles Simonyi, the father of Microsoft Word and Excel and now head of Bellevue-based Intentional Software, spoke with the Seattle Times from Russia about space tourism and other surreal matters. Simonyi is slated to make his second trip to the International Space Station aboard a Soyuz rocket on March 26 (at a cost of around $35 million). He is in the middle of a space-training regimen near Moscow that began on January 10. It’s like riding a bike, he says. One interesting detail is that he can’t bring his Kindle e-book reader aboard the space station, because it’s not officially qualified—the battery of an unknown electronic device might burst into flames there.

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[Updated Feb. 18 with newly confirmed panelist Linden Rhoads of UW TechTransfer:]
Cleantech and renewable energy are rare examples of fast-growing areas of investment and entrepreneurial activity—but the Northwest is behind the curve in these emerging arenas compared to Silicon Valley, New England, and some other parts of the country. The Northwest, however, is developing nearly unrivaled expertise in key areas like the intersection of cleantech and information technology. Whether it’s energy efficiency, green buildings, or smart-grid infrastructure, the tools and technologies coming out of this sector will go a long way toward determining our region’s growth and competitiveness. Xconomy Seattle has recently reported on several efforts to build regional leadership in cleantech, such as a Washington state-appointed task force and a national R&D network.

So what are the most promising areas of commercialization in cleantech and computing, and how big are the opportunities? Are other areas of the energy economy (e.g., biofuels, solar) also poised for growth that the region can take advantage of? What kinds of companies are VCs and investors looking to fund? And what should business and policy leaders in the Northwest do to allocate resources, maximize competitive advantages, and accelerate economic growth?

We will pose these questions, and more, to some of the world’s leading authorities at an upcoming Xconomy Forum on The Rise of Cleantech in the Northwest. This evening panel discussion and networking event will take place from 6 to 8:30 pm on March 26, at the law firm K&L Gates in downtown Seattle. The event is sponsored by Climate Solutions, an environmental nonprofit, and will bring leaders in energy, technology, finance, and policy together with C-level executives, venture capitalists, angel investors, entrepreneurs, and other leaders in the innovation community.

Now, a bit about our distinguished panelists:

—Michael Butler, chairman and CEO of Seattle-based Cascadia Capital, brings a wealth of experience in cleantech finance and investment banking. Most recently, he spoke with Xconomy about the need for the Northwest to get organized around its strengths in alternative energy and software, and the importance of public- and private-sector partnerships.

—Jesse Berst, managing director of Redmond, WA-based Global Smart Energy, will speak about why the U.S. needs a smart energy grid, what it will take to achieve that goal, and how the Northwest—and the nation—will fare in the emerging “electricity economy.”

—Jeremy Jaech, CEO of Seattle-based Verdiem, will talk about the convergence of energy innovation and information technology in the current economic climate. The co-founder of Aldus and Visio will discuss business opportunities in software-meets-cleantech, as well as the competitive strengths of the Northwest and how they can be maximized.

—Mark Aggar, director of environmental technology strategy at Microsoft, will talk about sustainable computing and the role of big companies in advancing green IT, power management, and environmental policy.

—Linden Rhoads, vice provost, UW TechTransfer, will discuss the role of research, startups, and venture capital in the cleantech revolution. She recently spoke with Xconomy about VCs and tech transfer.

The event will begin with registration at 6 pm, with the panel to follow 30 minutes later, and plenty of time left at the end for networking. You can find details about how to register here. We hope you will join us, and look forward to seeing you there.

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