A young Canadian software startup with Boston investors is now part of a big Boston-area company. Ottawa-based Blaze Software has been acquired by Cambridge, MA-based Akamai (NASDAQ: AKAM) for an undisclosed cash sum.

What’s interesting here is that Akamai, the Web content delivery and networking giant, is making a move into Web performance optimization—basically tackling Web performance at the browser level (what some call “front end”), rather than the network level. Akamai has been positioning itself as a one-stop provider of a secure platform for businesses to reach customers via the Web, mobile, and cloud. That approach also includes, among other things, speeding up Web and mobile applications, as evidenced by the company’s recent acquisition of its California-based rival Cotendo for $268 million.

Today’s deal is no doubt smaller than that, but it could be an important sign of things to come—especially around Boston. Blaze started in 2010, and its seed funding came from local investors CommonAngels and Boston Seed Capital. So why sell now?

“You always have a choice of how you want to grow the business,” says Chris Sheehan, managing director of CommonAngels. “It made a lot of sense for the guys to partner up with Akamai, who’s so strong in the [content delivery network] space. When I made the investment, [Web performance optimization] was just beginning. The timing was sooner than I expected. But in the last 12 months, this whole thing has really started to take off.” [Disclosure: CommonAngels is an investor in Xconomy, and Sheehan is a board member at Xconomy.]

Blaze’s approach is to optimize the code on Web pages so as to speed up the transmission of content and render pages faster on whatever device the customer is browsing on—PC, tablet, or smartphone. This is particularly useful for e-commerce and media sites, which tend to get gummed up by lots of different pieces of code loading on them. The company’s technology (and team) will be integrated into Akamai’s cloud platform, said Rick McConnell, executive vice president of products and development at Akamai, in a statement.

In speeding up websites, Blaze competes directly with Boston-based companies Yottaa (which is also in Boston Seed’s portfolio) and SiteSpect. Google’s team in Kendall Square also released a free tool for Web page optimization in the fall of 2010.

It’s not just about making websites faster, however. All of the above companies have been trying to combine Web optimization with business analytics so as to help businesses track things like sales and customer behavior more effectively. Now Akamai is firmly in the game, and we’ll see how that affects the competitive landscape.

“It’s going to make it a lot harder,” Sheehan says. “It puts a lot of pressure on the other startups.”

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Don’t know about you, but I’m less interested in Facebook’s IPO than I am in the efforts of people trying to find the next Facebook out of Boston/Cambridge. One such effort is the new Experiment Fund, based at Harvard University, which I wrote about earlier this week.

Turns out there’s more to the latest seed-stage fund in Boston than initially meets the eye. I had a chance to speak with the Experiment Fund’s co-founders, Hugo Van Vuuren of Harvard and Patrick Chung, a partner at Silicon Valley-based New Enterprise Associates (not that Patrick Chung, that Patrick Chung).

They clarified the goals of the new fund and provided some more context around how it plans to distinguish itself from other similar efforts. I’ve also talked with a number of other early-stage investors around town and have gotten a better sense of how the Experiment Fund is being received locally (more on that below).

First, some mechanics of the fund, which has been in the works for about two years. Harvard has no financial stake and will have no say in the fund’s investment decisions, but it has provided support and office space, Van Vuuren says. He declined to specify the projected size of the fund, but he said it plans to make four to six new investments over the next two years, each in roughly the $100,000 to $250,000 range.

The Experiment Fund has already invested in four companies: Rock Health (see my colleague Wade’s stories here and here), Omada Health, Punch Media, and Tivli. Interestingly, only Tivli is based in the Boston area. Rock Health and Omada are in San Francisco, and Punch Media is in the DC area. They all were started by Harvard students—the key ingredient for now—but the fund intends to invest in teams from other schools around Boston and the East Coast, as well. So I’m guessing its next four investments will be pretty different from its first four, at least geographically.

“We want to meet them here,” Chung says. “We want to help you right here in Boston where the ideas were first born, where the team was put together.”

One issue they wanted to address was the notion that the fund is … Next Page »

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Snapette was supposed to be an unusual way for Sarah Paiji to spend the summer between her two years at Harvard Business School. It was a mobile app idea she started working on last winter with Harvard alum Jinhee Ahn Kim, aimed at enabling women to better share and find fashion products in brick-and-mortar stores.

Then, two days before school was set to wrap up that first year, a Twitter interaction with the colorful Silicon Valley investor Dave McClure more or less changed all that, Paiji says. She tweeted an infographic about local shopping, which McClure then retweeted. He also directed his Twitter followers to sign up for the Snapette fashion app. The resulting traffic clued Paiji in to the fact that McClure was someone important in the startup world.

At the suggestion of friends, Paiji reached out to McClure, who runs the 500 Startups seed fund and accelerator in Mountain View, CA, to share some more information on her company. “He liked the idea but said he doesn’t know anything about fashion,” she says. So McClure passed Snapette along to his 500 Startups partner Christine Tsai and Jess Lee, founder of fashion tech startup Polyvore, to take a look at the company. Snapette got the OK, the 500 Startups fund invested an initial $50,000, and Snapette left its digs at Boston’s MassChallenge program to join McClure’s accelerator—three weeks after it had already started.

Now, Paiji is working full-time on Snapette and has no foreseeable plans to return to business school. The 500 Startups demo day in August put Snapette in front of 700 investors.”If they’re interested, it’s hard to say you’re going to back to school and will do this on the side,” says Paiji.

“It was very thematic of the whole journey: unexpected,” she says.

(And this isn’t the first startup I’ve written about whose Twitter interactions with McClure ultimately led to inking an investment from him. The other one would be Cambridge, MA-founded and now San Francisco-based Baydin.)

Snapette officially launched its app in late August in conjunction with demo day, and Kim and Paiji finished up the year at Dogpatch Labs in Palo Alto, CA. The company also continued to be a part of the MassChallenge program remotely, Paiji says.

Just last month, it made the move to New York City (to Dogpatch Labs, again) to be near the “high shopping density of boutiques and users,” says Paiji, who I caught up with in Boston this week.

There’s plenty of buzz around social, local, mobile, and even fashion tech startups. So what makes Snapette different? Most of the plug-ins and apps and platforms aimed at better tailoring shopping to consumer preferences exist in the online world. Not so much for the physical world. “Our idea was, we would love to help women find great products in stores using crowdsourcing,” Paiji says.

Snapette’s iPhone and iPad interface provides a stream of product pictures that have been uploaded by the user community, with information on the brand, price, and store that carries it. Users can search streams near them, and get directions to the store selling the products nearby. They can also interact with and follow others in the Snapette community, share products to other social media outlets, and view a stream of what products are hot and trending based on likes and comments on Snapette.

“It feels like Pinterest for the real world,” says Paiji. (The comparison had to be drawn.)

Snapette has since expanded beyond this crowdsourced content, and is explicitly partnering with brands and boutiques looking … Next Page »

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There seemed to be a paucity of news from San Diego’s life sciences sector over the past week, which makes our briefing especially brief.

—San Diego-based Qualcomm (NASDAQ: QCOM) established a $100 million fund for investing in wireless health and related health IT startups. The fund will be managed by Qualcomm Ventures, which already has invested in Sotera Wireless, Telcare, AliveCor, Cambridge Temperature Concepts, and WorkSmart Labs. In addition to the Qualcomm Life Fund, the wireless giant also unveiled a new subsidiary, Qualcomm Life, as well as a wireless connectivity platform developed to enable medical device makers to connect through the Internet to online data centers.

—Carol Gallagher, who is now the executive chair of San Diego’s AnaptysBio, offered some 140-character gems in an Xconomy-moderated Twitter chat about the state of biotech startups. In one epigram, the former Calistoga Pharmaceuticals CEO explained in one tweet why the Seattle biotech succeeded. Gallagher wrote: “Calistoga had a very clear and well-differentiated hypothesis that at each step the card turned over favorably and a Gr8 team.”

—Aviva BioSciences, a San Diego clinical research organization, disclosed that it plans to raise $500,000 through a combination of debt, securities, and rights to acquire securities, according to a recent regulatory filing. The company offers both specialized products, such as magnetic separation kits, and services, such as ion channel screening and custom cell lines.

—San Diego-based TrovaGene named Antonius Schuh as CEO, overseeing the company’s development of urine-based diagnostic assays that can be used to screen patients for infectious diseases. Schuh previously served as the chairman and chief executive of Sorrento Therapeutics, a biotechnology company he co-founded based on proprietary technology for generating very large libraries of human antibodies.

—San Diego’s Essentialis, which is developing a new medicine for treating cardiovascular and metabolic disease, said it had promoted Aaron Berg from president and chief commercial officer to CEO. Berg, who joined Essentialis just over a year ago, previously held senior positions at Schering-Plough and Kos Pharmaceuticals. Berg also joined the company’s board of directors.

—Neox Clinical Research, a clinical research organization, or CRO, based in the Czech Republic, said it plans to open an office in San Diego next year that will serve as the company’s North American headquarters. Matt Delaney, who was previously vice president of global sales and marketing for a rival CRO, was named managing director of Neox’s U.S. operations.

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The Boston ecosystem for tech startup investing just got a little more active. Boston Seed Capital said today it has hired Dave Balter, the CEO of BzzAgent, as a venture advisor (see photo, right).

Balter joins Peter Blacklow from Worldwinner, now executive vice president of digital for GSN, as a top advisor to the fund. Both are keeping their current roles in their respective companies as well.

Boston Seed Capital is run by Nicole Stata, the founder and former CEO of human-resources software firm Deploy Solutions, which she led for 11 years before its sale to Kronos in 2007. (If there’s one thing you get from this article, please learn how to pronounce Stata correctly: “STAY-ta.” Yes, she comes from a famous family.)

Boston Seed, which has offices in Newton, MA, is an early-stage investment firm that is about a year old. It invested in eight startups in its first year—most recently, Shareaholic, FitnessKeeper, and Relive (just last week). Other investments include Krush, Yottaa, EverTrue, Kinvey, peerTransfer, and Smarterer. Most of its startups are based around Boston, though Stata says, “We invest from Boston to pretty much anywhere.”

Stata (see photo, left) declined to give specifics about the size of her fund or how much she’ll invest in a typical startup. She did say she’s looking at seed-stage to Series A investments, is testing “the micro-venture model” while “keeping as close as possible to a traditional venture fund,” and is “eager to work with [other] venture firms.” In terms of sectors, Stata says Boston Seed focuses on “enabling platforms for Internet, mobile, and data.”

There is a question of how Boston Seed will differentiate itself from other local micro-VC funds such as NextView Ventures and Project 11 (not to mention angel groups). Stata herself has expertise in software as a service, human capital management, and business software. Blacklow brings plenty of gaming and marketing know-how. And the addition of Balter brings more leadership in marketing, social media, and company-building, as well as more contacts with entrepreneurs, investors, and thought leaders.

Indeed, the point of bringing in Balter is to provide “existing CEO feedback” to startups, says Stata. “It’s something I wish I had done when I was running Deploy,” she says. (Balter’s company, BzzAgent, is owned by Tesco/Dunnhumby after an acquisition earlier this year.)

So why does Stata want to do venture capital now, instead of starting another company herself? At Deploy, she says, “I was heads down, and quite myopic in my field. I wasn’t good enough at looking around at what was happening. I wanted to understand, what does the world look like today and where is it going?” As an investor, she says, “I can help a lot of companies instead of just one. That’s a big motivator.”

That brings her back to Boston Seed’s essence. “We really want to help startups,” she says. “That’s the reputation we want to get. We have to earn it.”

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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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It is a dark time for biofuels companies—and industrial biotech around Boston, more broadly.

Xconomy has learned that Qteros, a heavily funded developer of cellulosic ethanol technology based in Marlborough, MA, has laid off most of its staff, including its CEO John McCarthy. The news was reported earlier today by Dan Primack at Fortune. Xconomy received a tip yesterday from a source with knowledge of the company.

The source said that Qteros “couldn’t raise money” and was “reduced to a skeleton crew to sell anything of value.” Mick Sawka, who is listed on the company’s website as senior vice president, is the acting CEO, according to the source. Messages left with Qteros and Battery Ventures, one of the company’s lead investors, were not returned.

Qteros started in 2006 as SunEthanol (it changed its name in 2008), out of UMass Amherst. Its investors include Battery, Venrock Associates, Long River Ventures, Soros Fund Management, Camros Capital, Valero Energy, and BP. By our count, the company had raised nearly $30 million prior to its most recent financing, which was a $22 million Series C round announced at the beginning of this year.

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It’s an exciting time to be an entrepreneur. There are no shortage of problems to solve, ever-lowering barriers to entry, and near-ubiquitous access to low/no-cost technologies, which makes damn near anything possible. I adore working side-by-side with those who also see the world as an experience in which to participate rather than just consume. I am constantly energized and inspired by their works. These are my people, ambitious and proud.

My business being invention and intervention during a company’s earliest stage, I spend a good deal of time in different American cities working with entrepreneurs and those who advocate on their behalf. Having the opportunity to serve these folks while experiencing their local entrepreneurial networks firsthand, I have observed a number of too-disparate, closed-loop entities along the way that are effectively guiding startup community members towards market viability. Historically, entrepreneurs have existed at one end of the ecosystem with investors at the other. A startup has to leap the chasm of proving their business scalable and, as such, investment worthy. The accelerator model pioneered by Paul Graham with Y Combinator disrupted that century-old model, moving down the chain halfway closer to budding entrepreneurs and providing them with sustenance in the form of small investments, as well as mentorship and a community of fellow entrepreneurs off which to bounce ideas.

It is my contention that the proliferation of startup accelerators and the subsequent realignment of early-stage capital behind the best of them to serve as a pipeline and viability filter has revealed a kink in the overall process of starting up for an overwhelming majority of entrepreneurs. As a result, thousands of would-be founders are currently mired in the “dead zone” that exists between ambition and minimum viability. The accelerator model, while certainly a net-positive for entrepreneurship, only serves the small minority of today’s entrepreneurs—those with technical expertise or a co-founder with the same who can clearly and concisely convey an idea. In aggressively cultivating the large majority, you direct the flood of ambitious folks waiting to be guided toward viability to existing early-stage market filters, fundamentally changing the landscape of entrepreneurship while simultaneously realigning the existing network of capital behind filters even further down the chain and closer to entrepreneurs.

Most every market—be it thriving, dormant, or beginning to burgeon—has more than enough resources to catalyze and drive a fertile startup community, including Detroit. You all have the raw ingredients: advocates, entrepreneurs, and investors. It’s not a question of resources, but how they are directed or, in this case, misdirected. Who you consider to be an entrepreneur or, more specifically, what your allocation of attention and resources would suggest, is fundamentally flawed. After engaging with hundreds of entrepreneurs on the subject, I find that for a city and its investment community, there are actually five types of entrepreneurs, and that acting passively … Next Page »

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“We’re not social media investors,” says Scott Maxwell. And I like him already.

Maxwell is the founder of OpenView Venture Partners. The Boston-based VC firm is different from a lot of its peers in that it doesn’t typically invest in early-stage startups or late-stage growth companies. Instead it specializes in something in between, what it calls “expansion stage” deals: OpenView’s sweet spot is investing $5-15 million in tech companies that are making $2-20 million in annual sales and are wanting to get to $100 million in revenue, he says.

As Maxwell suggests, OpenView’s sector focus is less on social technologies, and more on the less flashy but highly lucrative fields of business software, cloud computing, and software as a service. The firm does look at consumer technologies, he says, but so far it has invested only in business-to-business companies. “You can invest in aspirin, vitamins, or endorphins,” Maxwell says. “A lot of [social media] is investing in endorphins. We’re much better at aspirin.”

OpenView has been around since 2006 and focuses on companies that are building their customer base in North America. The firm grew out of Maxwell’s experience at Insight Venture Partners, which he joined in 2000. Long before that, he was an MIT PhD in mechanical engineering and an MIT Sloan School MBA. He spent the ‘80s doing technology development at a couple of California startups, and the ‘90s working in financial services.

As he explains with his VC hat on, the expansion stage is the “best risk-return investment. It’s a really good point to invest. The expertise you need is unique compared to early stage or later growth stage.” The great majority of companies OpenView invests in are already “successful, chugging along, and growing nicely,” he says. (It’s still a bit early to talk about the payoff though—more on that below.)

Back in the summer, I talked with Maxwell (see photo, left) in depth about OpenView’s approach to investing in and supporting mid-stage tech companies—a stage that seems sorely lacking in capital, given the glut of seed- and early-stage investments being made out there. We also talked about broader trends in cloud computing, mobile software, and the Boston-area technology ecosystem. I wanted to relay some highlights here that have stayed with me.

But first, let’s address the b-word. When we spoke, in early August, there was a lot of talk about a new tech bubble, especially around early-stage companies. Maxwell was prescient in his response to my query. “I haven’t take a bubble bath in a long time,” he said. “There are lots of [kinds of] formations of bubbles. Sometimes they get bigger and slowly dissipate, or they get really big and pop. I think bubbles pop when everyone is all-in. When all the money is in, it has to come out.”

Maxwell contrasted the market dynamics with the original dot-com bubble. “By the time we got to ’99-2000, everyone who was going to be all-in was all-in,” he said. “My sense is we’re not there yet. We’re in an inflated state, but for me it feels tempered.”

With that in mind, Maxwell said, OpenView’s “philosophy is to keep building the … Next Page »

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The early-stage tech accelerator business just got even more competitive.

Boulder, CO-based TechStars, which runs seed-stage mentorship programs for startups in Boulder, Boston, Seattle, and New York, announced today it has raised a new $24 million fund from a long list of investors that includes Foundry Group, IA Ventures, Avalon Ventures, DFJ Mercury, SoftBank Capital, SVB Financial Group, RRE Ventures, and Right Side Capital Management. The new money brings TechStars’ total funding to roughly $34 million (from over 75 venture capital firms and angel investors).

Here’s what’s more interesting. The new money will be used to offer each new company accepted into TechStars an additional $100,000 in the form of a convertible note. That will be effective for all 2012 programs, and is on top of the $6,000 per founder that TechStars provides in its 12-week boot camps in exchange for a 6 percent equity stake in each startup.

The $100K will help teams worry less about early fundraising and should “entice a broader spectrum of would-be entrepreneurs to consider” the program, says TechStars founder and CEO David Cohen.

I asked Cohen via e-mail about how the extra money would help TechStars compete against other incubator programs—most notably, Silicon Valley-based Y Combinator, which started offering $150K to each of its startups earlier this year.

“I don’t think the best companies really pick an accelerator based on a small amount of funding like this,” Cohen says. “I think they pick on results and reputation. Results matter. The average TechStars company raises over $1M. Seven of the first 20 have been acquired. We have some great historical data which we are transparent about and I think this matters.”

Cohen went on to stress some of his program’s merits for entrepreneurs—the focus on a small number of teams, and the wide backing from investors. “Hopefully they pick TechStars also because of our focus on quality over quantity, and based on the quality of our mentorship,” he says. “I also hope they pick TechStars because we are so widely supported, and are backed by more than 75 VCs and angels. This makes a real difference for our companies, and I don’t think anybody else offers such breadth of mentorship and investment backing. This $100k per startup offer comes from a wide variety of venture funds nationally, and we think that’s different too. Imagine having the support of so many, right out of the gate.”

So will TechStars be expanding its programs or moving into new cities anytime soon? Cohen didn’t give any specifics, but he said much of the new funding would be used “for future operations and financings.”

Lastly, I asked him about the challenge of maintaining the TechStars culture and quality of mentorship as the program continues to grow—and as the noise and redundancy among early-stage tech companies, ideas, and incubators seems to keeps growing too.

“We fund about ten companies at once, and put the full focus of our organization on them,” Cohen says. “We bring the best mentors available to the table and get them to deeply engage with these companies. We want every company we fund to be successful. We haven’t changed our focus on quality over quantity as we’ve carefully and slowly expanded. We’re the same TechStars as we’ve always been, and we just keep piling on the unfair advantages that we give the startups we fund.”

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Nukona, a Solana Beach, CA-based software developer that enables IT administrators to manage consumer-oriented mobile apps, says today it has closed on a funding round led by Citrix Systems’ Startup Accelerator program in Santa Clara, CA.

The corporate incubator program was launched earlier this year by Fort Lauderdale, FL-based Citrix Systems. The accelerator program, which can last as long as 18 months, provides seed funding, office space, business mentoring, access to Citrix technology, and other benefits to qualifying startups. In April, the accelerator announced a “global challenge” to determine the first 12 early stage companies to be admitted to the program.

John McIntyre, managing director of the Citrix Startup Accelerator, wrote about the Nukona investment on his blog last month. McIntyre also listed all 12 of the startups selected for the program on his blog three months ago, and writes that the Startup Accelerator Center is staging an open house tomorrow evening.

Nukona disclosed in an e-mail today that it had landed funding from the corporate accelerator. The suburban San Diego company did not reveal the amount of funding it has received, but Citrix said in April that winners of its global challenge competition would be eligible for up to $400,000 in seed money.

In the e-mail from Nukona, co-founder and CEO Chris Perret said the funding round, which also included some angel investors, would be used to accelerate a number of security and policy management features for Nukona’s flagship App Center product line.

Nukona says on its website that its technology addresses the headaches that enterprise IT administrators face as authorized network users adopt consumer-oriented personal devices for use in corporate applications. The company says it specializes in the mobile security problems posed by Android and iOS-based devices, as well as apps downloaded from private app stores.

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Some big changes are afoot at an interesting Boston-area laser startup. TeraDiode, a Littleton, MA-based maker of laser systems for cutting, welding, and defense applications, said today it has named Parviz Tayebati the company’s new CEO and board member.

Tayebati, the former chief executive of telecom laser company Azna and photonics firm CoreTek, succeeds TeraDiode’s founding CEO and investor, David Sossen. Sossen is no longer listed on the company’s website as a member of the leadership team, and the firm isn’t taking interview requests today, according to a spokesperson.

Earlier this summer, Sossen told me about TeraDiode’s history and some of its technology’s far-out applications, such as laser weapons that could be deployed on a tank or ship to disable UAVs or blow up incoming rockets. That’s still years away, though. TeraDiode’s present applications include industrial welding, military target illumination, and heat-seeking-missile deterrents.

The company’s technology, based on a technique called wavelength beam combining, was developed at MIT Lincoln Lab to make direct-diode lasers brighter, more powerful, and more focused. In 2009, TeraDiode raised $4 million in Series A financing led by Stata Venture Partners. Last month, the startup said it had secured $3.2 million in new defense-related contracts.

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[Updated 3:00pm, see below] Providence, RI-based Betaspring, a seed-stage accelerator program in its third year, is holding its Investor Demo Day down in the Ocean State today. Eleven young startups, between three months and a year old, are presenting to an audience of venture capitalists, angel investors, entrepreneurs, and media. Looks like most (if not all) of them are Internet software or mobile-related.

Here’s a quick rundown on this summer’s class, courtesy of Betaspring founder and managing partner Allan Tear:

BuildingLayer
Intuitive mapping and wayfinding solutions for indoor spaces

TouchBase
Keeping teens and parents in touch over a private, mobile network

Revenizer
Easy marketing scorecards to help companies grow faster

Mosec
Speech-to-text for mobile professionals, integrated directly with CRM systems

Nest4Less
Relationship marketing platform for realtors and home owners

Translate Abroad
Translate Chinese writing into English using your mobile phone

Inhabi
Matching landlords with prequalified renters

Zoko
Enabling dinner groups to form, plan, and grow dinner parties

Study Egg
Increasing learning performance for college students with short activities via smartphone

FittedFashion
Custom clothing platform delivered through digital tailoring technology

…and the final company has a name and logo that I can’t read. Orb? Corb? (No website.) [Update: I'm told it's Gorb.]
Bringing skill-based wagers to mobile gaming

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The best way to get to know Dave Balter is over a beer. The founder and CEO of Boston-based marketing firm BzzAgent (now part of U.K.-based Dunnhumby/Tesco) is known for speaking his mind, but over a beer it’s even better. I’m not sure what he was drinking when he replied to my e-mail yesterday as he flew across the pond at 39,000 feet, but it appears to have loosened him up nicely.

I saw Balter speak at Angel Bootcamp in June, and his straight shooting impressed me then. Basically, he said that many entrepreneurs and execs have an inflated sense of themselves and their companies just because they’ve raised money and have had some success. Savvy investors should look for humble founders who are always learning, work harder than others, and have a fearless, grind-it-out mentality, he said. The following week, Balter came out with an article in Inc. Magazine in which he admitted his ego nearly destroyed BzzAgent; he implored entrepreneurs to stay humble, a process that he calls “the humility imperative.”

In addition to his CEO and angel investor duties, Balter is the author of two books on word-of-mouth marketing and the creator of numerous blogs, so he’s a bit of a polymath. He recently became a co-founder and executive chairman of Smarterer, another Boston tech startup. He’s also a newly minted Xconomist.

But his latest project (back to the beer now) is “DB Tech Prom,” a blow-out gala for the Boston tech community, to be held on October 20. There has been a lot of talk about creating a culture that celebrates entrepreneurship here in Boston, and this event seems to address that. At the same time, there’s no shortage of tech parties and gatherings these days, so I wondered what the real point was. Balter answered that, and much more, below.

Here are some highlights from our e-mail exchange:

Xconomy: Why is Tech Prom important for the Boston startup community, and what are its goals? If it’s about fostering a culture of celebrating entrepreneurship, how do we balance that with the humility imperative?

Dave Balter: After some very non-scientific poll-taking and survey-manipulating, we found that most individuals in Boston’s tech scene didn’t have the perfect prom experience. Some of this is of course due to intense, paralyzing high-school-nerdiness and less-than-impressive early-development social skills (see Sixteen Candles for widely referenced examples), but oh how things have changed. Now the techies have inherited celebrity status, and nerdiness…well, it’s in baby, it’s in.

This event should be a watershed moment that allows Boston to strut its stuff. And we’re not talking about flail-dancing during some Def Leppard song, but rather the celebration of how current … Next Page »

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Here in Boston, September 1st brings about quite a bit of change: students migrating back into town, moving trucks and furniture in the streets, and street cleaners around my office (all cutting down on parking options, sorry to say).

We’ve weathered Tropical Storm Irene and a roller-coaster stock market, felt the mild rumblings of an East Coast earthquake (OK, most of us here didn’t), and are waiting to see how the Red Sox-Yankees series plays out tonight. And football season. Did I mention football season?

It’s also a time of change and opportunity in the tech-business community, as we look forward to a high season of events and news. Here are some quick hits:

—Joi Ito has officially started as the new director of the MIT Media Lab (he succeeds Frank Moss). In a blog post, Ito writes, “The awesome space that the Lab lives in, and the somewhat tricky issues around IP and confidentiality, have kept a lot of the great things going on at the Lab out of the public view. I’d really like to have the Media Lab be more involved in the conversation that is the global Internet, and to invite everyone to participate in what we do.”

—CSN Stores is now officially Wayfair.com. No surprise there, as the Boston e-retailer (think Amazon for the home) has rebranded its 200-plus sites under a unified name. Wayfair, which has long been profitable, recently raised its first round of outside funding, and it was a doozy: $165 million from Battery Ventures, Great Hill Partners, HarbourVest Partners, and Spark Capital. It sounds like a lot of the money will go towards marketing and building the new brand.

—A number of Boston-area companies are hiring up a storm in a seriously competitive job market. HubSpot is among the usual suspects, coming off its recent acquisitions of Performable and Oneforty. The company is 285 employees going on 2,085. (We’ll be keeping an eye on how it manages its growth and integrations.) Other firms looking to hire include Gemvara, PeerTransfer, and a bunch of TechStars Boston companies—plus giants like Verizon and Pfizer (both are setting up R&D beachheads in the Boston area). I’m guessing Google and ITA Software aren’t exactly sitting still in Kendall Square either.

—While on the topic of Kendall Square tech icons, I should mention that Akamai has formed a partnership with fellow Cambridge startup Happy Cloud to speed up software downloads via Akamai’s content delivery network—in particular, downloads of high-quality PC games. Happy Cloud came out of beta with its on-demand game store in July.

—In the “dead” category, consider U.S. solar panel startups. This week’s news about Solyndra, the Fremont, CA-based company that said it will file for Chapter 11 bankruptcy protection, is another nail in the coffin. Solyndra raised nearly $1 billion in private equity financing (and borrowed $500 million-plus from the U.S. Department of Energy), making it one of the largest failures in venture capital history. Solyndra was backed in part by Boston and Silicon Valley-based RockPort Capital and a number of other firms, including Madrone Partners, U.S. Venture Partners, CMEA Ventures, and Redpoint Ventures.

The news comes on the heels of Evergreen Solar’s bankruptcy—which Black Coral Capital’s Rob Day says isn’t the end of the story for the Marlboro, MA-based firm. And last week’s bankruptcy filing by Intel-backed SpectraWatt, in upstate New York. The broader consensus seems to be that U.S. solar investors didn’t look out far enough on the cost curve and didn’t have deep enough pockets to keep supporting companies trying to compete with cheaper solar overseas. There are still big opportunities to innovate in solar, of course, but the investor climate is looking pretty dour.

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Benjamin Nye has an eye for the Benjamins. That’s not quite a palindrome, but it does sum up Nye’s track record as a tech investor.

Nye, a managing director with Bain Capital Ventures (see photo, right), has had a string of strong exits—including Network Intelligence (bought by EMC in 2006), SolarWinds (IPO in 2009), and LinkedIn (IPO this year). The latest deal came in the past week, when Waltham, MA-based DynaTrace was snapped up by Compuware (NASDAQ: CPWR), the Detroit software firm.

The technical details of what DynaTrace developed (see below) might not be as important as these numbers: $256 million in cash for the acquisition (on about $22 million total invested by BCV and Bay Partners), translating into a 7.2X return on BCV’s investment, Nye says.

Here’s how it all went down. First, let’s rewind to 2006. Nye had heard from a former CEO of a company he was looking to buy that DynaTrace, an interesting year-old startup, was being run by the “smartest guy” he knew. The only problem was the startup was in Austria, so Nye took the entrepreneur call with what he calls “high skepticism.” By the end of the call, however, he was intrigued: DynaTrace had solved a problem that Nye had run up against at his old company, Precise Software. Namely it had a way to help businesses’ IT departments figure out why their software applications (consumer-facing websites, for example) were running slowly, and what to do about it.

“The way he’s doing it versus the industry standard is the difference between causation and correlation,” Nye says. While other companies could make educated guesses based on time stamps and which parts of the code were calling other parts, DynaTrace could pinpoint exactly “which part in the chain was causing an app to run slowly,” he says—which is tough to do in the midst of Internet-scale traffic and disparate pieces of code running in different programming languages.

Nye led Bain Capital Ventures’ $5 million Series A investment in DynaTrace and helped move the company to the Boston area in early 2007, hiring a U.S. team. The company started signing up big customers in banking, e-commerce, and retail, and its revenues more than doubled each year, reaching $26 million (and being cash-flow positive) over the past 12 months.

So why sell to Compuware now? DynaTrace didn’t need to, Nye says, adding that there was … Next Page »

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Twitter co-founder Biz Stone has signed up to assist Boston-based Spark Capital as a strategic advisor. Spark general partner Bijan Sabet announced the news on his blog today. Stone wrote in his blog last week that he is stepping back from his day-to-day role as creative director of San Francisco-based Twitter to “focus on new endeavors,” including relaunching The Obvious Corporation with Evan Williams and Jason Goldman. In his new role with Spark, Sabet says Stone “will help us think through and evaluate new investment opportunities” and “provide us with valuable insight about our current portfolio companies.” Spark has been an investor in Twitter since 2008.

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Ladies and gentlemen, after last week I hereby declare the end of high season for tech events in Boston. We’ve had our celebrations, drunk our grain, and talked our heads off. Now, before we start getting some things done around here, let’s reflect just a little more.

The following took place during a 24-hour period last week:

—Coolio performed at the DartBoston/TechStars Demo Day party.

—The Boston Bruins beat the favored Vancouver Canucks in Game 7 of the Stanley Cup Finals for their first title since 1972.

—Fashion guru Alexandra Wilkis Wilson, co-founder of Gilt Groupe, shared the stage with me at our XSITE 2011 conference at Babson College (photo gallery here).

I’m not sure which of these pairings was least likely—fashion and I have rarely shared the same sentence—but the fact that all three happened in the span of a day suggests Armageddon is upon us. And, given the collective lack of sleep in this region (or at least this office) during that time, I will refer to it as Hell Week—after the Navy SEAL training where candidates are pushed to their limit, sleep less than four hours over 5.5 days, and emerge on the other side stronger than they thought they could be. I mean it in a good way, really.

All of this calls for a retrospective of highlights I’m able to remember through the haze of last week. Let’s get right to it:

1. I remember TechStars Demo Day kicking off with “I’m Shipping Up to Boston” by the Dropkick Murphys blasting from the speakers of the Royale nightclub—and all the startup teams joining managing director Katie Rae on stage, clapping, wearing a mix of company T-shirts, camouflage tuxedo suits, and other hipster items.

2. I remember a lot of raucous whooping and cheering for the startups (before, after, and sometimes during their pitches), and intro music for each speaker. A bit over the top, but I understand the need to build excitement. One investor called the format distracting, but he was in the minority.

3. I remember a mix of presentation styles, which was nice—from “here’s my life story” to “let’s get right to the business,” from laid-back to in-your-face. Also I remember Walt Doyle from Where (now PayPal) looking like a veteran stand-up comic as he introduced the first TechStars startup, EverTrue.

4. I remember angel investor Bill Warner introducing Ginger.io’s Anmol Madan by saying he was “fearless.” Case in point: some of Madan’s research work at the MIT Media Lab was on “trying to understand women with a computer.”

5. I remember lots more financing being announced by lots more companies than usual over the past couple of years (see this updated list of TechStars Boston financings for the current class). Perhaps Y Combinator’s $150K guaranteed investment for graduates of the program is not so big an advantage anymore.

6. I remember Hardi Meybaum of GrabCAD saying he likes Boston because … Next Page »

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Incubator, schmincubator. The innovation community has had its fill of incubators and accelerators, hasn’t it? Well, this one is a little different.

As echoes of Commencement speeches die down around town, it’s fitting that the 12-week startup bootcamp known as TechStars Boston is graduating its newest class of companies tomorrow. What’s interesting about this group—compared with the two previous Boston classes, and indeed, other TechStars classes from Boulder, Seattle, and New York—might be its diversity across industry and geography, and its potential to bring fresh talent to the area.

The 12 companies presenting to investors and media at tomorrow’s Demo Day in Boston range in sector from mobile/social gaming (The Tap Lab), online promotions (Promoboxx), and alumni networking (EverTrue), to health and wellness (Ginger.io) and medical devices (Strohl Medical). Their founders come from Israel (Senexx), England (Memrise), and Estonia (GrabCAD, which just announced a seed-financing round); as well as Wisconsin (Student Spill), Tennessee (Help Scout), Texas (Kinvey), and the Boston area (the rest). I’m hearing that several of the teams from outside are planning to stay local, which should help Boston’s talent pool.

The group’s diversity is notable because tech incubators tend to draw most of their talent from founders who are already based locally—and they tend to focus on Web and social/mobile software to the exclusion of other fields like healthcare or hardware. There is still plenty of Web and mobile in this year’s crop, but its variety of startups stands out for a small incubator.

As does the group’s camaraderie, if you listen to the program’s leader. “The amount of support and help they’ve given each other, that’s really been fun for me to watch,” says Katie Rae, managing director of TechStars Boston. She calls the group “stunningly close.”

The narrative arc of a TechStars company is a classic hero’s journey—complete with a call to action, meetings with mentors, a series of tests and conflicts, and a resolution and reward. Yet this year’s companies did not enter the program as a wide-eyed or naïve bunch.

“We were skeptical about incubator programs. There’s a ton of them popping up everywhere,” says Karan Singh, co-founder of Ginger.io, which develops software for tracking people’s health and wellness by interpreting communication and movement patterns gleaned from their mobile phones. The algorithms are based on research done at the MIT Media Lab. While Ginger was already in Boston prior to TechStars (at Dogpatch Labs), Singh, an MIT Sloan MBA, is another example of imported talent—he came from the Bay Area after graduating from UC Berkeley.

Partly through TechStars, Singh says, he has learned that the key to building a business … Next Page »

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CityPockets’ tiny team was in desperate straits this past April. The Silicon Alley startup was supposed to help users organize the flood of online vouchers and daily deals that pack the inboxes of budget foodies and fashionistas. But just a couple months ago none of the three-person team seemed likely to be indulging in discount Mediterranean brunches or half-priced Armani sportswear.

All the good press could easily have fooled you. To read the reviews of CityPockets in Forbes or TechCrunch, you might picture foosball tables, bean bag chairs, and fancy complimentary coffees. The online reviews gave the whiff of high-end Silicon Alley success.

But around the time when these articles were coming out, both Cheryl Yeoh, the 28-year-old CEO of the fledgling tech startup, and co-founder Jhony Fung, 27, were nearly broke. They had burned through most of the savings they brought to the venture, after leaving high-end consulting jobs. Yeoh was down to budgeting $35 per week for food, eating mostly kale and quinoa. (“It’s the grain with the most protein, and the vegetable with the most protein,” she explained.) Yeoh had for months been sleeping on the Stuyvesant Town couch of her newest hire, David Guthu, with only a small curtain, Velcro-ed to the ceiling, for privacy.

Guthu didn’t have it much better. He may have had the bed but he hadn’t been paid in the two months since he started, and he feared he would lose the house he owned in Phoenix, where he is from. Fung, the programming whiz of the team, was also having mortgage issues, and was close to making a move that could have squashed any real hope of getting off the ground. “I was about to tell Cheryl that I would need to go get a part-time job. My mortgage is my responsibility,” Fung said.

In the middle of April, a prospective angel investor told Yeoh (below left) he wanted to talk. But she and the team, especially Fung (below right), had been through the cycle of pitching, optimistic feedback, and petering interest so many times before.

Yeoh had started CityPockets a year ago when she was still working as a management consultant at KPMG. Discount vouchers like Groupon and LivingSocial were just starting to take hold. But Yeoh, always on the hunt for a good deal, had already signed up for eight memberships. “I couldn’t keep track of all of them. And when they expired it was a real waste of money,” she said. From this peculiar Web 2.0 problem, Yeoh had the idea to create a tool to collect and manage all of a person’s daily-deal vouchers-–-a wallet for Internet coupons. The online software imports all of a user’s vouchers into a single account where he or she can sort them by type, location, and expiration date. Users also receive alerts when the coupons are about to expire.

CityPockets would also function as a marketplace for unused vouchers, allowing users to sell each other things like spa trips before they expire. Yeoh soon pitched the idea to Fung, an old friend from Cornell University who was working as a consultant at IBM. “We would work on CityPockets after work, every night from 9pm until 2am,” she said. “With four hours for sleep.”

After a few grueling months of this double life, the two quit their day jobs last summer and were accepted into LaunchBox, a tech incubator in Durham, NC. The three-month program gave them a small workspace, $20,000, and advice on how to get CityPockets off the ground.

But then the setbacks started. Investors and potential partners offered to give the company its startup costs if only they were willing to change the business model. Yeoh’s original idea had … Next Page »

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