Students should be studying how to start things-how to create and grow new products, initiatives, ventures, and enterprises-a skill set that never goes out of style and that is fundamental to our nation’s future well-being and prosperity. And the best way to learn how to start things is to actually try to start things-whether it be a new venture to do something useful for your schoolmates, a new project to do something positive for your community, or a new enterprise in your dorm room, lab, or garage that just might change the world.

And while you’re at it, pay close attention to the principles of “lean startup,” as espoused by Eric Ries. Learn that it is indeed possible to systematically maximize the probability of innovation success: by working in small, interdisciplinary teams, which don’t spend months navel-gazing in conference rooms but which seek to engage with customers and reality as soon as humanly possible, and which “learn by doing” in hyper-rapid, iterative cycles-experimenting, learning quickly from what doesn’t work and building quickly upon what does. Unlock your inner changemaker-a skill set that will be critical to future success whatever the sector you choose: private, public, social, scientific.

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Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything—all external expectations, all pride, all fear of embarrassment or failure—these things just fall away in the face of death, leaving only what is truly important. —Steve Jobs

Watching an entrepreneur fail is sad, but watching but watching them fail from a lack of nerve is tragic.

Excitement
At the beginning of this year Bob, one of my ex-students, was in entrepreneurial heaven. He had an idea for a new class of enterprise software insight-as-a-service based on big data web analytics as a Cloud/SaaS (Software As a Service) application.

Bob had taken to heart the business model canvas and Customer Development lessons. After graduating he put together a prototype and had quickly marched through Customer Discovery, iterating his product with the help of CIOs and Fortune 1000 IT departments.

I had made one of the introductions to a Fortune 100 CIO, so I got to hear his progress from both him and the CIO.

Takeoff
After 90 days, things seemed to be moving at startup speed. Bob had a backlog of users wanting to try his application, and the corporate IT people who were trying his early prototype said, “It’s crude, we hate the user interface, it’s missing lots of features—but we’ll kill you if you try to take it away from us.”

I pointed a VC who followed the space to the CIO who was testing the prototype. The VC told me the CIO wouldn’t get off the phone. He kept telling him he couldn’t remember when he had seen an enterprise software product with so much promise. The VC checked with other IT users and heard the same reaction. It was a “gotta use it, don’t take it away, we’ll have to buy it” product. After a demo and lunch, the VC (who normally did later stage deals) wrote my ex student a check for a seed round.

Life couldn’t be better.

I followed Bob progress in bits and pieces from updates from the CIO, the VC and his emails and blogs. He seemed to be on the fast track to startup success. But pretty soon a few worrying warning signs appeared.

The first thing that I noticed was that Bob couldn’t seem to find a co-founder. I wasn’t close enough to know if he wasn’t really looking for one, but given the early success he was having, it seemed a bit odd. But the next thing really got me concerned. Bob started hiring second rate developers. At best they were B- players.

Stall
A month went by, and the product stopped getting better. The U/I still sucked, and new features had stopped appearing. The next month, the same thing. I got a call from my CIO friend asking, “what was going on?” He said, “It was a great prototype, we would have loved to deploy it company-wide, and I hate to let it go, but it looks like Bob’s company just lost interest in … Next Page »

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“Yeah, I love being famous. It’s almost like being white, y’know?”-Chris Rock

On Monday, November 21, the National Venture Capital Association and Dow Jones VentureSource released the results of the 2011 Venture Census, which reported statistics about ethnicity, gender and other characteristics of the venture capital industry garnered from a poll that included 600 VC industry participants. Not surprisingly, the census reaffirmed what most of us already knew: it’s good to be a white male.

Of the total 600 respondents, 87 percent were Caucasian, 9 percent were Asian, 2 percent were African American or Latino, and 2 percent were of mixed race. This is pretty much exactly the same as when the survey was done in 2008, when 88 percent were white guys.

The only thing worse than being non-white when it comes to your chances of getting a VC job is being female. While 79 percent of the survey respondents were male and 21 percent were female, it’s a misleading figure since so many of the women respondents were not in true investment roles. According to the NVCA, of those who identified themselves as investors, 89 percent were male and 11 percent were female. This is actually worse than the 2008 census, when 86 percent of investors were male and 14 percent were female (the NVCA notes that the measurements in the two years were done slightly differently). I am not surprised to see this decline, because we have seen a major contraction in the VC industry over the last three years. Women were last to the party and thus they are pretty much the first out the door when the jobs go away.

Similarly, the people lower on the totem pole tend to lose their jobs first when money gets tight, so that doesn’t bode well for the next generation looking any less like a day at the Polo Fields. It is worth noting that among NVCA census respondents there were far more women among people under 30 years of age (28 percent) than among people in their 40s and 50s (22 percent); additionally, there were far more people of color among those with less than 5 years in the field (23 percent vs. 13 percent overall). In fact it appears to be a straight-line correlation between newness to field/youth and the chance one might be female or of a non-Caucasian ethnicity. Of course, the younger the person the more likely they are to hold a junior role in a firm. Thus, if the ongoing industry contraction takes with it the XX chromosomes and the people with pigment on the theory of last in first out, the future of our field is going to continue to feel a great kinship to Caspar the Ghost: male, white and flying high.

One of the most interesting statistics in the census, in my opinion, is that 49 percent of respondents, when asked where they expect to be in five years, expect to be at the same firm in the same role, while 16 percent expect to be at the same firm in a new role. If you read my post from last week entitled, “Hey, Where is Everybody Going?” you know that, at least in the life sciences sector of the venture world, venture capital jobs are not as secure as they used to be. Look at it this way: there were 462 active US venture capital firms, defined as investing at least $5 million in companies, in 2010. This compares with 1,022 venture firms in 2000. If you define the universe of US venture capital firms as those raising money in any of the last 8 years, the 2010 count was 791, according to NVCA.

However you slice it, there are fewer chairs at the table now then there have been in the past. I would think that this would make venture capitalists pretty paranoid. Note to self on the next great investment opportunity: a company that treats the sore necks of VCs who spend lots of time looking over their own shoulders to see if someone is coming to get them. It may be a small market, but it’s becoming a chronic condition, thus a recurring revenue model.

A last note from the census: despite the fame and fortune garnered by the VCs who have made their names investing in social networking/social media businesses, use of these modes of communication are a mixed bag. Of the 600 respondents, 62 percent use Facebook and just 30 percent use Twitter, although 85 percent use LinkedIn (job search anyone?). Only 33 percent report that they read blogs and only 11 percent report writing blogs (I am actually aware of only 2 or 3 other women VC blog writers).

So to those 33 percent of my colleagues that actually might see this post, it would be interesting to hear your thoughts on the NVCA venture census. Do you think our field will look more diverse 10 years from now or just the same? Will there be more women and minorities or fewer? What do you think it will it take for the venture capital field to look less like Maroon 5 and more like the Black Eyed Peas? And most importantly, who wants in on my sore neck deal?

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After I wrote a long article profiling the unusual culture at True Ventures, the San Francisco-based early stage investing fund known for its investments in startups like Automattic, GigaOm, and KissMetrics, the firm invited me to attend True University, a two-day conference on startup-building tactics at the University of California at Berkeley. (Well, the truth is I invited myself, and True graciously allowed me to matriculate.) The way I understood it, the idea behind True University was to build on True’s successful one-day Founder Camp events—which bring together CEOs and founders of companies backed by True Ventures for a day of off-the-record lectures, conversations, and commiseration about the challenges of startup-building—by extending the experience to lower-level company employees as well. I already knew that True Ventures is atypically vigorous about encouraging the companies in its portfolio to learn from each other, so I was curious to see what kind of “curriculum” the firm was planning for its “students.”

The event took place this Wednesday and Thursday in an appropriately collegiate setting—Berkeley’s Haas School of Business. It came complete with celebrity professors, a choice of five majors, a catalog of more than 40 courses, a graduation ceremony with hand-signed diplomas in Latin, and the obligatory kegger. True invited up to five people to attend from each of the companies in its portfolio, and paid for accommodations for the out-of-town visitors. In the end, some 200 employees from 47 of True’s 72 portfolio companies made the trek. I attended both days, dipping in and out of a dozen sessions (I couldn’t settle on a major). I took extensive notes—something I wasn’t quite as assiduous about when I was really in college—and below I’ve gathered up a few of the most memorable quotes from the event.

But first some high-level impressions. True Ventures partner and co-founder Jon Callaghan kicked off the gathering by saying that “the core of innovation is collaboration” and asserting that “never before has a venture firm committed so deeply to lifelong learning as a business strategy.” It’s easy enough to mouth sentiments, but my sense is that Callaghan, co-founder Phil Black, and the other True partners really mean it. I’ve met plenty of venture capitalists in my travels for Xconomy in Boston and the Bay Area, and nobody seems to get a bigger kick out of working with early-stage entrepreneurs than the folks at True. If they weren’t actually managing roughly $378 million for their limited-partner investors, you’d think they were just doing it for the fun of it.

For one thing, True puts a lot of effort into making the people who run its portfolio companies feel as if they have a stake in one another’s success. That shows up across “the platform”—True’s name for the collection of tools it has built to help True-backed founders trade insights about surviving and thriving as a startup. Key elements in the platform include an online portal, an e-mail distribution list that CEOs can use to ping one another for near-instant advice, and the twice-yearly Founder Camp events.

But most of those tools are aimed at C-level execs. True University is the first time that True (or any other venture firm, as far as I know) has staged a professional-development event for the next tier down—the engineers, designers, and marketers needed to turn a founding visionary’s ideas into reality. “The first five to 10 people hired at a startup greatly influence what the next 50 to 100 will look like,” Phil Black observed at the graduation ceremony. In that light, it seems pretty smart to offer key officers a chance to climb out of their trenches, absorb a few new ideas about how to build high-growth companies, and connect with one another. Yes, it’s about lifelong learning, but it’s also about increasing the chances that True’s companies will score big on a time scale relevant to venture investors.

Judging from the quality of the lectures and conversations I listened to, the lean-forward attitudes of the participants, and the happy buzz among attendees during the breaks, picnic lunches, and parties, nobody went home disappointed. I wouldn’t be at all surprised to see … Next Page »

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Venture capital-backed startups got a slap on the back this week, but that was followed by a slap in the face in the latest round of Washington political gamesmanship over how much lawmakers should or should not encourage venture capital-backed innovation. So far, the battle to enhance U.S. innovation is taking yet another hit.

What I’m talking about is the effort in the capital to help venture capital-backed startups glean a bigger piece of the pie of a federal government multi-agency program that awards R&D contracts to small companies. This is exactly what the United States needs. But as we were once again reminded this week, the way it is being handled in Congress is exactly what the country does not need.

The Senate and the House have been at odds about the funding provisions of the Small Business Innovation Research (SBIR) program. Earlier this week, movement in the House looked promising. On Thursday, however, a cloture vote to bring the matter to the floor of the entire Senate failed, putting the philosophical debate about the access of venture-capital startups to SBIR money back to square one.

This is highly unfortunate. The House of Representatives on Wednesday finally agreed to open up SBIR funding to young companies heavily backed by venture capital. The Senate Committee on Small Business and Entrepreneurship did not share the position that the House now takes, but things might have changed once the measure got before the full Senate.

The latest turn of events underscores once again that the United States has to take steps to aggressively implement innovation, not just talk about the issue or even hotly debate it.

The SBIR program is intended to ensure that federal government and taxpayers have access to cutting edge and cost effective innovation while simultaneously supporting the growth of small business, which generates the vast majority of new jobs in America. Given our current high levels of unemployment and our need to reinvent the U.S. economy, common sense would dictate that the SBIR program be opened to the broadest cross-section of the best qualified candidates.

Unfortunately, special interests have for years sought to restrict participation in the SBIR program based upon how a small business has financed its growth. If a company got much venture capital, its participation in the SBIR program was severely restricted, regardless of its merits. An entrepreneur who financed his company with a loan or savings or investments from friends, family or angel investors has no such restrictions.

This time around, the House has been more active than the Senate in working to open more SBIR funding to VC-backed startups. The House version of the legislation gives VC-backed firms access to 45 percent of SBIC funding, and, with its latest changes, doesn’t mandate that VC interest in these startups be limited to a 49 percent ownership stake, as previous rules did. The Senate at this point not only … Next Page »

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Hot on the heels of The New York Times’ new metered-access pay plan for digital content, Remond, WA-based OwnZones Media Network is touting an initial $500,000 round of financing. The investors were not disclosed.

The company says it’s building a digital content aggregation service based around charging consumers a monthly fee to access higher-quality material with more targeted, less intrusive advertising.

Now that the Times has taken the big leap, there are going to be scores of publishers in smaller markets looking for a way to charge an online gate fee and drive people back toward the more lucrative printed product. Third-party providers are clearly going to have a niche to exploit there.

As a longtime participant in and student of the news business, I am personally skeptical that we are headed for a widespread “era of paid Internet content,” as OwnZones says. The New York Times can probably pull it off. But most newspapers aren’t The New York Times. Publishers in the middle tier are trying to find a turnstile price for their content, and I think they’re going to be very disappointed at how low it is.

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Seattle-based Tier 3, a cloud-computing service for businesses, said Wednesday that it has raised $8.5 million from Ignition Capital and Madrona Venture Group.

This is the company’s first publicly announced round of financing. Tier 3 was founded in 2006 and counts Microsoft among its nearly 100 clients. In a release, Tier 3 said it plans to use the money to move more quickly into new markets.

Tier 3′s chief executive is Adam Wray, a veteran of Limelight Networks, PeerApp, and Amazon.

The company presently runs its “core operations” out of server farms in Seattle and Salt Lake City, with plans to expand to four more facilities, according to the company’s website.

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One of the biggest mistakes entrepreneurs make is not understanding the relationship they have with their investors. At times they confuse VCs with their friends.

Let’s Go to Lunch
At Rocket Science our video game company was struggling. Hubris, bad CEO decisions (mine) and a fundamental lack of understanding that we were in a “hits-based” entertainment business not in a Silicon Valley technology company were slowly killing us.

One day I got a call from my two investors, “Hey Steve, we’re both going to be up in San Francisco, lets grab lunch.” I liked my two investors. I’d known them for years, they were smart, trying to figure out the video game market with me, (in hindsight a business that none of us knew anything about and shouldn’t have been in,) coached me when needed, etc. Our board meetings were collegial and often fun.

We were just about to have a board meeting in another week to talk about raising another round of financing to keep our struggling disaster afloat. I had assumed that my VCs were behind me. Thinking we were having a social call, I was completely unprepared for the discussion. (Lesson – never take a VC meeting without knowing the agenda.)

“Steve, we thought we’d tell you this before the board meeting, but both our firms are going to pass on leading your next round.” I was speechless. I felt like I had just been kicked in the gut and stabbed in the back These were my lead investors. It was the ultimate vote of no confidence. If they passed the odds of anyone in the entire country funding us was zero.

I knew they had been questioning our ability to stay afloat as a company in the board meetings so this wasn’t a complete surprise but I would have expected some offer a bridge loan or some sign of support. (I finally got them to agree if I could find someone else to lead the round they would put in a token amount to say they were still supportive.)

“Is this about me as the CEO?” I asked. “I’ll resign if you guys think you can hire someone else you want to back.” They looked a bit sheepish and replied, “No it’s not you. You should stay and run the company. However, we realized that we’ve backed a business we don’t know much about, the company is a money sink and both our firms have no stomach for this industry.”

“But I thought you guys were my friends?!” You’re supposed to support me!! I said out of utter frustration.

VCs Are Not Your Friends
I had just gotten a very expensive reminder. I liked my board members. They liked me. But while I was just seeing a single board member, I was just one of twenty companies in … Next Page »

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I like studying what works and what doesn’t. I focus more of my time on the former, but often learn more from the latter. I compile tactical, earthy techniques from my mentors’ books and sprinkle in a bit of technology. Think of my maneuvers as real-world Google Analytics, but with a focus on extrapolating future conditions and outlining countermeasure options for when the shitake hits the fan.

With that introduction…Here is my list of the seven best places to close a deal in Silicon Valley. It’s meant to give you a home-field advantage even when you’re on the road. It’s street smart to have an array of spots to close deals; here is a window into mine.

1) Menlo Park Starbucks

Meetings that happen in the office on Sand Hill road are official. Official meetings suck.

They suck because

a) You are in a bullpen office designated solely for meeting with entrepreneurs where the “no” rate is 90+ percent
b) They are scheduled back-to-back-to-back
c) Before you go to an office the size of my dog’s crate, you have to hang in the holding zone of the receptionist’s area
d) It feels corporate.

As my military strategist mentor taught me…where you fight matters. I say meet off-site. Away from the offices.

Taking a meeting at the Menlo Park Starbucks says, “If my venture fund won’t fund your startup, I might cut you a check from my personal account.”

2) The AlwaysOn Venture Summit

VCs love to look like they have lots of meetings lined up. It’s like they think that having more meetings translates into a direct return for their LPs.

It is most important for a VC to look busy when they are at a conference. They want to impress the other VCs with whom they might syndicate their next deal (or slide into the back-half of a tech deal they have no clue on, but appears hot and sought after). The best place to do this is at a venture conference and AlwaysOn is hosting one this week (December 13-15).

3) Fraiche Yogurt vs. Palo Alto Starbucks

Starbucks on University Ave is where VCs go for filler meetings before or after the two-and-a-quarter hour lunch at Evvia (see tip #5). This place is drenched in failure. A quarter of its customers are out of work and trolling LinkedIn, and a quarter of them are … Next Page »

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Magnetoresistive Random Access Memory, or MRAM, promises to change everything about how our computing devices work. It’s as fast as classical static RAM at the core of today’s microprocessors, but it doesn’t wear out, and it also holds data permanently, even when the power is off, like today’s flash memory. It could enable true “instant-on” information devices and speed up many types of computation.

Freescale Semiconductor, the former chipmaking division of Motorola, poured a lot of effort and money into making MRAM practical in the mid-2000s. But the technology almost wound up homeless, because Freescale is a microprocessor manufacturer, and wasn’t equipped to sell storage devices. The company had developed the technology without ever really intending to get into the fiercely competitive memory business.

Which is where New Venture Partners entered the picture. The San Mateo, CA-based venture firm purports to be one of the only venture firms in the world that specializes in finding promising but under-supported technologies inside corporate R&D labs and spinning them out as independent startups. Yesterday we published the first part of a conversation with David Tennenhouse, a former Amazon and Intel research executive who’s now a partner at the firm. In 2008, Tennenhouse and New Venture Partners helped to spin out the MRAM business from Freescale in the form of Everspin Technologies, which is now one of the world’s leading suppliers of MRAM for industrial, aerospace, and military applications. The details of the Everspin case, which illustrated many of the nuances and challenges of the spinout process, are among the highlights of Part 2 of our conversation, transcribed below.

During this part of our talk, Tennenhouse also described how the firm identifies teams and technologies that can be spun out profitably, what types of companies are likely to house potential spinoffs, why Google doesn’t do spinoffs but Microsoft does, and the roles that NVP’s partners must sometimes take on—including career counselor.

X: Can you walk me through a couple of your favorite examples of companies you’ve helped to spin out?

DT: One of my favorites is Everspin, where we spun out all the MRAM magnetic memory technology from Freescale. That’s an area where Motorola [which spun out Freescale in 2004] invested for many years and Freescale invested for many years. It’s the only group shipping real, working MRAM. It’s a great example, because one of the things you need is leadership in the team that is really headstrong and committed. Here you’re talking about a new semiconductor; a new material. They managed to get this all the way into customers’ hands. This was a hell of a dedicated team and they really wanted to foist this thing on the world.

Another critical ingredient is that the CTO at Freescale, Lisa Su, really wanted to see this thing happen also. But Freescale looked at the situation and said, ‘We don’t really want to be in the merchant memory business.’ If you could replace on-chip Flash memory with MRAM, that would be very interesting to Freescale, but first you would have to … Next Page »

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Proclaiming the venture model broken is in vogue. The lingering aftereffects of the Internet bubble have cast a shadow over the industry for a decade now; and while venture capital has consistently outperformed most equity asset classes for years, recent returns have not lived up to historical norms. Despite the grim headlines, there are signs of success all around us that prove that the venture model is far from broken.

Venture capital is, at its core, about helping to build innovative, high-growth, market leading businesses. The easiest way to measure success is to look at the exit market for venture-backed companies.

A sampling of transactions since September of 2009 in Massachusetts alone:

• Quattro Wireless was acquired by Apple for $275M

• Gomez was acquired by Compuware for $295M

• Nova Analytics was acquired by ITT for $392M

• E Ink was acquired by Prime View International for $400M

• Gloucester Pharmaceuticals was acquired by Celgene for $640M

• Ironwood Pharmaceuticals had a post-IPO market cap of $1.1B

• A123Systems had a post-IPO market cap of $1.3B

With all of this exit activity and value creation, it’s hard to understand why industry returns have lagged in recent years. The underlying data gives a good sense of the dynamics. The insights below are based on data from Thomson ONE.

There are some clear positive signals:

1. Exit volume is healthy. The IPO market has functioned on an intermittent basis in recent years, but M&A volume for venture-backed companies has taken up the slack and become the predominant exit path. When combining M&A and IPO exits, the activity has actually been fairly consistent over the years: about 300-500 per year since the mid-’90s.

2. Acquisition valuations are healthy. The average reported acquisition value for a venture-backed company hovered around $60M in the mid to late ’90s, and (after a spike in 1999 and 2000) has been averaging far more than $100M in the last few years, including 2009. Pre-IPO valuations for venture-backed companies have similarly increased over the years from around $150M in the mid ’90s to around $400M in the last few years. The increase in average exit valuations confirms that substantial equity value can be created within successful venture-backed companies.

There are negative signals too, of course, including:

1. Too many companies backed. The substantial increase in the number of companies receiving venture funding has created a glut of companies seeking an exit. In the early ’90s, there were about 1,000 companies backed by venture capital firms each year in the U.S. The late ’90s brought a rapid increase in investment activity that peaked at … Next Page »

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Venture investments in Boston-area mobile technology companies decreased in both volume and value in 2009, plummeting to levels not seen since 2005. But payouts from mergers and acquisitions hit a record level, raising overall deal flow to an unprecedented $1.5 billion, according to data compiled by Mobile Monday Boston.

Venture investing started out strong in 2009, according to the report, with $208 million invested in the first quarter. But investors couldn’t keep up the pace. They doled out only $24 million in the third quarter and $40 million in the fourth quarter.

By year’s end, venture capital firms had handed out only $339 million, a decrease of 40 percent from 2008′s record figure of $565 million. The total number of companies in the region receiving venture funding also fell, from 45 in 2008 to 32 in 2009.

The drops—which were paralleled in other sectors, and likely reflect the venture industry’s own travails rather than any fundamental decrease in venture-fundable innovation—brought an abrupt end to a three-year run of increasing venture investments in the region’s mobile industry.

Even as the venture well became drier, though, a number of more established mobile companies were acquired, providing exits for their own investors. The value of acquisitions in the mobile business zoomed upward from $473 million in 2008 to nearly $1.2 billion in 2009, Mobile Monday Boston found.

A single acquisition, 72 Mobile Holdings’ $530 million purchase of Chelmsford, MA-based wireless broadband equipment maker Airvana, accounted for nearly half of the $1.2 billion total. Compuware’s acquisition of Lexington, MA-based Gomez, Prime View International’s acquisition of Cambridge, MA-based E Ink ($215 million), and KPN’s acquisition of Burlington, MA-based iBasis ($93 million) significantly boosted the numbers. (Apple’s acquisition of Quattro Wireless isn’t counted in the figures, since it was announced in early January; in any case, the companies haven’t disclosed how much Apple paid.)

Mobile Monday Boston organizer Kate Imbach, of Skyhook Wireless, presented the investment data at Monday night’s meeting of the group, and plans to detail them further at Xconomy’s Mobile Madness event today.

The report also detailed mobile investments by category. Hardware companies were the luckiest in 2009—19 percent of the 32 companies that won venture investments were in this category. Applications and software companies tied for second place at 15 percent each, followed by voice and advertising companies (tied at 9 percent each), and wireless infrastructure, content and RFID companies (tied at 6 percent each).

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Despite official data showing that the U.S. economy is out of recession, leading economics bloggers remain cautious about the nation’s economic prospects, with almost half saying that conditions are worse than the official numbers indicate. But government policies boosting entrepreneurship and allowing more high-skilled immigrants into the country could bolster recovery, bloggers say. That’s all according to a survey of online observers of the U.S. economy (including this reporter), released this morning by the Ewing Marion Kauffman Foundation in Kansas City, MO.

The overall condition of the economy is “mixed,” according to 59 percent of the bloggers surveyed, while 23 percent see the possibility of a double-dip recession and 10 percent believe a second recession is already underway. About half of the survey respondents said conditions for lending to individuals and small and large businesses are bad or very bad, and the group’s overall feeling is that government budget deficits, interest rates, inflation, and poverty rates will all rise substantially over the next three years. But all of that may actually mean more opportunities for innovators: nearly 60 percent of bloggers said conditions for entrepreneurship are either good or fair right now. (You can download the full survey report here.)

Surveys of leading economists are plentiful, but this may be the first time anyone has tried to quantify the views of economics bloggers, whose work appears in dozens of online publications (or on their own personal blogs) and ranges across the ideological spectrum. Tim Kane, a senior fellow at the Kauffman Foundation and the author of the survey report, says the foundation plans to repeat the survey each quarter.

“A survey of economic bloggers might seem like an exercise in herding cats, but it honestly struck us as a puzzle why nobody else was conducting one already,” Kane told me. “Here we have a crowd of the most knowledgeable and outspoken analysts of the economic scene, and nobody had bothered to take their pulse.”

Kane developed the survey questions with help from Donald Marron, former acting director of the Congressional Budget Office and a former member of the Council of Economic Advisers. He sent survey invitations to the top 200 economics bloggers as ranked by the Palgrave Econolog, a directory maintained by New York, NY-based academic publisher Palgrave Macmillan. In the end 83 bloggers participated in the survey. I was one of the bloggers surveyed, and I was also on the board of advisors that helped Kane to design the questions. (For full disclosure: The Kauffman Foundation is one of the underwriters of Xconomy’s Startups Channel.)

To me, one of the most striking findings was that most respondents—71 percent, in fact—felt that the federal government is too involved in the U.S. economy. That seems unexpected, given that economists on the left and the right seem to agree that the bank bailouts and aggressive federal stimulus spending, while perhaps unpalatable, saved the economy from disaster. More than half of respondents gave the U.S. Congress a failing grade when it comes to their performance steering the economy; Wall Street firms also got dismal grades. The Congressional Budget Office and other watchdog groups fared much better.

Asked to name the federal policies that would best stimulate economic growth, the bloggers named increasing high-skill immigration (63 percent), increasing legal immigration at all skill levels (57 percent), promoting new firm formation (48 percent), increasing financial regulation (41 percent), and increasing education spending (33 percent).

Kane says the finding that surprised him most was that bloggers have such bleak views about the economy’s near-term future. “Despite the individualistic nature of bloggers, I was shocked to see how pessimistic the group was in general about the 3-year outlook for the U.S. economy, but I attribute that to their ability to see beyond both the headlines and the official statistics,” he says. “I was also heartened by the consensus for cutting payroll taxes and shifting the tax burden to consumption generally and gasoline specifically.”

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Three New England firms rounded out the first week of the New Year with new financing rounds.

—Konarka Technologies of Lowell, MA, which is famous for its flexible “Power Plastic” photovoltaic material, raised $23.8 million in Series G funding through an offering combining equity and warrants. All of the money came from a single source, according to a regulatory filing published yesterday, but Konarka hasn’t yet identified the investor. The company’s existing investors include 3i, Chevron, Draper Fisher Jurvetson, Good Energies, Mackenize Investments, the Massachusetts Green Energy Fund, the Massachusetts Technology Collaborative, New Enterprise Associates, Partech International, and Vanguard Ventures.

—Dynadec of Providence, RI, has raised $2.1 million toward an intended $2.4 million round of financing, according to a regulatory filing yesterday. As I explained in a profile last summer, Dynadec, formally known as Dynamic Decisions Technology, is commercializing software developed by Brown University computer scientist Pascal Van Hentenryck that can help companies solve complex optimization problems, such as the most efficient way for a utility to deploy power-line repair personnel after an ice storm. The four investors contributing to the round weren’t named in the filing, but Dynadec’s board includes representatives of Liberty Capital Partners, Velocity Equity Partners, and the Slater Technology Fund.

—In yet another regulatory disclosure filed yesterday, Groton, MA-based Harvest Automation said it has collected $3 million out of an intended $5.75 million funding round. Harvest told Mass High Tech that the investment came from Amsterdam-based Life Sciences Partners and Indiana-based Midpoint Food & AG Fund, as well as Dina Routhier, a principal at the Massachusetts Technology Development Corporation. The startup, which was founded by iRobot alumni and was originally known as Q Robotics, is building agile mobile robots for large-scale agricultural operations. As Greg explained in a July 2008 profile, the robots are designed to adjust the spacing between potted plants as the plants grow.

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It’s too early to say whether it’s the beginning of the end of the liquidity drought, or just the end of the beginning. But after seven straight quarters of declining IPO and M&A earnings for venture-backed U.S. companies, there was a ray of hope in the fourth quarter of 2009. Venture-backed firms raised $7.5 billion through mergers and acquisitions and IPOs in Q409, the highest total since the first quarter of 2008, according to year-end data released today by Dow Jones VentureSource.

It was the first quarterly increase in liquidity since 2007, and exceeded Q408 levels by almost 50 percent. The jump was fueled largely by a dramatic increase in the median amount paid in company acquisitions, from about $30 million per deal in the third quarter of 2009 to nearly $85 million per deal in the fourth quarter.

“The fourth quarter has set the stage for an active year in M&As in 2010,” said Jessica Canning, Dow Jones VentureSource’s global research director, in a statement. “As the economy improves, acquirers are gaining confidence in their own financial situation and returning to strategic acquisitions. At the same time, the steady trickle of public offerings is teasing investors who expect the IPO window will re-open in the coming year.”

Of course, it’s also easy to take a glass-half-empty view of the latest round of data. The median M&A amounts in the fourth quarter were inflated by a small handful of relatively large deals, including Amazon’s $847 million acquisition of Zappos, ViaSat’s $568 million acquisition of WildBlue Communications, and Logitech’s $405 million purchase of LifeSize Communications. The total liquidity among venture-backed companies in 2009 was only $17.1 billion, a poor showing next to 2007′s total of $61 billion and 2008′s $26.1 billion. And the median amounts paid in M&As, averaged across all of 2009, was just $27 million, which looks slight compared to 2007′s $73 million and 2008′s $33 million.

About the best thing you can say about M&A trends is that acquirers were finding a lot of bargains in 2009. Canning called 2009′s $27 million median “a positive sign for acquirers looking to purchase companies at reasonable prices.”

The IPO market, after a pathetic 2008, improved by only a small margin in 2009. Seven venture-backed companies went public in 2008, raising a total of $550 million. In 2009, IPOs among venture-backed companies increased to eight, with the total amount raised increasing to $903 million. (Three fourth-quarter IPOs—by Chicago-based Echo Global Logistics, Sunnyvale, CA-based Fortinet, and Seattle-based Omeros—accounted for $220 million of that total, making it the slowest quarter since Q109, when there were no IPOs at all.)

But while the IPO numbers did increase in 2009—and while companies in Xconomy’s home cities, including Watertown, MA-based A123Systems ($371 million), San Diego-based Bridgepoint Education ($142 million), Woburn, MA-based Logmein ($107 million), and Seattle’s Omeros ($68 million) contributed significantly to the 2009 totals—the IPO market was still largely shuttered compared to 2007, when 78 companies went public, raising $6.9 billion.

Could 2010 turn out better? It almost has to, unless a big chunk of the 25 venture-backed companies currently in registration with the SEC drop their IPO plans. One interesting tidbit in the Dow Jones VentureSource data is that venture-backed companies seem to be moving to pay off their backers with greater haste. The companies that achieved exits through mergers or acquisitions in 2009 had been in business for a median of 5 years and had raised a median of $18 million, compared to six years and $22 million for companies acquired in 2008. Companies that went public in 2009 were 7.9 years old on average and had raised $43 million, compared to 8.7 years and $55 million for companies that went public in 2008.

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Tim Rowe says he has happy news to share at the Cambridge Innovation Center’s 10th anniversary party tomorrow night (see main story). The founder and CEO of the rental office facility has long had a spreadsheet showing how much money venture capital firms have invested in CIC companies, and last month, he says, the total cleared the $1 billion mark.

Altogether, 29 companies that are either current or former residents of the CIC have won venture funding. And the exact total of the funds they’ve raised is $1,028,000,000, Rowe says. (The full list of venture-funded CIC companies is below.)

“That is a real milestone for us, because it validates what we are doing in a way that almost nothing else can,” Rowe says. A billion dollars, he notes, is the equivalent of an entire venture fund in the bloated dot-com era, or three or four funds these days.

“To pull in that kind of investment, over a period which is essentially the life of a venture fund—most of the money has come in over the last three to four years—is a simple and strong validation of this homegrown idea that you can bring startups together and have a powerful community that leads entrepreneurs to finding the resources they need to become big and successful,” Rowe says.

Of course, taking office space at the CIC—as some 543 startups have done over the years—is no guarantee that a company will go on to win venture funding. (It doesn’t even improve the chances that New Atlantic Ventures, where Rowe is a venture partner, will take a look, he says.) And most of the companies on Rowe’s $1 billion list would probably have won funding no matter where they were headquartered.

But it is probably fair to say that the kinds of startups that are attracted to the CIC’s fraternal, overcaffeinated, high-achieving atmosphere are also the kinds of companies that tend to fare well in the scramble for attention from venture firms. The list of distinguished venture-funded CIC alumni includes companies familiar to all New England entrepreneurs, such as Carbonite, Ember, Enterprise Mobile, Gloucester Pharmaceuticals, GreatPoint Energy, Hubspot, Luminus Devices, Maven Networks, Thing Magic, Visible Measures, and Zafgen.

Here’s the whole list:

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Aptera, the sleek carmaker backed by Google and Idealabs, didn’t respond to my inquiry earlier this week about reports of an internal split in which founders Steve Fambro and Chris Anthony had left the company. But in an online report published today by The San Diego Union-Tribune, Aptera officials rejected accounts that Fambro and Anthony were ousted in a boardroom showdown.

The company’s status is a keen issue to some 4,000 people, including celebrities Tom Hanks, Robin Williams, and Shaquille O’Neal, who have put down $500 deposits to be the first to buy one of the three-wheel, two-seater vehicles. The Aptera 2e, the company’s first production vehicle, resembles a wingless plane and is expected to cost between $25,000 and $40,000. Aptera is based in Vista, CA, about 30 miles north of San Diego.

Citing a statement issued by Aptera CEO Paul Wilbur, the Union-Tribune says the carmaker had to adjust its production schedule “to align with financing realities.” Instead of producing its first fuel-efficient model in the fall of 2009, as Aptera announced at the beginning of this year, Wilbur says the company will complete its first vehicles in 2010. About 10 of Aptera’s 40 employees have been laid off.

The company, which has raised at least $27.5 million from Google, Idealabs, and other venture investors, is seeking additional funding, according to Popular Mechanics. Aptera says it also intends to resubmit its application for a $75 million loan from the Department of Energy’s Advanced Technology Vehicles Manufacturing Incentives Program.

Aptera says co-founders Fambro and Anthony were not asked to leave. Fambro remains on the board, but has taken a leave of absence from the company until next year. Anthony is now the CEO of Flux Power, a startup in the San Diego area that is developing battery-management systems. In another online account published by Popular Mechanics magazine, Fambro also voiced his continuing support for CEO Wilbur.

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San Diego’s Fallbrook Technologies says it has struck a deal for what is literally a “greenfield” application of its NuVinci continuously variable transmission. The venture-backed company, which has been steadily expanding the market for its transmission technology, has signed a licensing agreement with Hydro-Gear of Sullivan, IL, a leading maker of drive systems for lawnmowers and the outdoor power equipment market.

Under the agreement, Fallbrook and Hydro-Gear say they will develop a new application—an infinitely variable transmission (IVT) for zero turn radius (ZTR) riding mowers, which pivot rather than turn, as well as other types of mowers, and garden equipment. The IVT transmission, which incudes forward, reverse, and zero output (idling) within its range of gearless input-to-output ratios, enables the mower to move quickly forward and backward without manual shifting. The innovation represents the latest in a series of technological advances over the past decade that have transformed riding mowers into more powerful, sophisticated, and versatile machines that also are used to plow snow, haul firewood, and carry out other chores.

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If you’ve seen from the inside how technology startups get created and funded, you know that law firms are involved at every step in the process. But to outside observers, it might be surprising just how central a role the attorneys can play—not just by helping entrepreneurs with incorporation papers and the other legal rigmarole of starting a business, but by connecting them with the right venture capital firms and making sure investments are structured fairly for both the founders and the venture funds. And while nobody likes to pay legal fees, a good outside attorney can literally save a company when things start to go south: an experienced firm can help straighten out founder-investor conflicts or line up emergency financing, for example.

Given that Boston was the birthplace of venture financing, it’s probably not surprising that it’s also home to a large group of law firms specializing in company creation and financing. Indeed, you can’t go far in the startup world without bumping into names like Cooley Godward Kronish, Edwards Angels Palmer & Dodge, Foley Hoag, Foley and Lardner, Goodwin Procter, Mintz Levin, Proskauer Rose, Ropes & Gray, Nutter, and Wilmer Hale (see tables on this page and page 4). Several of these firms are home to former partners from Testa Hurwitz, the Boston firm that more or less invented the modern corporate technology practice; Testa launched and represented scores of Boston-area startups, venture capital funds, and technology giants between its founding in 1973 and its dissolution in 2005.

Last week I sat down with Tom Burton and Lewis Geffen, two attorneys from the corporate practice at Mintz Levin‘s Boston office, to hear more about how law firms fit into the local innovation ecosystem. Founded here in 1933 by Herman Mintz, Benjamin Levin, and Haskell Cohn—three Harvard Law School graduates turned away by Boston’s white-shoe firms because they were Jewish—Mintz Levin now has nearly 500 attorneys, making it Massachusetts’ fourth-largest law firm. It has long represented Biogen Idec—one of the first big biotechnology success stories—and was intimately involved in AOL’s acquisition of Time Warner in 2000. The firm also has major operations in San Diego. And under Burton’s direction, it has developed a booming practice representing clients in the energy and clean technology sectors on both coasts. Many of the firm’ clients turn up regularly in these pages, including EnerNOC, Greatpoint Energy, FloDesign Wind Turbine, General Catalyst, and Rockport Capital.

At Mintz Levin’s office near San Diego’s Carmel Valley, partner Carl Kukkonen tells Bruce, “We represent a lot of small, pre-funded venture-backed companies as well as multi-nationals.” Kukkonen, who was among the lawyers to open the San Diego office in 2006, adds, “I like to tell people I was working with solar, fuel cell, and battery companies before I ever heard of the term ‘cleantech.’”

From Mintz Levin’s 43rd-floor conference room at One Financial Center in Boston, one can peer down on the Federal Reserve building, the Custom House Tower, and every downtown landmark. It’s a far cry from the brick warehouse district of Kendall Square where we scribes at Xconomy spend most of our time—but the visit was an interesting reminder, for me, of all the high-level networking, negotiation, advice, and other homework that goes into getting a technology startup off the ground.

In my interview with Burton and Geffen, portions of which are transcribed below, we covered everything from the state of the cleantech industry and the challenges of working for both startups and venture funds to non-compete agreements and that old chestnut, the difference between East Coast and West Coast investing cultures.

Xconomy: Explain to me how Mintz Levin wound up developing an energy and cleantech practice.

Tom Burton: One thing that’s interesting about Mintz is the entrepreneurial nature of the firm itself, and the way it moves into markets that other firms haven’t placed a bet on. I was pitched that back when I joined the firm in 1996, and I chose Mintz over a lot of safer bets like the Skadden Arpses of the world.

Lewis Geffen: At Sherman and Sterling in New York, where I spent my first five years, no one ever thinks “I have to produce business somehow.” At Ropes & Gray or Wilmer Hale, new associates are simply given work. Whereas we teach “business development 101″ to our associates. It’s part of our fabric here.

TB: For me, all I knew was that I wanted to build something that hadn’t been built before. I wasn’t sure what it was going to be, but I trusted in the firm’s pitch, and took advantage of some luck. When I was a second-year associate, I brought in my first client, who … Next Page »

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Regulatory documents filed today show that Heartland Robotics, the Cambridge, MA, industrial robotics startup founded by MIT computer science legend Rod Brooks, has raised just over $7 million in an equity offering. The documents don’t reveal the identities of the funders, and Heartland has not announced the names, but Xconomy has learned that one of the investors is Bezos Expeditions, the Seattle-based venture investing operation of Amazon (NASDAQ: AMZN) founder and CEO Jeff Bezos.

Reached this afternoon by phone, Heartland president Patrick Sobalvarro confirmed that the offering had taken place, but described the lead funder in the round only as a “top tier” investing firm. He says Heartland plans to make a formal announcement about the investment soon, but has not yet obtained clearance from the funders to release their names.

A bit of detective work shows that Bezos Expeditions is one of them. Heartland’s regulatory filing—a standard “Form D” that privately held companies must file with the Securities and Exchange Commission when selling stock—includes Melinda Lewison in the “related person” field, which is usually reserved for company founders, executives, and board members. Lewison is a principal at Bezos Expeditions.

Lewison did not immediately respond to Xconomy’s request for confirmation and comment about the investment. But we have confirmed through another source that Bezos is one of the participants in the round.

Heartland, founded last fall, is still in stealth mode, but Brooks said last year that the company’s robotic technology is designed to empower laborers in manufacturing facilities to be more productive. Brooks, who is chairman and chief technology officer at Heartland, has said in discussions with Xconomy that he is “trying to do for manual workers what PCs did for information workers, i.e., let ordinary manual workers become their own information engineer and increase their own productivity.”

Sobalvarro, an MIT-trained computer scientist who previously founded surveillance video analysis software company IntelliVid, said Heartland is not yet prepared to add detail to that story. “What I would say is that we’re at a stage where we’ve really got the business proposition clearly confirmed,” he says. “We’ve been working with a couple dozen manufacturers and … Next Page »

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