Funding for clean technology startups has increased substantially in recent years, with 323 U.S. companies raising a total of $4.3 billion in 2011, according to the recently released MoneyTree Report. In the San Diego area, the same report shows that four cleantech startups raised $78 million last year, including $15 million that went to SG Biofuels in the fourth quarter.

But sometimes it’s not enough to be green. Many cleantech startups face a basic challenge in competing against existing products that might not be as environmentally friendly, but are nevertheless well-established—even commoditized—in their respective markets.

In San Diego, sustainable design architect (and Xconomist) Robert Noble has led the development of clean manufacturing methods and technologies for manufacturing a green replacement for medium density fiberboard (MDF) structural panels—a standard material used in building construction and other industries. Noble says the proprietary process makes panels from any kind of fibrous, cellulosic material, such as recycled paper, cardboard, wood chips, corn stalks, and even cow manure. The big difference is that the replacement product, which Noble calls 3-D Engineered Molded Fiber (3DEMF), requires no petroleum-based glues or addititves, or vapor-emitting chemicals.

Ecor samples

Now Noble Environmental Technologies, a company he founded in 2005, is overseeing installation of a 3DEMF factory, showroom, and design lab in downtown San Diego to manufacture the company’s Ecor brand panels. “The tide has turned for sustainable materials,” says Jim Torti, the company’s chief operating officer.

After personally funding the company through 2009, Noble says he now has about 15 individual and institutional investors, and he’s in the process of raising another $4 million to help equip the 10,000-square foot factory and to provide some cash flow. Noble adds that he has no plans to seek venture capital. He says the time required to build large-scale manufacturing and their primary market—the building industry—”doesn’t easily fit the venture capital model for a quick exit,” which is an issue for many cleantech businesses.

Torti and Noble say they wanted to establish the company’s first production plant in an urban, mixed-use setting—an apartment building is across the street—to demonstrate … Next Page »

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Second Rotation, the Boston company that runs the electronics recycling site Gazelle.com, has been fairly quiet for the past year. No more.

The startup said today it has raised a $22 million Series D financing round led by Craton Equity Partners. Existing investors Physic Ventures, Venrock Associates, and RockPort Capital also participated in the round. The company most recently raised a $12 million C round in 2010 (announced exactly a year ago today). It has raised about $44 million to date.

Xconomy wrote about Second Rotation when it first came out with the Gazelle brand in 2008, and before that, back when my colleague Rebecca had an old Motorola phone on which she spoke with Gazelle co-founder Israel Ganot. (It turns out she still has that phone. OK, I shouldn’t throw phones, I mean stones—I only upgraded to a BlackBerry earlier this year. Did I mention I hate my data plan?)

Second Rotation was founded in 2006. The company says its revenues grew by 155 percent in 2010 compared with the previous year. Gazelle, which also says it has more than 175,000 customers who have traded in or recycled phones and other used electronics, plans to use the new financing to accelerate its marketing to mass media and make new investments in operational capital, inventory acquisition, and other areas of the business.

“Our goal is to completely transform the way consumers think about the consumer electronics they buy, sell and own,” said Ganot, who is now the CEO, in a statement today.

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As crafty parents know, turning chores into games can motivate hard work. New York’s Recyclebank uses a similar approach with its incentive program to encourage recycling.

Working with community and school organizations, as well as with individual members, Recyclebank offers rewards points to those who recycle empty bottles, cereal boxes, pet food cans, sandwich bags, and the like. The rewards points, as with other types of incentive programs, can be exchanged for discounts on products and services from retailers and restaurants. In the never-ending cycle of manufacturing and consumption, Recyclebank believes its incentives can help stem the tide of waste. “We need to find ongoing solutions to live in balance with the resources that are available on this planet,” says CEO Jonathan Hsu.

Offering incentives for good “green behavior” seems to be catching on. The seven-year-old company is growing rapidly, Hsu says, with more than 2.6 million members in its program, up three times from a year ago. “We are deployed in 300 communities in the US and the UK,” he says.

Hsu took the reins at the company last October after serving as CEO of digital marketing company 24/7 Real Media in New York. One of his goals has been to expand Recyclebank’s services. In May Recyclebank acquired GreenYour, a Web-based guide that offers tips on living green. According to a June regulatory filing, RecycleRewards, of which Recyclebank is a subsidiary, secured $2.1 million in equity. Since its inception Recyclebank has raised … Next Page »

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The first time you do something, it’s a novelty. The second time, it’s a pattern. The third time, it’s a tradition. After yesterday, the “Xpo” lightning-presentation portion of Xconomy’s annual XSITE conference now qualifies as a Boston-area tradition—one that’s so fun we think we’ll keep it around for a while.

A dozen early-stage startups joined the informal competition, where audience members were the judges (we used a mobile applause-meter app to gauge the response to each startup). Prizes were awarded in three categories: information technology, cleantech, and healthtech/life sciences. The prize for each category winner was a $100 gift certificate at Gilt.com, generously donated by Gilt Groupe (whose co-founder, Alexandra Wilkis Wilson, was an XSITE speaker earlier in the day).

Today we want to recognize and honor the three winners:

Cleantech

The competitors: CoolChip Technologies, Altaeros Energies, Greenbean Recycle, OsComp Systems

The winner: Greenbean Recycle, Shanker Sahai, founder. Greenbean is developing a new type of “reverse vending machine” that encourages recycling by ingesting soda cans, water bottles, and juice and sports drink bottles and providing refunds (in the case of containers covered by bottle-bill refund law) in the form of digital cash sent straight to a user’s PayPal account or campus cash card. The refunds can be tracked on a mobile app, which also provides a platform for gaming and competition between individuals or teams. The company is pilot-testing the machines on the MIT campus this summer and plans to try them at Tufts starting this fall.

Information Technology

The competitors: WaySavvy, Proper Cloth, Smarterer, STELLAService, PoKos

The winner: WaySavvy, Michael Raybman, co-founder. WaySavvy is combating travel-info overload. Rather than visiting dozens of sites to find the right hotels or flights, WaySavvy users can find the best flights and hotels within their budget in a single click, thanks to optimization technologies and social-profile data. Visual tools allow users to validate and customize the algorithmic recommendations before buying. Raybman says the company is starting out by targeting business travelers who manage their own travel reservations.

Healthtech

The competitors: REBIScan, Ginger.io, Strohl Medical

The winner: Strohl Medical, Heather Keith, founder and CEO. “In the world of stroke, time lost is brain lost,” Keith says. Strohl Medical is developing a medical device aimed at helping emergency-room doctors diagnose ischemic strokes as quickly and reliably as they can use EKG machines to diagnose heart attacks. The Strohl kit fits over the patient’s head and can detect differences in activity on the right and left sides of the brain that indicate stroke. That means some patients could be treated sooner with medicines such as tPA that can reduce the damage.

Congratulations to our winners, a hearty thanks to all of our competitors for taking part, and good luck to next year’s Xpo startups!

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Tigard, OR-based Agilyx, which turns plastic into synthetic oil, is gauging a possible public offering after raising a $22 million Series B round. The new investment was led by Kleiner Perkins Caufield & Byers, and included Vancouver, BC’s Chrysalix Energy Venture Capital, Waste Management, and Total Energy Ventures International. Chrysalix’s Brian Wawro told the Portland Business Journal that Agilyx is already discussing IPO possibilities with bankers and could target the end of 2012. But CEO Chris Ulum was more circumspect, telling the Journal that an IPO is one of several potential options.

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Cheezburger Network’s decision to finally take some venture money was 2011′s first big deal for Seattle-area tech companies, and it easily dominated the roughly $55 million raised in 15 equity-based financing transactions recorded in January, according to data compiled by CB Insights FundingFlash.

Ben Huh and his team over on Queen Anne have a growing kingdom of humor sites led by I Can Has Cheezburger?, the wickedly simple cat-photo captioning community that has spawned its own hilariously bizarre subculture.

The investors were some big names: Foundry Group, Madrona Venture Group, Avalon Ventures, and SoftBank Capital. Cheezburger, founded in September 2007, had previously only raised $2.25 million, primarily from Seattle-area angel investors.

Even though he says the network now attracts about 16.5 million unique visitors a month, Huh was remarkably forthcoming about the fears come along with the company’s recent growth.

“I’m afraid of being caught napping,” he said in an interview with Xconomy. “This is our market to lose.”

Also making a good showing was a company we haven’t written anything about, as far as I can tell: Thrift Recycling Management of Lakewood, WA which resells books and other used consumer goods online. It raised $8.5 million from QuestMark Partners in a growth equity deal, according to CB Insights’ data.

January’s third-biggest deal was for Corensic, a software startup out of the University of Washington that helps companies debug software on multi-core processors. Dow Jones VentureWire reported the $4.5 million financing was led by Madrona Venture Group and WRF Capital.

Madrona showed up once again—this time with former Expedia CEO Rich Barton—in the $2.5 million Series A financing for Decide, a stealthy startup that says it’s going to bring “unprecedented levels of transparency to electronics shopping.” Decide’s website says it was founded by UW computer science professor Oren Etzioni (a venture partner at Madrona) and four students.

For the rest of the January deals data, see this table. I’m sure we’ll be following some of these companies here at Xconomy in the months ahead.

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San Diego-based EcoATM unveiled its latest-generation kiosk today at the Demo Spring 2011 conference in Palm Desert. The company, which recently raised $14.4 million to begin manufacturing its electronics-recycling kiosk, says its new, fully automated “eCycling Station” includes an ATM-like cash dispenser for immediate payment of recycled devices.

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Steve Manning saw some of the latest consumer electronics at the 2011 International CES confab in Las Vegas this month, and the CEO of Dexter, MI-based ReCellular was reminded how it takes before Americans who buy such nifty gadgets will want to trade in for new stuff. About 15 months.

“It was amazing, great neat technology displays,” Manning says, “but if you step back from that event, in 15 months, those products that they are announcing will become obsolete because newer technology and features are going to be introduced.”

The effects of Moore’s law have been kind to Manning and his company, however. ReCellular, which collects used mobile phones and refurbishes them for the resale market or recycles them, grew its revenue by about 45 percent in 2010 and rapidly added workers because of increasing domestic and foreign demand for its refurbished devices, says Manning, who joined the firm in May 2009. (The company is private and does not release specific sales and profit figures publicly.)

ReCellular is an important company to know about because of its rapid growth and prospects to boost the Michigan economy. In October, the Farmington Hills, MI-based venture firm Beringea endorsed ReCellular with an undisclosed investment in the company through its Invest Michigan Growth Capital Program. Since the deal was announced, the firm has grown its work force by more than 10 percent, according to Manning.

Founded in 1991 by brothers Charles and Allan Newman, ReCellular has had a knack for capitalizing on major changes in the multibillion-dollar wireless industry. In its early days, when new mobile phones cost several thousand bucks, the firm refurbished phones and leased them to customers. Now phones are much cheaper, making it easy to own them outright, and the time cycles for replacing them are much shorter. For instance, Americans’ rush to buy newer smartphones such as the iPhone has provided a surplus of older-model handhelds for ReCellular to refurbish and sell, Manning says.

ReCellular is now the largest cell phone refurbishing and recycling firm in the country. It processes between 400,000 and 500,000 phones per month. About three quarters of the phones are refurbished for the resale market, while the devices that are beyond repair are pulled apart. The plastic parts are recycled and the valuable materials, like gold from circuit boards and copper from battery chargers, are sold.

The firm makes profits on its resale business but, even after cashing in the gold and other precious metals, the recycling … Next Page »

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It began in 2009 as a project among University of Michigan graduate students to find alternative uses for food waste. Now it’s a company called ReGenerate Solutions, which might be one of the hottest new startups in Southeast Michigan.

ReGenerate took the top prize for the student track of December’s Accelerate Michigan Innovation Competition—which was promoted as the largest business plan contest in the world—with its plan to provide organic food waste digesters for large cafeterias and supermarkets. The startup’s founders, who incorporated their venture last month, rose to the top of nearly 300 student teams that entered the competition.

But there are new challenges ahead for ReGenerate, according to co-founder Hunt Briggs, who heads business development for the startup while completing his dual MBA and master’s degree in environmental science in Ann Arbor. The group needs to complete testing of an early prototype of its digester at Michigan State University, advance development of a commercial-scale model of the system, and strengthen ties with potential customers, Briggs says.

It’s likely going to be a lot of work to shake up how facilities manage food waste. Rather than have its customers ship uneaten food to landfills, ReGenerate wants them to put certain waste into on-site digester. The digester is being designed to convert discarded food into biogas, which can be combusted right at the facility for heating water. The leftovers of that process would be used to make compost. The group is now addressing questions about how these systems will fit with busy cafeteria and grocery store operations, where employees are used to chucking food waste into dumpsters.

“What we’re going to have to do is work with customers to enable our unit to be practical for them. We can’t just come in and drop the thing off and say, ‘Good luck,’” Briggs says. “We actually have to work with them to see how we can integrate with their operations.”

To support its nascent operations, ReGenerate got some help through a … Next Page »

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Twice a year the Northwest Energy Angels put on a showcase where the organization’s investors can talk shop, and local cleantech companies have the opportunity to update the group of angels—many of whom have backed them in the past—on their recent accomplishments. It’s a chance for the growing organization to benchmark its success in facilitating relations between cleantech entrepreneurs and potential investors looking to provide early-stage capital to up-and-coming cleantech companies here in the Northwest.

“It’s been a year already— an excellent time to bore you with lots and lots of statistics about what’s happened over this last year,” angel Lars Johansson joked in his address at the group’s holiday party/winter showcase on Friday at the Talaris Conference Center.

Over the last year the NW Energy Angels, founded in 2006 by local entrepreneur Martin Tobias and state lawmaker Jeff Morris, have made some substantial strides. In March the group hired on new executive director Margo Shiroyama, who has spent her first nine months on the job growing the group’s scope—growing the organization’s resources and events for cleantech companies and investors, including research field trips, new member programs, and investor discussion groups, a project spearheaded by one of the group’s members, Kiki Tidwell.

The group itself has grown from 45 active members at the time of its summer showcase in July, to more than 53, and has invested more than $3 million in 20 cleantech companies in the region to date.

The rest of the night was turned over to company presentations and mingling. Though all of these companies had presented at previous NW Energy Angels events, they were all in varying stages of development—some approaching third and fourth investment rounds, while others were just completing due diligence. Some we’ve reported on before, others are brand new. Take a look at these highlights from the presenting cleantech companies:

—MicroGREEN Polymers (Arlington, WA)

This company, which develops technology to recycle plastics into cheaper, environmentally friendly items, such as coffee cups, has been on our radar for some time. MicroGREEN Polymers raised $6.9 million in a Series B round back in May, funding that allowed it to build a new facility in Arlington, which is “now filled with $6 million worth of equipment” leading to toward commercialization, according to CEO Tom Malone. “We’re cranking out products,” he says. That financing was followed up by an additional $2.7 million last month, in a round that is still open and could be worth as much as $3.75 million. While Malone says the company is six months behind schedule, he’s excited to announce that MicroGREEN currently has samples in the hands of 2,000 customers. “I’ve never been higher about the company,” he says. “No doubt you’re going to see us announcing great things in the next quarter.”

—G2B Ventures (Seattle, WA)

G2B Ventures, also known as G2B Holdings, is a Seattle-based real estate consulting and redevelopment company that buys homes, retrofits them for green, energy efficient technologies, and resells them for a profit. Chairman and CEO Aaron Fairchild says G2B is “racing to revenues,” having just closed a round on Friday. “The money just came into our account today, so we’re really fired up about that,” he says, adding that NW Energy Angels investments accounted for one third of the round. The new funding, according to Fairchild, will back the company’s new home renovation venture, getting started under the name “Green Canopy Homes.”

—Farm Power Northwest (Skagit County, WA)

This company, which also presented at the summer showcase, is in a different kind of clean tech business—manure. The company, which develops, owns and operates energy harnessing manure digester facilities out of backcountry dairy farms in Washington and Canada, just closed its third round … Next Page »

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News hit yesterday that Cambridge, MA-based thredUP, an online platform for swapping used children’s clothing, will be packing up for San Francisco next month, as first reported on Scott Kirsner’s Innovation Economy blog. The company has signed a lease for a building near the city’s Union Square neighborhood starting in September, CEO James Reinhart says.

Is this another notch on the Bay Area’s belt (think Zendesk and TaskRabbit), proving its superiority over Boston as a environment for fostering tech startup growth? Not exactly. Reinhart says the move is largely for personal reasons: he and his wife recently had their first child and they have family out West. It’s something he’s been planning for some time and isn’t due to San Francisco’s dominance as a tech hub, he says.

“I think Silicon Valley is certainly a bigger space, but it’s not necessarily a better space,” he told me in a phone interview yesterday afternoon. “There are tradeoffs in moving there.”

For example, he says, while there is a greater population of developers in Silicon Valley, there’s also tougher competition from tech giants like Google, Twitter, and Facebook in attracting that talent. “This notion that there’s more talent out there, and that’s why startups move, I think it’s false,” he says.

Boston also has a rich population of startups in the business of online swapping of goods. There’s Gazelle, for recycling and selling used electronics; Swaptree, where you can trade used books and entertainment media; and even a business for renting out your car while it’s not in use (that would be RelayRides.) “In some ways we’re leading the core swapping market, so it cuts both ways,” Reinhart says of Boston.

ThredUP does have the potential of taking advantage of the “spillover effect” from Bay Area consumer Web giants like eBay, when it comes to hiring talent or adding advisors, Reinhart says. He’s planning on moving with five other employees to the thredUP San Francisco office. The startup—which launched its kids’ swapping site in April after initially starting as a marketplace for trading used men’s and women’s shirts—plans to hire another developer once it gets into town, and add another engineer in October. A few thredUP employees will remain in Boston for personal reasons, he says.

Last month, thredUP raised a $1.4 million Series A-1 round of funding, led by Menlo Park, CA-based Trinity Ventures. Three East Coast investors also participated in the round: Founder Collective, High Line Ventures, and NextView Ventures, the new micro VC firm in Boston.

Founder Collective Managing Partner Eric Paley says his firm has investments in West Coast companies, so the thredUP move isn’t much of a game changer for his relationship with the company.

ThredUP now has about 16,000 users, and is adding about 1,000 each week, Reinhart says. He also says the company is looking forward to reaching out to the mom-focused bloggers and Facebook groups, like Circle of Moms, located in San Francisco. It’s a community thredUP has been looking to tap into in order to enrich its user site. “There are natural connections there that are interesting,” Reinhart says.

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Last week the Northwest Energy Angels—a group of over 45 private investors who have banded together to invest exclusively in cleantech and energy companies located here in the Pacific Northwest—held its annual Summer Showcase at Tesla Motors’ South Lake Union showroom. Founded by Seattle entrepreneur Martin Tobias and state lawmaker Jeff Morris in 2006, the angels provide early-stage capital to cleantech entrepreneurs and connect promising companies with potential investors.

So far, the group has invested more than $3 million in 17 local companies, a sign that it is active and growing—along with the Pacific Northwest cleantech sector. Back in March the Angels hired on local tech veteran Margo Shiroyama as the new executive director, and the group is recruiting new angels, hoping to bring the membership up to 60 by the end of the year.

On Friday afternoon many of the angels joined representatives from local cleantech companies, and green-minded community members at Tesla to mingle, connect, and hear updates from 11 companies that had presented at a prior NW Energy Angels event. Drinks were served in 100 percent compostable plant polymer Greenware. I would be lying if I said a few in the crowd weren’t eyeing Tesla’s bright red Roadster on display in the front of the room. (After the presentations, many signed up for test drives around the neighborhood, though I was not so lucky.) But the combination of compostable cups and fully electric cars sure did set the scene for an event on cleantech business ideas.

One of the more high profile attendees included U.S. Rep Jay Inslee, the Democrat who represents Washington’s first congressional district. Energy Angel Bill Lemon introduced Inslee as our “tireless advocate in the promotion of clean energies.” In his introductory remarks, Inslee urged the companies to develop new clean technologies and move the country and world forward toward renewable energies.

“The future of the U.S. economy is not determined at the Fed, or the White House, or the Congress. It is determined by people like you,” he said. “It is a system that is broken because it is rife with subsidies that support old technologies that have been around for the past hundred years.”

Inslee then outlined his five pillars for the future of clean energy, which he termed his “vision for America.” The steps included creating demand for new technology, increasing energy standards for machinery (including cars, buildings, and gadgets), changing the tax code to provide clean energy incentives for small businesses, increasing federal energy R&D, and leveling the playing field between clean energy businesses and industry old timers like oil and coal.

“These five pillars, I think, have the capability to get us into the international game. And it needs to happen this year—next year is a year too late,” Inslee said. “This is the most exciting thing technologically since we went to the moon,” adding that Seattle and the Pacific Northwest are poised to be cleantech leaders based on our booming regional tech industry. “When there’s a technological transition, Washington shines!” he said.

The remainder of the event was dedicated to a series of short company updates and networking among cleantechies. The presenting companies included a few more established startup success stories, as well as a handful of brand new companies fresh on the scene. Though all of the companies had been represented at prior NW Energy Angel events, many of them have escaped our radar until now. But whether you’ve heard of these startups before or not, if you’re interested in what’s up-and-coming in the Pacific Northwest cleantech sector, take a look at these highlights:

—EMME (Beaverton, OR)

Standing for Energy Management Made Easy, EMME develops energy management devices. These are monitoring gadgets for everything from heating, ventilation, and air conditioning equipment, to wireless power monitors, and power meter breaker boxes—that helps consumers keep track of their home’s carbon footprint, and save money and energy. “It will tell you how much you’re spending on heating, cooling, your refrigerator is spending, your big screen TV,” said Jon Brodeur, the company’s vice president of sales and marketing. “And it will give you recommendations on what to do to save energy costs,” without having to change out any appliances.

—EnerG2 (Seattle, WA)

You’ve probably heard of EnerG2, a nanomaterials startup focused on energy storage. The company, which develops ultra-high performance synthetic carbon material for use in double layer capacitors, has had such success in the last few years that Lemon kicked himself for passing up an opportunity to invest. “Boy do I really, really regret it!” he said. Since that missed opportunity, EnerG2 has brought in $8.5 million in its Series A venture investment—which chief operating and financial officer Chris Wheaton joked happened during in the fall of 2008, “nearly financial Armageddon.” Later on, EnerG2 secured another $21.3 million in federal stimulus money. “It completely blew the doors off for us,” Wheaton added. “There’s nothing like success to create more success.”

—EnergySavvy (Seattle, WA)

This energy-efficiency focused startup works to help homeowners understand the “miles per gallon” of their homes by helping consumers calculate their energy use and find places they can cut back, make changes, and save both energy and money. Only an eight-person operation, according to Scott Case, the vice president of product management, EnergySavvy has had so much interest from prospective customers they have been struggling to grow fast enough to keep up. The company makes its money … Next Page »

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On March 29 MIT arranged a round table seminar entitled “The Future of Manufacturing Innovation—Advanced Technologies.” The seminar focused on technological advances that could spur manufacturing in the U.S.

MIT president Susan Hockfield opened the afternoon by reflecting on the status of the U.S. as a manufacturing nation. “Many Americans tend to believe that hardly anything is made in the U.S. anymore, and that all manufacturing has moved to China or other countries with low wages,” she said. ”But by reinventing manufacturing capabilities and processes, the U.S. could create 17 to 20 million new jobs.”

Is this realistic? Can Western countries with high-paid jobs really compete with countries like China and India where the cost of labor is lower?

“Yes. Just look at Germany and Japan,” Hockfield said.

Coming from Sweden with a background in engineering, and having covered European industry for many years for publications such as VerkstadsForum, Verkstäderna, and Automation, I believe that Hockfield may be right, but that the United States has much to do in order stay competitive. Just look at the figures: in 2009 the U.S had a trade deficit of almost $227 billion with China alone, according to the U.S. Census Bureau’s foreign trade statistics. Over the last three years, 10 percent of the U.S. manufacturing workforce was laid off, MIT political scientist Suzanne Berger pointed out at the seminar.

While I don’t mean to sound like a preachy outsider, a number of practices that I’ve observed from my time covering European manufacturers, particularly in my native Scandinavia, could be useful as the United States seeks to rebuild or reinforce its own manufacturing infrastructure.

Consistent information handling during a product’s entire lifecycle is an often underestimated but vital component if we want to keep manufacturing profitable. Being able to master small batch production, even of complex and high-tech goods, in order to meet individual customers needs, is another key to staying competitive.  This is easier said than done. America is adapted to economies of scale, a tradition dating back to the days of Henry Ford. Certainly the U.S. has a huge home market, but this has probably delayed the adoption of small, efficient batch manufacturing essential in smaller countries and markets, such as the Nordic ones.

Once that is mastered, customization becomes, if not easy, at least more achievable. Customization, in turn, demands consistent information, with software solutions holding and updating product data correctly, through the product’s entire life cycle. Systems that can do this must … Next Page »

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It was a quiet week for deals in the Northwest—too quiet. Maybe companies are steering clear of breaking news so they don’t get drowned out by all the big quarterly earnings news and Apple’s much-anticipated product announcement tomorrow. Probably there’s a storm coming.

—Ryan took us inside a major partnership between Bothell, WA-based Seattle Genetics (NASDAQ: SGEN) and Millennium in Cambridge, MA. The deal, which we originally reported last month, calls for Millennium to sell Seattle Genetics’ experimental drug for Hodgkin’s and other lymphomas in all markets outside the U.S. and Canada. Millennium, which began a research collaboration with Seattle Genetics back in 2003, is acting as the Bothell firm’s global development and marketing partner, thanks to Millennium’s global parent company, Japan-based Takeda Pharmaceutical.

—Wade reported that Harvest Power, a Boston-area renewable fuels company that has operations in Seattle and Vancouver, BC, has formed a partnership with Waste Management (NYSE: WM), the Texas-based waste hauling giant. Waste Management has invested an undisclosed amount to help Harvest Power expand to more cities, starting with the East and West Coasts.

—Dow Jones VentureSource broke out VC data for Washington state in the fourth quarter of 2009, as Bruce reported. The venture dollars invested shot up almost three-fold in the quarter, when $239.4 million was invested in 25 companies, compared with the same quarter in 2008, when less than $85.6 million was invested in 18 companies. For all of 2009, however, Dow Jones showed a 9 percent decline, with $793.4 million invested in 107 companies, as compared to $875.6 million in 97 companies the prior year.

—Bellevue, WA-based Motricity, a software firm that helps wireless carriers and media companies deliver mobile data services to customers, filed a form S-1 with the SEC, saying it plans to sell up to $250 million in an initial public offering. The company was founded in 2001 and is backed by more than $400 million in venture funding; it moved headquarters from North Carolina to Washington following its $135 million acquisition of the mobile services unit of InfoSpace (NASDAQ: INSP) in 2007. Motricity generated revenues of $117.1 million in the 12 months ending on September 30, 2009, but is not profitable.

—Lastly, we had a fascinating guest post from entrepreneur Jasper Kuria, a former Microsoftie, on the reasons behind the “evil” term sheets that VCs negotiate with startups they want to fund, and the ensuing strategy discussions about company growth and exits.

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I caught up yesterday with noted entrepreneur and investor Martin Tobias, after his latest startup, Seattle-based Kashless, announced a partnership with RecycleBank to reward people for recycling items at Kashless.org. The basic idea is a rewards program—redeemable for merchandise at hundreds of retailers—for people who give away things like old clothes, food, bikes, electronics, or other equipment online.

Since I last reported on Kashless last winter, the “recommerce” firm has rolled out its free online marketplace and community website in 122 cities around the U.S. The partnership with RecycleBank, a New York-based firm and fellow RRE Ventures portfolio company, should help Kashless acquire new members. Kashless currently has tens of thousands of members, while RecycleBank has hundreds of thousands. “They’ll promote their members to join Kashless,” Tobias says. “They’re rewarding people for separating their trash, and we’re rewarding people for extending the life of products they’re no longer using.”

Tobias says the deal puts his company “over the top” and should help convince more people to give away their stuff on Kashless.org instead of Craigslist, Freecycle, or Goodwill stores. “We’ve been working hard to make Kashless.org the best place for people to find and give away free things,” he says. The rewards program “adds to the things we’ve already been doing, like driving directions [to available items] and tax deductions. It further differentiates us and makes it more valuable to give things away through us.”

Kashless is now staffed by five full-time employees and a couple of contractors. That’s down from about a dozen earlier this year, during the bulk of the company’s product development work. Tobias says there are more than 500,000 active listings on the website.

The company’s revenue model is a combination of advertising on the consumer site and licensing of the software platform to brands and communities that want to boost their recycling. The latter “private label” portion of the business makes up the majority of Kashless’s revenues, Tobias says.

I asked Tobias for the weirdest thing anyone has given away on the site. He named a couple items off the top of his head: a live monkey in a cage, and a tugboat up on blocks in someone’s yard. “An interesting thing for us is that everything posted on Kashless has been taken by somebody,” he says.

Tobias then remembered that he had once advertised a broken urinal from his old house. (I didn’t ask.) “Some guy said, ‘I’ve been looking for that.’ He thought he could fix it.”

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Kashless.org, a free online goods market, has launched its first celebrity donation program, according to a press release today. Seattle-based Kashless is working with Dave Dederer, the former singer and guitarist for The Presidents of the United States of America, for this first program. Dederer is donating a guitar and a set of skis, and users of Kashless will be able to write why they think they should get the items for free. Having a celebrity donate to the site should raise awareness about the environmental good Kashless CEO Martin Tobias hopes the site can do, especially during a time when many people are looking for alternative ways to get rid of (or acquire) goods.

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Blue Marble Energy announced today that it had reached its Series A financing goal. The Seattle-based company is developing ways of turning organic material like algae and human waste into useful chemicals and renewable fuel. Financial details of the funding were not disclosed, but in April Blue Marble reported in an SEC filing that it had raised approximately $1 million of a $2 million offer in equity.

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It was a fairly quiet week for deals in the Northwest, with some activity in biotech, software, materials, and devices.

—Seattle-based Arzeda, a developer of artificial enzymes, formed a partnership with DuPont to create new crop seeds that incorporate Arzeda’s technology, which should increase the productivity of the plants for food, as Eric reported. Financial terms were not released.

—Arlington, WA-based MicroGreen Polymers raised $1.6 million from WRF Capital and angel investors including Northwest Energy Angels, Alliance of Angels, and Atlas Accelerator, as Luke reported in an exclusive. The company has developed technology to recycle plastics into cheaper and more environmentally friendly coffee cups, food packaging, and other items. The money is part of an ongoing round that MicroGreen expects will net $3 million to $4 million this month.

—In another Xconomy exclusive, we talked with the founder of Santa Clara, CA-based Data Domain (NASDAQ: DDUP), Kai Li, a Princeton University computer science professor who has been visiting the University of Washington for about a year. Data Domain just got bought by Hopkinton, MA-based EMC (NYSE: EMC) for $2.1 billion in cash. Li spoke in depth about the ideas behind Data Domain, its growth and acquisition, and the future of data storage.

—Luke reported that Seattle-based Kineta, a biotech firm with an unusual business model, acquired the licenses to an array of compounds from Redwood City, CA-based Airmid with the goal of reaching clinical trials for drugs to tamp down autoimmune diseases like rheumatoid arthritis and multiple sclerosis. Kineta is looking to run promising drug candidates through early-stage clinical trials and then form partnerships with bigger drugmakers to run bigger trials, collecting upfront payments, milestones, and royalties on any product sales.

—EndoGastric Solutions, a medical device company based in Redmond, WA, and Redwood City, CA, raised $7.5 million from undisclosed investors. The firm, which was originally incubated in Kirkland, WA, at Scout Medical Technologies, makes devices that treat heartburn and obesity. It previously raised $79 million in venture capital from MPM Capital, Advanced Technology Ventures, and other investors.

—Seattle-based Cozi, a startup that makes family organizing and activity planning software, formed a partnership with Nestle to launch its service on the food company’s website, as Eric reported. Cozi’s software will be rebranded on the site with both companies’ names. Financial terms of the deal were not announced.

—Earth Class Mail, a Seattle company that delivers physical mail to businesses digitally, is providing key technology for Kansas City, MO-based Perfect Output’s document management service, as Eric reported. Financial details of the partnership were not given.

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Xconomy has learned that MicroGreen Polymers, an Arlington, WA-based developer of technology to recycle plastics into cheaper, environmentally friendly coffee cups among other things, has raised $1.6 million for expansion from WRF Capital and local angel investors (Northwest Energy Angels, Alliance of Angels, and Atlas Accelerator), out of an ongoing round the company expects will net $3 to $4 million later this month.

The money will be used to build up MicroGreen’s commercial manufacturing capacity, and boost its payroll from 9 people to as many as 30 over the next year, says CEO Tom Malone. The company is also scouting new locations, likely to be in Everett, WA, he says.

MicroGreen got started in 2002, when it spun out of the University of Washington. The basic idea from founders Greg Branch and Krishna Nadella, a pair of graduate students, was to see if they could develop a technique to squeeze high-pressure liquid carbon dioxide into plastics, to heat them up and expand them while in a solid state. This process creates billions of tiny microbubbles that allow manufacturers to maintain most of the properties of regular plastic, while using a lot less of the regular plastic that is made from oil. The MicroGreen technique also creates a handy insulating layer of air inside the plastic, which can protect your hand from getting burned while holding that hot morning coffee. But plastics are everywhere in the modern world, and MicroGreen Polymers sees plenty of opportunities to stick its recycled product into markets that are worth billions.

“We can use less plastic to do the same work,” Malone says. “It’s a less-is-more story.”

The technology, which MicroGreen calls “Ad-air” does just that—it adds air bubbles into recycled PET plastics (like the stuff from water and soda bottles), which makes the subsequent product lighter, uses less material, and makes it cheaper, Malone says. It retains many, but not all of the same properties as the original plastic, so it can’t be used for everything, he says.

The initial applications of the MicroGreen technology have been for a reflector plate that a Japanese manufacturer used to make liquid crystal display TVs appear brighter, and for a contract with Northrup Grumman to help make some electronics equipment lighter, Malone says. These aren’t huge clients, generating revenue of about $1 million last year, and almost $2 million this year, Malone says.

Bigger opportunities lie ahead in disposable coffee cups, food packaging such as … Next Page »

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The Web has drastically lowered the barriers to starting a business. But that benefit has a flip side: established Web businesses are more vulnerable to competitors who can suddenly come up from behind.

That’s the story that may play out this year in the electronics recycling market. Last year we ran a couple of stories about Waltham, MA-based Second Rotation, whose website, Gazelle, set out to disrupt eBay’s business by buying up people’s unwanted electronics at a carefully calculated market price, then reselling them at a higher price. Now a couple of Yale undergrads in New Haven, CT, have launched another cash-for-gadgets site that sets out to disrupt Gazelle’s business, by making the buying process simpler and beefing up the eco-friendly spin.

The startup, YouRenew, launched in March. Its website is still in beta mode, and is evolving fast, but it does most of the same things as Gazelle: it allows users to search a database for specific items such as mobile phones, music players, digital cameras, game consoles, and DVD players, find out how much cash an item will bring ($78 in the case of my Xbox 360), and print a pre-paid shipping label.

But YouRenew’s site is designed to be simpler to use than Gazelle’s, with fewer forms to fill out and fewer pages to click through to finish the process. It also adds a stronger green element: for every gadget they sell, customers get to pick whether YouRenew will donate money to a domestic renewable energy project like a wind farm or to reforestation efforts.

“We’re trying to create a platform in which it’s easier to sell or recycle your old electronics than it is to throw them away,” says Rich Littlehale, YouRenew’s co-founder. “There are definitely players that have gotten quite of a bit of a head start on us, but I think it’s like the search engine market in 1999—there are many competitors and a winner like Google hasn’t emerged yet. So in building the website, the question we were constantly asking ourselves was, what aspects of the other sites out there are either too difficult or too hard to understand, and how can we improve on the model?”

For YouRenew, part of the answer was cutting out steps like making new users set up an account. “The other thing we’re really going for is trying to take over the green niche,” says Littlehale. “At a lot of the other sites, like Cell for Cash and Buymytronics, the emphasis is on the cash. Gazelle has the most robust and well-built platform, but the number-one thing they’re pushing is not green. The main tagline on their site is ‘Get Cash for Your Gadgets,” and ours is ‘Get Paid to Recycle.’”

That may not sound like a big contrast, but it’s upon such distinctions that brands are built. And Littlehale is counting on YouRenew’s donation policy—for every transaction, the company sends money out of its own pocket to either AmericanForests.org or CarbonFund.org—to further burnish its image.

Littlehale and his Yale roommate and fellow founder Bob Casey are taking a year off from school to get YouRenew off the ground. A native of Norwell, MA, Littlehale says he’s got entrepreneurship in his blood—his grandfather ran a furniture store on Beacon Street in Boston. His father is a longtime investment banker, but after two summers working for financial firms, including Lehman Bros., he says “I wanted to do something that was maybe a little more risky.” He also wanted to follow up on the success he’s had with the Party for a Cause Foundation, a non-profit he founded to help college students put on fundraising events. “We’ve had thousands of students at Yale and now Georgetown participate in events for charity, and that was exciting and gave me a little bit of a taste for entrepreneurship,” Littlehale says.

Of course, the key to success with a gadget-recycling site probably isn’t whether its founders have entrepreneurial spirit or green intentions, but whether it will buy the devices that people want to sell, and whether it will pay an attractive price. A quick check of YouRenew’s prices shows that they’re competitive with, if not superior to, Gazelle’s. (An 8-gigabyte iPhone 3G in good condition will bring $220 on both sites; but the Xbox 360 for which YouRenew offered $78 would only bring $37 at Gazelle.) Littlehale admits, however, that YouRenew needs to keep expanding the list of gadgets for which it’s prepared to make a purchase offer. “We are still playing a little bit of catch-up behind Gazelle in terms of finding your device,” he says. Gazelle also does a much better job of using the major search engines to steer people to its site, Littlehale says.

But YouRenew’s secret weapon may be its youth, small size, and low overhead. Littlehale and Casey aren’t taking salaries yet, which has enabled the company to launch and pay its programmers using a very small angel round. Second Rotation, by contrast, has raised $10.4 million in venture financing—money that comes with strings, like board meetings and reports to shareholders and lots of employees to pay.

“We realize we don’t have the capital base of a Gazelle,” says Littlehale. “But we think we have a good concept, and we think we are really smart guys and girls, and what we’re trying to do in the near term is really to get the site down, make it as easy as possible to use, and as green as possible…It’s not that we’re trying to wipe out the market and be the only player. It would be silly to think we could do that. But when there is a list of [gadget-resale] websites available to people, we want to be the one where people look at it as the greenest.”

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