Westford, MA-based NetScout Systems (NASDAQ: NTCT), a network-performance management firm, said today it is acquiring Psytechnics, a software company based in Ipswich, U.K., and Portsmouth, NH. Financial terms of the deal were not given. Psytechnics helps businesses manage the quality of IP voice, video, and telepresence services; the firm says its installed base manages more than a million Internet telephony users in the U.S. and Europe. NetScout, which is led by CEO Anil Singhal, makes software to help businesses run their IP networks more efficiently. The company operates in a competitive sector that includes startups like Seattle-based ExtraHop Networks. For the most recent quarter, NetScout reported a profit of about $11 million on roughly $76 million in revenue.

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Earlier this month, we wrote about some of the mammoth venture deals that helped add up to $355 million worth of investments in Massachusetts startups in January. But don’t think we’ve forgotten about the little guys.

These are what we call our under-the-radar deals, typically worth between $100,000 and $1 million (though the January list contains a deal smaller than that). Those numbers, tracked by New York-based private company intelligence platform CB Insights, are in now, and we think they have a lot to tell us about what’s going on in the innovation scene.

We look at both equity and debt forms of financing on this list, and see their smaller dollar values as valuable indicators of the New England startup landscape. The reports often tell us which new companies are about to emerge out of stealth mode or spin out a new product, and frequently these end up being companies we highlight in bigger stories later on down the line.

There were 13 of these financings in the month of January, with eight in equity, four in debt-based funding, and one that represents a security to be acquired through the exercise of option or warrants, according to the SEC filing. Software and cleantech companies showed up prominently on the list.

December saw a higher number of under-the-radar financings (21), but January had some bigger-sized deals than the month before it. There were three million-dollar financings on January’s list, with $1 million in debt to security software company eIQnetworks, $1 million in equity to DNA mapping company U.S. Genomics, and another $1 million in equity to Green Earth Technologies, developers of biodegradable patent-pending motor oil, as well as other home and lawn products.

As usual, Massachusetts took the biggest share of these deals, at 10. Connecticut pulled in two such deals, and New Hampshire had … Next Page »

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It’s not that I thought Vermont and New Hampshire were technological backwaters, because I knew from my years of working in Boston that the local venture capitalists were pumping millions of dollars into startups in the two northern New England states. But what I’ve found over the past year or so of living in both Vermont and the Boston area is that the only thing that really separates the startups in Kendall Square from those in Barre, VT, and Lebanon, NH, is that the former are way closer to good seafood. The level of innovation and sophistication among the entrepreneurs in both camps is pretty much equal.

While attending a business and innovation event called Vermont 3.0 in Burlington, VT, last week, I thought it would be fun and interesting to take a look back at all the northern New England innovation I’ve covered over the past year. Indeed, a perk of working north of the Massachusetts border is that I’ve visited the laboratories and research facilities of many exciting startups up here. I’ve had a chance to visit with faculty and researchers affiliated with innovation hubs such as Dartmouth College, Middlebury College, and the University of Vermont. I’ve also talked shop with venture capitalists at firms such as Borealis Ventures, based in Hanover, NH, and FreshTracks Capital in Shelburne, VT.

What follows are summaries of the northern innovation stories I’ve written for Xconomy in the order in which they were published. For each story description I dug into my notes and tried add something that wasn’t in the original piece (but I’m not one to withhold interesting details from my posts, so the supply of previously unreported material was a bit thin).

My plan is to dig deeper into the pockets of innovation north of Boston over the next year. But make no mistake, the majority of my stories will still emanate from the Hub.

—In northern New England, there are no technology clusters as dense as those found in Boston, but I found an emerging innovation cluster in Dartmouth College and environs earlier this year. My trip to Dartmouth in February resulted in a post about the key labs, people, and concerns that contribute to the startup ecosystem there. (I also learned that parking is as difficult to find on the Dartmouth main campus as anywhere in Cambridge, MA.)

—People may assume startups in New Hampshire operate in small buildings nestled in the woods, and in the case of Lebanon-based antibody discovery firm Adimab, those people would be right. I met the founder and CEO, Tillman Gerngross, at the Dartmouth Regional Technology Center, an incubator that hosts Adimab and other firms with ties to Dartmouth College. Gerngross, an engineering professor at Dartmouth, pointed out that a firm called GlycoFi that he co-founded and sold to Whitehouse Station, NJ-based drug giant Merck (NYSE:MRK) in 2006 was operating in separate labs in the same building.

—One of the first stops that startups make to find money in Hanover is Borealis Ventures. Borealis has done well investing in Dartmouth spinouts; its investment in GlycoFi alone made its first fund a big success, firm co-founder and managing director Phil Ferneau told me during a meeting. While there are many angel investors in New Hampshire, Borealis may be the only venture capital firm in the state. So, as you’d imagine, Ferneau and his partners are very popular among entrepreneurs in the state.

—After meeting with Gerngross and Ferneau, I wondered what exactly was under the hood at GlycoFi that would persuade Merck to maintain its operations in New Hampshire. It turned out that GlycoFi’s technology—which involves the use of bioengineered yeast to produce human proteins with lower structural variability than mammalian cell lines typically yield—is a centerpiece of Merck’s recent strategy to develop copies of biotech drugs. And many of the scientists who are developing the GlycoFi platform still reside in northern New England.

—Apparently, I’m not the only Boston-area innovation junkie who’s working in Vermont. John Danner, the CEO of Northern Power Systems in Barre, VT, told me during a meeting at his office that his primary residence is still in Massachusetts even though he spends most of his weeks in the Green Mountain State. Danner, a former engineer aboard nuclear submarines, is now engineering a turnaround at the Vermont-based wind turbine manufacturer. (The latest on Northern Power is that it’s aiming to … Next Page »

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Burlington, MA-based Nuance Communications (NASDAQ: NUAN) said today it has purchased image scanning and indexing company eCopy of Nashua, NH, for $54 million in Nuance stock. ECopy’s software for touchscreen-driven multifunction printers (MFPs) helps companies scan business documents and easily incorporate them into accounting and records systems. “Nuance and eCopy share a vision of connecting MFP devices to a wide range of applications in an easy and productive way,” Robert Weideman, a general manager and senior vice president in Nuance’s Document Imaging Division, said in a statement.

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Noble Environmental Power, an Essex, CT-based wind energy company, has withdrawn its planned for an IPO. The offering, initially filed in May 2008, was to include some 23.4 million shares worth up to $375 million. In its filing today, Noble said withdrawing the offering “is consistent with the public interest and protection of investors.” The company operates six wind farms in New York state, one in Texas, and has 8 more under development in New York, Minnesota, New Hampshire, and Vermont.

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Boston-based Mascoma, a startup developing techniques for making ethanol from high-cellulose feedstock such as wood chips, said yesterday it will consolidate its operations in a new office building and R&D facility in Lebanon, NH, near the Dartmouth College location where the company was founded, and where the majority of its workers are already employed.

The move will mean closing the company’s current headquarters on Soldiers Field Road in Boston and reducing the company’s staff by 12 to 15 employees. The cutbacks are the result of  “elimination of redundant functions and inability of some staff to relocate,” the company said. The move will take place by September.

With everyone at the company under one roof, R&D, engineering, and business development staff will be able to work together more closely, the company said. “The move will provide three things: it will make our production process scale-up easier, provide operating efficiencies, and lower costs,” Mascoma chairman and CEO Bruce Jamerson said in a statement. “I am also looking forward to spending more time with our scientific staff as our technology migrates from the lab into production.”

The company also said consolidating will allow Mascoma to reduce its carbon footprint by eliminating trips between offices. The cuts won’t affect operations at the company’s demonstration facility in Rome, NY, or its plans to build a commercial-scale facility with partner Frontier Renewable Resources in Kinross, MI.

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Manchester, NH-based Cadec Global, which makes GPS tracking, logging, and safety equipment for fleets of trucks, said today that it has raised $4 million in new capital from existing investor Thule Investments of Reykjavik, Iceland.

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The long-delayed initial public offering for Merrimack, NH-based GT Solar International is scheduled to go forward on Thursday—and so many investors are interested in the company that the offering is already oversubscribed, according to Ben Holmes, publisher at research firm Morningnotes.

The stock will trade on the NASDAQ exchange under the ticker symbol SOLR. According to Morningnotes’ research, it will debut in the price range of $15.50 to $17.50 per share, potentially raising $470 million to $530 million for the company, which makes equipment for manufacturing photovoltaic panels and has landed some big contracts recently. The company dusted off and expanded its long dormant plan to go public on July 7 after first filing for an IPO in April 2007.

Morningnotes reported today based on information gathered from the deal’s underwriters—who include Credit Suisse, UBS Invest Bank, Banc of America Securities LLC, Deutsche Bank Securities, Piper Jaffray, and Thomas Weisel Partners LLC—that the IPO is “oversubscribed with no appreciable price sensitivity,” meaning investors are willing to buy in even at the high end of the $15.50-$17.50 price range. The underwriters “didn’t give a degree of oversubscription—just more than one times,” Holmes says.

GT Solar was founded in 1994 and is controlled by private equity firm GFI Energy Ventures and alternative-energy investment manager Oaktree Capital Management. If the offering goes ahead as planned, it will be the first IPO by a U.S. venture- or PE-backed company since the end of the first quarter, breaking not only the regional New England IPO drought but the national one as well.

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As if its sports teams’ bragging rights weren’t enough, Massachusetts has now topped the state rankings in science and technology prowess. Meanwhile, Washington placed a respectable #5.

That’s the word today from the California-based Milken Institute’s 2008 State Technology and Science Index. The rankings are based on 77 indicators across five broad categories: R&D inputs, risk capital and entrepreneurial infrastructure, human capital investment, technology and science work force, and tech concentration and dynamism. (You can get the full state list here, and the full report here.)

A whopping four New England states placed in the top 10, with Connecticut, New Hampshire, and Rhode Island also represented—and all three have improved their positions from 2004, the year of Milken’s last state survey. Washington is up one spot from sixth place, while Massachusetts maintained its dominance at the #1 position.

The report notes that Massachusetts scores “well ahead” of the competition, and attributes this to its world-class research institutions, cutting-edge firms, and ability to attract and retain a highly skilled work force.

Everyone loves a Top 10 list, so here it is, with notable changes in parentheses. The release said these states are “in the best position to succeed in the technology-led information age.”

1. Massachusetts (held position since 2004)
2. Maryland (up 2 spots)
3. Colorado
4. California (down 2)
5. Washington (up 1)
6. Virginia
7. Connecticut (up 3)
8. Utah
9. New Hampshire (up 3)
10. Rhode Island (up 1)

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Like microchips, photovoltaic solar cells are made from one of the most common materials on earth: silicon. But it takes a lot of bulky and expensive equipment to transform raw polycrystalline silicon or “polysilicon” into the pure, flat sheets of single-crystal silicon that make up photovoltaic cells. Merrimack, NH, is home to GT Solar, one of the world’s leading makers of that equipment—and this week the company secured a $91 million contract with a Dutch photovoltaic manufacturer called The Silicon Mine BV.

The company is building the Netherlands’ first solar-grade silicon plant—actually two adjacent plants scheduled to open next year in Sittard/Geleen, about halfway between Antwerp and Cologne, Germany. GT Solar is supplying The Silicon Mine with two key kinds of equipment involved in the vapor deposition process used to create most solar cells. The machines—polysilicon reactors (like the one pictured) that break down the raw tricholorosaline form of polysilicon into a vapor, and hydrogenation units that convert silicon tetrachloride exhaust from the reactors back into trichlorosilane—allow the process to operate as a closed loop, materials-wise.

It’s the first European installation for GT Solar, which sells most of its equipment to Asian manufacturers, including South Korean firm DC Chemical Ltd., which placed a $200 million order in March.

Almost a year ago, GT Solar filed paperwork with the Securities and Exchange Commission announcing its intention to raise as much as $200 million in an initial public offering, but it hasn’t yet announced a date for the IPO.

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A Dover, NH, company with a new way to seal blood vessels during surgery has filed for an initial public offering. Salient Surgical Technologies submitted the paperwork for an IPO to the Securities and Exchange Commission today, but didn’t disclose details of how many shares it plans to offer or how much money it hopes to raise. (The filing does say, however, that the maximum aggregate price for the offering would be $86.25 million.) No date for the IPO has been set.

From its founding in August 1999 until Wednesday, the day before the filing, the firm was known as TissueLink Medical. In a press release announcing the change, President and CEO Joe Army said the new name was intended to emphasize that Salient is a medical device company, not a biologics firm or tissue bank.

Salient uses what it calls “transcollation” technology to seal blood vessels. Its handheld device produces radio frequencies that heat up tissue and a saline solution to carry the radio frequencies to the desired site. The heat causes collagen—a major component of skin, muscles, blood vessels, and bone—to shrink, closing blood vessels and stopping bleeding. The traditional way to seal blood vessels has been to use electrodes to cauterize them.

Salient says an advantage of its technology is that the saline it provides carries away excess heat, so that a patient’s tissue never gets above about 100°C, compared to about 300°C for cauterizing systems. That reduces damage to surrounding tissue. Electrodes can also stick to dry cells, causing more bleeding when they tear away. Saline prevents that problem, the company says. And, it notes, because nothing is burned, there’s no smoke, and there’s less blood to obstruct the surgeon’s view of what he’s working on.

Salient also says its system cuts bleeding in half and reduces blood transfusions by 75 percent, tackling issues of blood shortage and possible immune reactions. It claims patients experience less swelling pain and swelling, recover faster, and have to spend less time in the hospital, all of which improve patient outcomes while cutting costs.

The main markets the company has targeted so far include orthopedic surgeries, such as hip and knee replacement, as well as spinal surgery and cancer surgery. Researchers are exploring other types of procedures that might benefit from the technology.

Salient launched its main product, the Aquamantys System, in March 2006. The company had sales of $29.5 million in 2007. In the prospectus, Salient says it has only penetrated about 10 percent of the hospitals in the U.S. that could use its equipment, and that even those could expand their use of the system.

Salient originally licensed the technology from medical device company Medtronic, and now licenses five patents owned by the Minneapolis-based firm. Salient owns another six U.S. patents and has 22 more pending. The company has also filed a number of patent applications in Europe and Japan.

Army, who had been the chief financial officer since 1999, became president and CEO last June. In July 2007, Salient closed a Series E round of financing for $20 million, bringing total funding to about $90 million. Investors include Medtronic, Brait SA, Vanguard Venture Partners, and other groups from the U.S., the U.K., and Japan.

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Ever since scientists first figured out how to make carbon nanotubes—tiny cylinders of carbon with diameters of a few tens of nanometers—they’ve been touted as the material of the future: as strong as steel but far lighter, with the ability to conduct electricity in useful ways. The problem is that because they’re so small, it’s been difficult to make them at scales that would be useful to industry. You can’t really build a lightweight airplane a few microns at a time, after all.

Now a New Hampshire company, Nanocomp Technologies of Concord, says it has overcome that limitation, producing sheets of carbon nanotubes that measure three feet by six feet and promising slabs 100 square feet in area as soon as this summer.

“From the get-go, we wanted to build something that would be manufacturable,” says Peter Antoinette, CEO and co-founder of Nanocomp. “We’re out to make value-added components out of that material.”

The sheets, which the company can produce on its single machine at a rate of one per day, are composed of a series of nanotubes each about a millimeter long, overlapping each other randomly to form a thin mat. The tensile strength of the mat ranges from 200 to 500 megapascals—a measure of how tough it is to break. A sheet of aluminum of equivalent thickness, for comparison, has a strength of 500 megapascals. If Nanocomp takes further steps to align the nanotubes, the strength jumps to 1,200 megapascals.

The trick, says Antoinette, is being able to make the tubes a millimeter long. Many carbon nanotubes, in addition to having vanishingly tiny diameters, are at best a few tens of microns long (a micron is one-thousandth of a millimeter). So most production processes create what is essentially a powder of nanotubes, Antoinette says.

He won’t go into great detail about Nanocomp’s recipe for cooking up the tubes, but essentially the process works by taking a carbon-containing fuel, such as ethanol or methane, heating it up, and flowing it past a catalyst—a nanoparticle that can be made from any number of materials, including oxides of nickel, cobalt, or iron. Heat causes the flowing fuel to react with the catalyst, breaking off the carbon atoms, which build up on the catalyst, atom by atom, into a nanotube. The size of the catalyst determines the diameter of the nanotube.

Antoinette says Nanocomp’s technical achievement was to figure out a way to maintain the catalyst particle at the desired size and hold it stable long enough for the nanotube to grow to millimeter length. A computer controlling about 30 different parameters in the process—including temperature, temperature gradient, gas flow rates, and the chemistry of the mix—allows the builders to control the properties of the tubes. One setting gives them single-walled tubes, and another gives multi-walled versions, with one cylinder inside another, which provide different properties. “We can dial it in,” he says.

So what do you do with the stuff once you’ve made it? Antoinette says the sheets would be particularly good for shielding electronic components from electromagnetic interference. He’s talked to manufacturers of cell phones and PDAs who are looking at the material as something they could use to build handsets that are less vulnerable to the noise from stray transmissions. It might also make a nice housing for a computer, with aligned nanotubes acting as an antenna for wireless connections and randomly oriented nanotubes protecting the computer from electrical surges, while the material also dissipates heat from the processor.

Someday Antoinette would like to see the nanotubes built into composites, similar to the carbon fiber composites being used for next-generation airplanes such as the Boeing 787. But even before that’s done, the current material can solve a problem designers are having with those carbon fiber composites—the fact that … Next Page »

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VKernel makes virtual appliances that manage virtual servers running virtual operating systems. But today the Portsmouth, NH, company announced that it’s raised some decidedly non-virtual cash—$4.6 million of it, to be exact, in a venture funding round co-led by Waltham’s Polaris Venture Partners and San Francisco’s Hummer Winblad Venture Partners.

The company’s “appliances” are actually downloadable software modules that managers of corporate data centers can load onto the same servers they’re virtualizing using systems from other vendors such as VMware. The software takes care of two problems not directly addressed by virtualization systems themselves: analyzing server capacity to identify, predict, and sidestep bottlenecks when too many users are trying to access the same server resources; and tracking the utilization of virtualized systems, so that individual departments within a business can be charged the appropriate dollar amounts for accessing CPU time, memory, long-term storage space, and network capacity.

VKernel was launched in early 2007 by Alex Bakman, a serial entrepreneur who is also founder, chairman, and former CTO of Portsmouth-based Ecora Software, which helps companies prepare for external audits of their IT infrastructures. In 2005, the New Hampshire High Technology Council recognized Bakman as the state’s Entrepreneur of the Year.

VKernel says it plans to use the venture money to advance product development and beef up sales and marketing efforts. “We believe organizations will see VKernel technology as a vital component of successful virtualization projects,” said Polaris general partner Dave Barrett in the company’s official announcement of the funding round. (Barrett and Hummer Winblad general parter Mitchell Kertzman will join VKernel’s board.) “The company’s executive team has a solid track record of growing businesses from the ground up, and we fully anticipate VKernel will rapidly become a player in this market.”

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Hogs and dairy cows in the United States produce nearly 3 billion pounds of manure a day, according to the U.S. Department of Agriculture. That’s over 1 trillion pounds per year—an unimaginable, truly Augean heap of waste. Unfortunately, farmers can’t simply divert a few rivers, as Hercules did, to wash it all away. But technology is creating some promising alternatives, and a Portsmouth, NH, company called Environmental Power is exploring one of them. It’s building North America’s largest facility for producing pipeline-quality natural gas from cow manure.

Call it re-moo-able energy. Outside Stephenville, TX, about 60 miles southwest of Fort Worth, an Environmental Power subsidiary called Microgy is constructing eight above-ground anaerobic digester tanks, each holding 916,000 gallons of manure. When high-carbohydrate materials such as restaurant grease-trap waste are added to the manure and the mixture is heated to about 130 degrees Fahrenheit, the bacteria naturally present in the manure will really start to party, breaking down the waste and releasing an expected 1 billion cubic feet of methane per year.

The captured biogas will be purified, compressed, and pumped directly into a nearby natural gas pipeline. The Stephenville plant is the kind of place that’s sure to turn up sooner or later on an episode of the Discovery Channel’s cult hit “Dirty Jobs with Mike Rowe.” And it’s one of the world’s first industrial-scale implementations of a technology that’s already widely used for small-scale electrical cogeneration on farms in Europe and has the potential to convert a decent fraction of U.S. agricultural waste into usable energy.

“We are energy guys, and we’re really focused on trying to identify ways to maximize the production of useful energy,” says Mark Hall, a senior vice president in Environmental Power’s Chicago office. “So we were looking for a [variant] of anaerobic digestion that we could deploy for larger operations to maximize gas production. This technology works really well for that.”

Environmental Power was founded in 1982, and over the years it has developed, operated, and sold a dozen clean-energy projects, including seven hydroelectric plants, two facilities that burned municipal waste, and three waste-coal-powered generating plants. In 2002 the company acquired Golden, CO-based Microgy, which had obtained the North American license for an anaerobic digestion technology developed by Danish firm Xergi. “This thermophilic co-digestion technology—where you use a little higher temperature and a mix of materials in above-ground digesters—has been used pretty extensively in Europe, including over 2,500 installations in Germany” says Hall. “It’s on the high end, from a capital-expense standpoint, but it really produces a lot of energy. And we are honestly pushing the boundaries and trying to achieve large-scale, pipeline-quality gas production.”

Selling the methane alone would produce respectable revenues for the company. But the waste-digestion business has a few built-in incentives that make it even more attractive—from a financial standpoint, if not an olfactory one. One is that the basic material is free. Farmers are usually glad to … Next Page »

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