Times are still tough out there—and maybe getting tougher—despite faint rumblings of an economic recovery on the horizon. In the past two weeks, young startups and big public companies alike have shed workers in layoffs big and small. Here’s a quick recap of the bloodletting in the Northwest.

—Vidoop, a Portland, OR-based maker of online security and authentication software, laid off an unspecified number of staff members this week, according to its blog. The company cited “the current economic climate and its impact on our target market” and a longer sales cycle as reasons for the cuts. In November, Vidoop reportedly laid off nine of its 37 workers. The company moved to Portland from Oklahoma last September.

—Seattle-based TeachStreet, an online community site that connects students and teachers in six metro areas around the U.S., laid off four staff members on Monday. The move, which was first reported by TechFlash, was made to give the startup a longer runway. Dave Schappell, TeachStreet’s founder and CEO, confirmed the news but declined to say how many staff are left in Seattle. (Last August, the startup had about 10 people in its headquarters.)

“These were not performance-related layoffs,” Schappell said. “The world changed since we raised the first round.” Speaking of which, TeachStreet is expected to announce the close of a new funding round in the next week or so.

—Finnish mobile-phone giant Nokia (NYSE: NOK) is closing its office in Kirkland, WA, as part of a strategic shift to streamline investments in its services business. The number of local employees affected has not been disclosed, but Nokia said about 450 staff will be affected globally. The Kirkland office was built around former startup Twango’s mobile-media technology for sharing photos and videos online. Nokia bought Twango for an undisclosed sum in 2007.

—Kirkland, WA-based Pathway Medical Technologies slashed 39 positions (19 percent of its workforce) early last week, as Luke first reported. The move was made because the company didn’t raise as much as it hoped in its most recent venture financing round in March—Pathway brought in just $42.3 million out of the $55 million it was shooting for. Pathway makes a medical device that clears out blockages in leg arteries, but sales in the U.S. have fallen short of projections so far.

—Microsoft (NASDAQ: MSFT), the Redmond, WA-based anchor of the tech community, implemented last week the second round of job cuts it originally announced back in January. About 1,200 workers in Washington state are losing their jobs, and there has been speculation that further staff cuts could be made if the company’s sales figures don’t improve in the coming months.

Comments (1) | Reprints | Share:        

[Updated April 18 with correction to Madrona Venture Group's new investment in Q1---Yieldex, not PetraVM (which was Q4)]

OK, the venture capital stats are in for the first three months of 2009, and surprise—they’re not very pretty. In fact, venture capitalists and all of us who follow their activities should probably just retire now while we still can.

Or not. As Lucinda Stewart of Kirkland, WA-based OVP Venture Partners puts it, “We are used to rain in the Pacific Northwest, but we are seeing breaks in the forecast.” She is referring to a few encouraging signs in the regional VC data—namely that the number of deals and dollars, though down compared with the first quarter of 2008, are down by less than the national average. What’s more, according to one major survey, the number of deals and the total investment in those deals are actually up compared to the fourth quarter of 2008.

According to Dow Jones VentureSource, venture capitalists invested $121.8 million in 22 deals in Washington, which is down substantially compared to the $256.4 million invested in 27 deals in the first quarter of 2008. But it’s a slight improvement over the $116.8 million invested in 19 deals in the last quarter (fourth quarter of 2008).

You also have to look at the stage of the various deals, Stewart says. “I’m encouraged by the seed-stage investing numbers, which are only slightly down,” she says. “In terms of angels, it doesn’t look like they’ve disappeared. That’s a decent sign for the future of the Northwest.” Also, she notes that half of the deals in Washington had an outside lead or co-lead investor.

Stewart says OVP did six follow-on investments last quarter, including deals with Seattle-based Adapx and Bellevue-based Talyst, a healthcare software firm. “Talyst has a couple hundred hospital installations, so I was very concerned they were going to suffer [in the current climate]. But they beat their Q1 numbers,” she says.

Greg Gottesman of Seattle-based Madrona Venture Group says his firm had a very active first quarter, making one new investment (Yieldex) and seven follow-ons. “That’s as many as we’ve made in years,” he says. “Times are more difficult, and companies do have to do more with less.”

“Everybody is continuing to make investments,” says Andy Dale of Seattle-based Buerk Dale Victor. “It’s certainly not business as usual. Portfolio companies are slowing down in revenue and hiring, and we’re all helping them work through this economy…We’ve got to hunker down and focus on making what we have work.” He continues, “Financing is one perspective. But are they creating new partnerships, new products, getting things done?” Within BDV’s portfolio, Dale points to Bothell, WA-based Halosource, which recently got EPA approval for its water-purification system.

What’s more, Gottesman adds, “A lot of companies are taking advantage of current market opportunities.” For example, IT-optimization firm Apptio, based in Bellevue, is working with Amazon Web Services on a cloud-computing partnership. “It’d be a mistake for anyone to say times are rosy,” he says. But when the bubble burst in 2000-2001, that was “self-inflicted pain. This time there are forces outside the tech world that have caused the downturn.”

By Xconomy’s tally, here are the top five venture deals (and investors) in Washington from the first quarter of 2009. All were follow-on investments:

—Pathway Medical Technologies, $40 million (Forbion Capital Partners, HLM Venture Partners, Oxford Bioscience Partners, Latterell Capital Management, Cooperative AAC, Giza Venture Fund). Luke broke the news of the medical device company’s funding here.

—nLight Technologies, $10.7 million (Menlo Ventures, Mohr Davidow Ventures, Oak Investment Partners, Smac Partners; Andy Dale is also an investor in the company). Xconomy published a short profile of nLight co-founder and CEO Scott Keeney here.

—PivotLink, $10 million (StarVest Partners, Trident Capital, Emergence Capital Partners). Xconomy reported on the Bellevue, WA, and San Francisco-based business intelligence software firm here.

—Adapx, $9 million (UV Partners, OVP Venture Partners, Paladin Capital Group). We profiled the Seattle company’s financing, digital pen technology, and business strategy here.

—Skytap, $7 million (Ignition Partners, Madrona Venture Group, WRF Capital). Xconomy profiled the Seattle software startup and its strategy in the crowded field of cloud computing here.

Comments | Reprints | Share:        

It was another relatively slow week for deals in the Northwest—with a very notable exception being the largest venture capital deal of the year to date (see below).

—Xconomy broke the news of the Northwest’s biggest venture deal of 2009 so far: Kirkland, WA-based Pathway Medical Technologies’ $40 million financing led by Amsterdam-based Forbion Capital Partners, and joined by HLM Venture Partners, Oxford Bioscience Partners, Latterell Capital Management, Cooperative AAC, and Giza Venture Fund. As Luke reported, Pathway CEO Paul Buckman said the financing is the first part of an ongoing $55 million fundraising round. Pathway makes a novel device that clears out blockages in clogged leg arteries.

—Bellevue, WA-based Bsquare (NASDAQ: BSQR), which provides software and services to help companies develop mobile and embedded devices, said it is porting Adobe’s Flash technology onto Google’s Android mobile platform for a top-tier wireless carrier. Financial terms of the deal were not disclosed. Thanks to Bsquare, Android may get Flash before the iPhone does, enabling all sorts of new mobile applications.

—Bothell, WA-based Vioguard, maker of germ-zapping computer keyboards (using ultraviolet radiation), told Xconomy the story of its $1 million first-round angel financing round, and its ongoing effort to raise another $2.5 million to $3 million by June. Vioguard CEO Larry Ranta explained how the startup is going after the growing hospital market, where containing the spread of deadly bacteria like MRSA is a crucial issue.

—The Northwest Association for Biomedical Research, a Seattle-based nonprofit that supports science education, received a three-year, $1.3 million grant from the National Science Foundation, as Luke reported. The funds will be used to help high school teachers and students understand how information technology is used in biomedical research.

—Seattle-based Vulcan Capital, Paul Allen’s venture firm, invested in a $15 million Series D round of financing for Audience, a voice-processing software firm based in Mountain View, CA. Vulcan was an existing investor, together with New Enterprise Associates, Tallwood Venture Capital, and VentureTech Alliance, all of whom participated in the round. Audience is going after the mobile market, where it aims to reduce noise for people talking on their cell phones.

Comments | Reprints | Share:        

Tom Clement, the CEO of Pathway Medical, has been named the new chairman of the Washington Biotechnology and Biomedical Association. He’s been busy lately at his day job, since Pathway, a Kirkland, WA-based maker of medical devices to clear fatty buildups in leg arteries, won FDA approval of its first device. Clement’s term with the WBBA last two years. He takes over for Jim Gore of the Pacific Northwest Diabetes Research Center.

Comments | Reprints | Share:        

Pathway Medical Technologies is in the marketing game for real now. The Kirkland, WA-based company has started selling its Jetstream device for clearing out fatty blockages in leg arteries, after winning FDA clearance for a modified version of the device, hiring its initial sales team, and stocking up on inventory for what it expects will be an early wave of demand.

We broke the news first here in July when Pathway won FDA clearance for the Jetstream. The company said then it would take some time before it could hit the market because it wanted to go back to the agency with minor modifications that would make the device easier to manufacture, simpler for doctors to use, and, frankly, look snazzier, says Tom Clement, Pathway’s CEO. The FDA said yes to all the tweaks, Pathway hired a sales staff of 18 to fill out its roster of 150 employees, and it stocked up on several months of inventory.

“We’ve been working feverishly,” Clement says. “We see a very, very bright future for this product and the world of endovascular care.”

Pathway’s Jetstream is a tiny stainless-steel drill mounted on a catheter that snakes inside clogged arteries, where it cuts up and vacuums out fatty buildups. The company is pitching it as the first device capable of drilling into and vacuuming out rock-hard calcium deposits in leg arteries, just as easily as its slices through squishier clots and lesions.

The condition, known formally as peripheral artery disease, affects an estimated 8 million to 12 million people in the U.S., although most go undiagnosed. Besides trying to drum up more demand, Pathway will be competing with Plymouth, MN-based ev3 (NASDAQ: EVVV), maker of a device called the SilverHawk, which cuts and scrapes out buildups. Apparently, the competition is well aware of the threat from Jetstream, and sounds worried. Six sales reps from ev3 have quit their jobs there to come work for Pathway, Clement says. Other ev3 reps are being given bonuses to resist the urge to jump ship to come work at Pathway, he says. “People know this device is coming down the pike,” Clement says.

Despite the excitement at Pathway, Clement says the company is trying to be careful not to commit the sin of getting overzealous. …Next Page »

Comments (1) | Reprints | Share: