It wasn’t so much the predictions as the discussion that was most interesting at last night’s annual predictions dinner, organized by the Washington Technology Industry Association. Will Twitter be acquired in 2010, and why? Who will have the dominant cloud computing platform in the next couple of years? What kind of startup are you looking to build or finance, and which areas are you staying away from?

A panel of Seattle-area tech entrepreneurs and investors gamely took the bait and had some lively exchanges over the course of an hour. OK, these guys all know each other, and we’ll take what they say with a grain of salt since it’s a public forum—but here were some of the most interesting points they made. (You can read more comprehensive recaps of the panel on Brier Dudley’s blog at the Seattle Times, and soon on TechFlash by moderator John Cook.)

The panel was split 3 to 2, with the narrow majority guessing Twitter will get bought next year. Andy Sack of seed-stage fund Founder’s Co-op predicted Twitter will make more money than Facebook in 2010 (surprising, given the current disparity in the other direction). Glenn Kelman, the CEO of Redfin, an online real estate firm, said Twitter should charge for search (as it has begun to do in partnerships with Google and Bing). Kelly Smith from Curious Office and the startup Pressplane argued that Twitter could be “absorbed by a big company,” but “it’s going to go nowhere.” By the end of the evening, Sack was predicting that Microsoft would buy Twitter next year.

There was a consensus that 2010 could be a big year for acquisitions. Bill Bryant of Draper Fisher Jurvetson boldly predicted that Amazon will buy Netflix, Blockbuster, and Hulu, while opening brick and mortar “Amazon media stores.” Greg Gottesman from Madrona Venture Group said Cisco might buy EMC (for VMware) and Seattle-based F5 Networks, while Microsoft might buy Research In Motion, the maker of the BlackBerry smartphone. Sack predicted Adobe would pick up Seattle photo-editing startup Picnik. Rupert Murdoch (News Corp.) would buy Seattle’s Cheezburger Network, and someone would buy Redfin.

Looking back on 2009 for a minute, the big deals that were questioned by the panel included Adobe’s acquisition of Omniture (Gottesman said it just didn’t make sense strategically) and …Next Page »

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The second half of 2009 provided a good measure of optimism, easing some of the pain investors felt toward the end of 2008 and in early 2009. The stock market has been volatile but up significantly overall. There are signs of increased lending activity. Mergers and acquisitions have picked up. And there’s a pulse in the IPO market.

Yet despite indications of recovery, we shouldn’t be lulled into thinking we’re over the crisis. The labor, housing, and consumer markets are still struggling. And there’s still plenty of fear and uncertainty as we emerge from the longest downturn since the Great Depression.

Keeping that cautionary note in mind, what do the recent positive strands of hope in the IPO, M&A, and credit markets tell us?

To begin with, a potential increase in IPO listings isn’t necessarily a signal that capital markets have returned to normal. Why? Because the companies coming to market are the best of the best, the ones who have survived the past 24 months of havoc and have continued to build on sound business fundamentals.

And that’s the point—we’re not out of the woods yet; every company that wants to go public isn’t going to succeed. After the initial IPO backlog is worked down, the next wave of public offerings, if any, will continue to present a challenge and will come from specific sectors that investors see as the leaders in potentially expanding markets—for example, health care services and technology, financial services, and software and software services. Other, more traditional companies that can provide a compelling investor advantage and return will also be in the IPO mix.

Job growth in the health services and education sectors and annualized spending growth in the equipment and software sectors—ranging from 10 percent to more than 30 percent from Q3 2008 to Q1 2009, and evidenced by recent quarterly earnings growth by industry leaders—give some hint of recovery as well as an indicator of where the money may flow in the near future. Still, even though many institutional money managers need to invest and are waiting for the right opportunities—including IPOs—don’t expect to see a boom.

In fact, it may end up that growth will be fueled more by the credit markets than …Next Page »

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It was a busy week for local technology news.

—Two teams from San Diego and a third from Northern California demonstrated their development of advanced chemical sensor prototypes that are tiny enough to be found inside ordinary cell phones. The U.S. Department of Homeland Security is funding the Cell-All program, with a goal of basically creating an anti-terrorism app for cell phones that would enable authorities to crowd-source chemical detection.

—MaxLinear has filed for its initial public stock offering. The Carlsbad, CA-based fabless chipmaker, which specializes in designing semiconductor-based television receivers, intends to raise about $100 million through its IPO. The market may be de-frosting a bit, with 47 IPOs so far in 2009, compared with 45 last year, and 272 in 2007.

—ProQuo, a San Diego-based Web 2.0 company that was founded in 2007, was quietly shut down after taking in a total of $15 million in venture capital from Menlo Park, CA-based Draper Fisher Jurvetson and San Diego-based Mission Ventures. ProQuo was never able to validate its business model; its website offered consumers a way to remove their names from mass-mailing lists for free, and the company planned to sell its optimized lists back to mass marketing companies.

—San Diego’s wireless industry group, CommNexus, celebrated the opening of EvoNexus, its free high-tech incubator, by announcing the selection of three more startup companies: EcoATM, MicroPower Technologies, and TetraVue. CommNexus CEO Rory Moore says EvoNexus is believed to be the first incubator that is completely free for startups—that is, it doesn’t even require an equity stake in participating companies, as most incubuators do.

—Jitterbug, the San Diego wireless provider that puts an emphasis on simplicity, has acquired MobiWatch, a Waltham, MA-based startup developing mobile personal emergency response services. A regulatory filing shows that Jitterbug’s parent, GreatCall, provided 630,000 shares of common stock to MobiWatch and its shareholders in a deal valued at $107,100.

—San Diego-based Networkfleet is using its technology to help companies that operate fleets of vehicles go green by monitoring engine emissions and ensuring that vehicles are operating efficiently. Co-founder Diego Borrego told me the company also expects to be a player as consolidations sweep through the fleet tracking industry.

—EcoDog, a Vista, CA, cleantech startup that has developed a device that helps homeowners sniff out savings in their electric utility bill, was named best of show at GadgetFest, the annual fall competition sponsored by CommNexus, the San Diego wireless industry group. EcoDog founding CEO Ron Pitt won over the crowd when he declared, “My product is the only product up here tonight that saves you more money than it costs.”

—San Diego-based cleantech startup EESG is looking to raise $1.2 million to expand the 10-employee company’s sales staff, purchase inventory, and ramp up public relations and marketing. The company’s founders told me they have raised about half so far, including $300,000 from Longboard Capital Advisors, a green investment firm based in Santa Monica, CA.

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Seattle-based Movaya Wireless, a mobile software startup, has been acquired by Digby, a mobile commerce firm based in Austin, TX. Financial terms were not announced. Movaya was founded in 2006 by Phil Yerkes and Stanley Wang, and recently has been focused on making digital goods storefront applications for the iPhone, Android, and other mobile Web platforms. The company has a development team in China that will serve as the basis for Digby’s operations in Asia.

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Seattle-based Amazon (NASDAQ: AMZN) said today its acquisition of online apparel and shoe seller Zappos, based in Las Vegas, has closed. The Zappos management team will remain intact, the company said. In a blog post, Zappos CEO Tony Hsieh said his board of directors has been “switched out,” and that the deal, worth about 10 million shares of Amazon stock, is valued at $1.2 billion, based on Friday’s closing price.

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Working for the man. It’s what most entrepreneurs want to avoid at all costs. But if their startup gets bought by a big company, that’s often just what happens—at least for a while.

Although the acquisitions market for tech startups has been relatively soft during the recession, there have been a few recent local examples to draw from. I took a highly unscientific sample of how three Seattle startups are doing post-acquisition. I wanted to hear about the cultural fit, the level of autonomy, and so forth. Not surprisingly, the ones I talked to said their transitions have gone very smoothly. Maybe the surprising thing is that I believe them (well, mostly—they did have to be pretty vague about future plans).

Here’s an update on the three startups and their founders:

Ethan Lowry, Urbanspoon (acquired by IAC in February 2009, announced in April)

The transition has been “remarkably uneventful,” Lowry says. “They’ve been very hands off.” He says IAC (NASDAQ: IACI) has been very supportive of Urbanspoon’s restaurant site, and that his team touches base with the mother ship once a week. “There’s all sorts of discussions before you get acquired. They say you’ll run your own ship…you’re kind of nodding, but what’s it really going to be like?” Lowry says. “I’ve been through other acquisitions that left you feeling more ripped out of your culture.”

He does say, half-jokingly, that Urbanspoon has gone through a “huge shift for us”—growing from three to five employees (adding a developer and a customer service person), and relocating to an office with a better view of Lake Union in Fremont, about a mile away from the old digs on Eastlake Avenue.

Last week, Urbanspoon introduced its “Scope” feature for its iPhone app, which lets you discover restaurants on the street around you by adding visual info to the camera feed on the screen. “In the beginning of summer, ‘augmented reality’ got a little bit of buzz,” Lowry says. “We thought, ‘This is cool, but seems super-gimmicky.’ We started prototyping something, and quickly discovered it’s entertaining. It’s fun, but can solve a real problem.” He adds that Urbanspoon has about 7 million installs of its iPhone app, making the Scope the biggest augmented reality app so far.

IAC’s future plans for the company are under wraps, but Lowry says Urbanspoon is …Next Page »

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Technology giant Cisco (NASDAQ:CSCO) plans to acquire Tewksbury, MA-based Starent Networks (NASDAQ:STAR), a provider of wireless infrastructure products used to transfer data to mobile devices such as smartphones, for a whopping $2.9 billion, Cisco reports this morning. Both companies’ boards of directors have approved the deal, which is expected to close in the first half of 2010. The New York Times provides some insights here about how Cisco’s purchase of Starent follows a previous deal to grow its presence in the market for wireless communications network infrastructure products. Starent’s 2007 IPO, which brought in $126 million, was considered a successful exit for the company’s venture backers, which included Boston-area firms Highland Capital Partners, Matrix Partners, and North Bridge Venture Partners.

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It’s good to be Gomez. The Lexington, MA-based software firm has agreed to be purchased by Detroit’s Compuware (NASDAQ:CPWR) for $295 million in cash, the companies report today. Gomez, which provides performance-management software for Web and mobile applications, was already in registration for an $80.5 million IPO and had raised, according to PeHub, $66 million in funding between 1999 and 2004 from its venture backers ABS Ventures, AdAstra, Dolphin Equity Partners, and Doughty Hanson & Company. The deal is expected to close in November.

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[Clarified Oct. 1---see below] Directors of Facet Biotech (NASDAQ:FACT) have unanimously recommended that its shareholders reject Biogen Idec’s $14.50 per share takeover bid, an all cash deal worth some $355 million, the California company announced today. Biogen (NASDAQ:BIIB) had proposed acquiring Facet, its partner in developing an antibody drug for multiple sclerosis, in early September. After Facet’s board rejected that deal, Biogen on September 21 launched its tender offer. “The offer is substantially lower than our company’s current market value…and attributes insufficient value to the attractive pipeline and assets of the company…” Facet Biotech CEO Faheem Hasnain said in a statement. Biogen could not be reached for comment this morning. Facet shareholders have until Oct. 19 to decide whether they accept or reject the tender offer.  [This article was amended to make it clear that despite its board stated rejection of the deal, Facet's shareholders still have to vote on the tender offer.]

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

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

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

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

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

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

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

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

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

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Kirkland, WA-based Digeo, a 10-year-old home entertainment company backed by Microsoft co-founder Paul Allen, has been sold to Arris, a broadband communications firm based in Suwanee, GA, for about $20 million in cash.

Digeo is known for its high-definition digital video recorder, called Moxi. The acquisition gives Arris expertise, intellectual property, and talent in video networking and multimedia services delivery. Arris will gain about 75 Digeo employees (mostly engineers) in Kirkland, which will raise its R&D costs by about $3 million per quarter, the company said.

“Arris delivers the market position necessary to take the Moxi vision to the next level,” said Digeo’s CEO, Greg Gudorf, in a statement. “I am extremely pleased that the Digeo team will continue to drive the evolution of the Moxi platform.”

But observers point out that the purchase price means a substantial loss on the investment for Allen. PaidContent reports Digeo’s total funding was more than $110 million. In an interview with TechFlash, Gudorf said fewer than 10 Digeo employees would lose their jobs in the acquisition, and that he will stay with Arris during the transition. The news of Digeo’s layoffs was first reported by the Seattle Times.

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The last official week of summer brought a slew of Northwest deals, to go along with today’s heat wave. Two of the year’s biggest financings happened in tech and life sciences, along with a big acquisition in healthcare, while a host of smaller deals went down in software, digital media, and advertising—and one company inched closer to an IPO.

—Seattle-based Integrative Diagnostics, Leroy Hood’s early cancer detection company, has raised $7.5 million out of a $30 million equity round, as Luke reported. The investors were not disclosed, but we’ll have more on this story soon.

—Seattle-based Free & Clear, which offers phone-based coaching for company employees battling tobacco addiction, obesity, and stress, was acquired by Inverness Medical Innovations (NYSE: IMA) of Waltham, MA, for $100 million in cash plus up to $30 million in follow-on payments, as Wade reported. Free & Clear was backed by Polaris Venture Partners, Three Arch Partners, and Kaiser Permanente Ventures. Inverness offers medical diagnostic tests and other disease management services for consumers.

—Portland, OR-based Ensequence raised $20 million, led by Clay Mathile, the CEO of CYMI Technologies (and former owner of Iams, the pet food company sold to Proctor & Gamble for $2.3 billion in 1999). It’s one of the Northwest’s largest tech financings of the year. Ensequence was founded in 2000 and is a leader in the interactive TV business, which lets viewers do things like call up additional information on the screen. There is some question as to whether the firm is moving its headquarters to New York, where its new CEO, Peter Low, is based.

—In the biggest life sciences venture financing of the year, Seattle-based Calypso Medical raised $50 million led by Skyline Ventures and Frazier Healthcare Ventures, with Bay City Capital and InterWest Partners also participating, as Luke reported. The funds will be used to expand Calypso’s worldwide rollout of its radiation pinpointing product, which helps radiation oncologists and technicians better treat prostate cancer. Luke also reported on the story behind the deal here.

—Seattle-based Getty Images, the creator and distributor of photos and other digital media, has made a $4 million strategic investment in Daylife, a New York media and content services company, according to the Wall Street Journal’s All Things Digital blog. The two companies have also formed …Next Page »

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[Updated 9/15/09 1:20 pm. See below.] Seattle-based Others Online, a Web advertising and optimization startup led by founder and CEO Jordan Mitchell, has been acquired by the Rubicon Project in Los Angeles for an undisclosed price. Mitchell has become vice president of data intelligence for the Rubicon Project, which automates the buying and selling of online advertising. Rubicon announced the news this morning, although the acquisition apparently began in June. Terms of the deal were not released.

“We built Others Online to specifically help publishers leverage data to make more money,” Mitchell said in a statement. “We were looking to partner with a company that was going to use our technology on a massive global scale, and we found that indeed with the Rubicon Project.” On his LinkedIn page, Mitchell refers to Rubicon as “our favorite customer.”

Reached by e-mail, Nicole Jordan of the Rubicon Project says four employees of Others Online (including Mitchell, presumably) have joined Rubicon. They are staying in Seattle but will commute to Los Angeles on a regular basis, she says. [Paragraph added to provide more details of the acquisition.]

The Rubicon Project says that “Others Online’s technology will serve as an enhanced data infrastructure foundation to unite disparate data points from multiple data providers to create a singular, data-rich view of audience for publishers, ad networks, exchanges and audience rep firms.”

Mitchell started Others Online in January 2006. The idea was to offer online publishers “behavioral profiling” software to help them better understand what their audience cares about. Others Online also provides behavioral analytics and ad services to help publishers better target and generate revenues from their audiences. Previously, Mitchell founded an e-business software firm in Seattle, which he sold in 1996 and then became part of Meridian Partners (now Saltmine). He was also the co-founder and CEO of Siaxx, an IT systems management startup. Mitchell got into online advertising through 121Media, which he joined as chief operating officer and director in 2003.

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Finnish mobile giant Nokia (NYSE: NOK) said today it has acquired certain assets of Plum, a social media sharing and messaging service based in Boston and San Francisco. Financial terms were not given. Plum, which has about 10 employees, is backed by Vulcan Capital in Seattle and Levensohn Venture Partners in San Francisco.

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Redmond, WA-based Smilebox, a photo services startup, said today it has acquired Preclick, a New Jersey maker (with Seattle developers) of photo organizing and printing software for retailers like WalMart, Costco, and Walgreens. Financial terms were not disclosed. Smilebox was founded in 2005 and launched its service, which lets people create electronic greeting cards, photo albums, and slideshows, in June 2006.

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Hillsboro, OR-based TriQuint Semiconductor (NASDAQ: TQNT) announced today it has acquired TriAccess Technologies, based in Santa Rosa, CA. Terms of the deal were not disclosed. TriAccess makes integrated-circuit amplifiers for audio, video, and HDTV applications. TriQuint Semiconductor, founded in 1985, makes wireless communication technologies for mobile manufacturers, cellular base stations, and defense and aerospace contractors.

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Hopkington, MA-based information storage and management company EMC announced today that it has acquired FastScale Technology, a Santa Clara, CA, provider of software platforms and applications for enterprises. EMC said in a statement that the acquisition will strengthen its cloud computing capabilities by dramatically increasing “the performance and scalability of private cloud infrastructures.” Terms of the deal were not disclosed.

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MySpace CEO Owen Van Natta confirmed in a press conference call today that the social networking website has purchased Seattle-based music service company iLike. Financial details were not disclosed, but the rumors surrounding the deal point to about $20 million being spent by MySpace for the Seattle startup. According to Van Natta, the company will remain in Seattle, with its 26 employees joining the MySpace team.

iLike is the most popular music application on MySpace’s rival network Facebook, with around 10 million users on the site, and around 50 million users total. The big question now, for analysts and music lovers alike, is what kind of response Facebook will have to its rival acquiring such a popular component of its website.

Van Natta said iLike will remain integrated into the various groups and networks it is part of, but the question remains how comfortable those networks will be now that iLike is an arm of a major company rather than an independent startup. For now, at least, it’s business as usual at iLike, according to a statement made by the company on its website. “The iLike.com website and applications will continue to operate as they always have—except that we’ll be working to make them even better in the weeks and months to come.”

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San Diego-based Helix Wind (OTC:HLXW) said today it has inked non-binding agreements to acquire the business assets of Abundant Renewable Energy, of Newberg, OR, and Renewable Energy Engineering for $4 million to $6.5 million in cash and restricted stock in Helix Wind. Helix reports that the buyouts will add more products to its portfolio, including Abundant Renewable Energy’s 2.5 kilowatt and 10 kilowatt wind turbines. Bruce recently spoke with Helix about the firm’s vision of small-scale wind turbines on every rooftop.

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