Mereja

Author: Gregory T. Huang

  • Signature Genomic Gets Sold for $90M, DreamBox Bought by Netflix CEO, The $7M Madrona Man, & More Seattle-Area Deals News

    Gregory T. Huang wrote:

    A very wide range of deals were done this week in the Northwest, ranging from small tech partnerships and fundings to a large biotech acquisition. Methinks the action will pick up in the next month before summertime.

    —Bellevue, WA-based DreamBox Learning, an online math education startup, has been acquired by Netflix CEO Reed Hastings and the Charter Fund, a nonprofit VC firm. Financial details weren’t given, but the deal includes a new $10 million investment in DreamBox. Hastings is a board member of Microsoft and an educational philanthropist. DreamBox is one of several companies leading the way in online “adaptive learning” technologies for kids.

    —Seattle-based Airbiquity formed a partnership with Tokyo-based Hitachi Automotive Systems to develop wireless telecom systems for electric vehicles. Financial terms weren’t announced. The deal is part of a broader effort to establish a global infrastructure for wirelessly connected vehicles and intelligent transportation services.

    —I took a deeper dive into Seattle-based Madrona Venture Group’s recent investment in Searchandise Commerce, an e-commerce and paid search company based in the Boston area. The $7 million deal is the brainchild of Brian McAndrews, Madrona’s newest managing director and the former CEO of aQuantive.

    —Seattle Genetics, the cancer drug developer based in Bothell, WA, and Genentech, the U.S. unit of Roche, have extended a licensing agreement for developing “empowered antibodies,” as Luke reported. Seattle Genetics (NASDAQ: SGEN) will receive $9.5 million upfront, plus milestone payments and royalties on sales of any FDA-approved products, while Genentech will pay for developing and marketing the drugs, which are designed to be more potent cancer-cell killers.

    —We summed up the top 10 venture deals for companies in Washington state in the first quarter of 2010. Leading the way in terms of dollars were Visible Technologies and BlueKai (more than $20 million each), while mobile-app startup Zumobi managed to sneak in $7 million under our noses. Only one out of the top 10 deals was a Series A financing.

    —Spokane, WA-based Signature Genomic Laboratories is being acquired by PerkinElmer (NYSE: PKI), the Waltham, MA-based scientific instrument maker. The deal is worth a whopping $90 million in cash, as Luke reported.

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  • Partovis to Step Down at MySpace

    Gregory T. Huang wrote:

    Ali Partovi and Hadi Partovi, co-founders of Seattle-based social music startup iLike, are stepping down from their senior executive positions at MySpace. The news was reported by All Things Digital, TechCrunch, and other outlets. MySpace acquired iLike last August, and the Partovis were promoted to senior vice president roles under MySpace CEO Owen Van Natta. But Van Natta left the company earlier this year after a reported dispute with his News Corp. boss. It sounds like the Partovis, entrepreneurs who also have active investments in companies including Facebook and BlueKai, will transition out of MySpace in the coming months.

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  • DreamBox Learning Bought by Netflix CEO (and Microsoft Board Member) Reed Hastings and Charter Fund—Some More Context

    DreamBox Learning
    Gregory T. Huang wrote:

    Score one for online education. Bellevue, WA-based DreamBox Learning announced today it has been acquired by Netflix CEO Reed Hastings and the Charter Fund, a nonprofit venture firm. The price was not disclosed, but the deal includes a new investment of $10 million in the company, which will be used to advance DreamBox’s e-learning technology, content, and distribution in U.S. schools.

    DreamBox Learning makes online math education software for schools and homes that’s aimed at young kids from kindergarten to third grade. The interface is sort of like an adventure game, including stories and activities that involve pirates, animals, and dinosaurs. The patent-pending technology behind the “game” assesses each student’s mathematical understanding, provides appropriate hints and encouragement, and selects personalized activities for the student.

    It’s part of a broader trend in which companies are developing programs that adapt to how individual kids learn—through different types of games or visual activities, say. New York-based Knewton, another educational tech company, just closed a $12.5 million funding round yesterday. “You’ll hear a lot on adaptive learning over the next few years as customizing learning for the individual student continues to emerge as a megatrend in education,” says Jason Stoffer, a principal at Seattle-based Maveron who focuses on investments in education and e-commerce.

    DreamBox is recognized as an innovator on the adaptive-learning curriculum side. “I have evaluated many companies in the K-12 e-learning marketplace and DreamBox Learning clearly stood out,” Hastings said in a statement. “They have already shown strong results in a short period of time, and the DreamBox Learning platform has the best underlying adaptive technology, giving every student the opportunity to thrive.”

    Hastings is now chairman of the board of DreamBox Learning. A couple things you might not know about him: he’s an educational philanthropist (and former U.S. Peace Corps math teacher) who served as president of the California State Board of Education from 2000 to 2004; he also serves on the board of directors of Microsoft. As part of today’s deal, DreamBox also gains two more board members: Kevin Hall, the CEO and president of Charter School Growth Fund, and John Danner, the co-founder and CEO of Rocketship Education.

    DreamBox Learning was founded in 2006 by Lou Gray and Ben Slivka, and had raised more than $7 million in angel capital, according to media reports. Neither Gray nor Slivka appears to be with the company as of today.

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  • Airbiquity, Hitachi Team Up on Electric Cars

    Gregory T. Huang wrote:

    Seattle-based Airbiquity announced today it has formed a partnership with Tokyo-based Hitachi Automotive Systems to develop telecommunications systems for electric vehicles. Financial terms of the deal weren’t given. The technology could allow drivers to do things like check their battery using their mobile phone, locate nearby charging stations, and get directions. The move is part of a broader effort to establish a global infrastructure for networked vehicles. Founded in 1997, Airbiquity is focused on wireless technologies for connected vehicles and smart transportation services.

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  • The Man Behind Madrona’s Investment in Searchandise: Lessons in VC, Company-Building, and Selling to Microsoft

    Searchandise Commerce
    Gregory T. Huang wrote:

    If you live in Seattle and follow technology trends, you know who Brian McAndrews is. If you’re a Boston techie, though, it’s possible that you don’t. Luckily, you have Xconomy to help bridge the gap between East and West. (Bear with me here.)

    McAndrews is a relatively new managing director at Madrona Venture Group, a Seattle-based VC firm, and he led the $7 million investment in Beverly, MA-based Searchandise Commerce announced last week. It is his first deal with Madrona. In a previous life, McAndrews was the chief executive of Seattle-based aQuantive, the digital advertising and marketing company, before becoming a senior vice president at Microsoft.

    I’m always surprised by how many people outside Seattle don’t know the story of aQuantive (myself included, until I moved here). This company built some of the pillars of online ad-placing and tracking technology, went public in February 2000 (talk about good timing—any later and it might have folded), and was bought by Microsoft for $6.4 billion in 2007—the largest acquisition Microsoft has ever made. McAndrews led aQuantive for eight years and was in charge of the sale and integration. He ran the advertiser and publisher solutions group at Microsoft before leaving the firm in early 2009.

    Last week, I spoke with McAndrews about a range of topics: what makes Searchandise Commerce a compelling company for Madrona; his personal investment philosophy; the broader future of venture capital; and a little more about the aQuantive and Microsoft story.

    McAndrews (see photo below), a Harvard University alum, says he first became aware of Searchandise Commerce through its current CEO, John Federman, and his board members Ross Goldstein, co-founder of DFJ Gotham Partners, and Sarah Fay, the former CEO of marketing agencies Carat, Isobar U.S., and Aegis Media North America; Fay had been an aQuantive customer for years.

    Brian McAndrews

    What intrigued McAndrews about Searchandise is that it combines e-commerce and online product search with the kind of display advertising and positioning found in offline retail, where you’ll walk into a Best Buy or Whole Foods and see certain products or shelves arranged to make them more prominent to consumers. (Manufacturers and advertisers pay some $20 billion a year for this kind of positioning.) With Searchandise Commerce, a manufacturer of flat-screen TVs, say, can bid to improve its ranking within a paid search engine like Buy.com.

    This pays off in the real world as well as online. “A huge number of people search online even if they buy offline,” McAndrews says. “What’s appealing to retailers is that the vast majority of people who come to their sites don’t make a purchase.”

    Searchandise aims to change that. As my colleague Wade previously reported, the company was founded in New York in 2000, and was formerly called Decidia and Guidester. In 2008, Federman started as CEO and moved the company to the Boston area. The firm’s strategy also shifted away from product navigation tools and towards paid search. McAndrews calls the company’s recent direction “an important wave of product search,” and he notes that it’s the kind of approach that would make sense to a huge e-retailer like Amazon.com. “It’s a very ripe area, though …Next Page »

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  • Washington’s Top 10 Venture Deals of the First Quarter—and Some Reactions

    Gregory T. Huang wrote:

    The first three months of 2010 are in the books. The dreaded tax day has passed. Time to look back at the top 10 venture capital deals in Washington state so far this year, and see what the trends are. What kinds of companies are getting cash? Who’s unable to attract the loot, and why? (For more context, you can also read my colleague Bruce’s latest rundown of the national VC numbers here.)

    First, here’s the list of the top local deals, compiled from the Xconomy Seattle archives, with an assist from the MoneyTree Report (PricewaterhouseCoopers, National Venture Capital Association, and Thomson Reuters), Dow Jones VentureSource, and CB Insights. I’ve included the stage of each deal if it was disclosed, as well as links to our prior stories about the companies:

    1. Visible Technologies (Bellevue, WA), $22 million, Series C (story).

    2. BlueKai (Bellevue, WA), $21.4 million, Series C (story).

    3. Calistoga Pharmaceuticals (Seattle), $15.2 million, second tranche of Series B (story).

    4. NanoString Technologies (Seattle), $15 million, second tranche of Series C (story).

    5. Infinia (Kennewick, WA), $11.5 million (story).

    6. Halosource (Bothell, WA), $10 million, Series D (story).

    7. Avvo (Seattle), $10 million, Series C (story).

    8. New Travelco (Seattle), $9.8 million, Series A (story).

    9. Zumobi (Seattle), $7 million (this news comes from the MoneyTree Report; the company tells me this is its third round of funding; see related story here).

    10. HemaQuest Pharmaceuticals (Seattle), $6 million (story).

    Looking over the companies, they come from a wide variety of disciplines. Five companies are from the software sector (Internet and mobile), three deals went to biotechs (although two were second tranches from rounds announced last year), and two cleantech companies raised cash. But seven of the top 10 were mid-to-late-stage deals, Series C or later, while only one was a first-round funding (New Travelco, the stealthy online travel startup from ex-Expedia execs). The relative dearth of funding for young companies around Seattle remains a concern I hear often, and entrepreneurs are increasingly turning to angel investors or bootstrapping as viable alternatives to raising venture capital.

    Meanwhile, Seattle-area investors see the overall funding results from the first quarter as encouraging, but they’re being cautious (and realistic) about the long-term prospects of the sector. “The investment level wasn’t solely dependent on the one big deal, which sometimes happens. A number of companies in the Northwest are getting larger financings completed, and angel and entrepreneurial activity in the marketplace is strong,” said Andy Dale, managing director of Seattle-based Montlake Capital (formerly Buerk Dale Victor), in a statement. “We still need high-quality, successful M&A and some local IPOs to demonstrate that the asset class can make money for long-term investors.”

    Chad Waite, managing director of Kirkland, WA-based OVP Venture Partners, added in a statement, “We are encouraged by these numbers and are staying focused on building great companies within IT, biotech and cleantech with a concentration in the Pacific Northwest.”

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  • Glympse Rolls Out Facebook Tie-In, Looks to Gain Traction in Location-Aware Social Networks

    Glympse on the iPhone
    Gregory T. Huang wrote:

    Question: Where is Glympse? Answer: Getting more socially connected.

    The Redmond, WA, startup, which makes location-based software for mobile phones, is announcing today it has integrated its service with Facebook. This means consumers can automatically share where they are in real-time with certain friends and contacts in their social network via their iPhone or Android smartphone.

    It’s not a custom deal with Facebook, but it takes advantage of the social network’s capabilities and reach. The integration allows anyone who has the Glympse service to have their location pop up on a map within Facebook so their friends can see where they in real time. The move “will help in the distribution” but doesn’t generate direct revenue, says Glympse co-founder and CEO Bryan Trussel. “It’s a breadth awareness and usage play for us.” Translation: it could help the company grow, and in a big way.

    The idea behind the company is that your friends, family, and business contacts can get an immediate “glympse” of where you are, automatically and dynamically (your position moves on the map; see photo below), for a certain amount of time that you set. So you don’t have to text or call them saying you’re going to be a few minutes late, or you just left the house. About a year ago, we pointed out that the main challenge the company faces is getting a critical mass of consumers to use the technology—and then figuring out how to get paid. A pretty familiar road for any Internet or mobile startup.

    Since then, location-based mobile services have exploded, with the rise of map applications on smartphones, more widespread adoption of smartphones themselves (and “social phones” like the new Microsoft Kin), and the popularity of location-based social networks like Foursquare. Other companies in the sector include Loopt, Brightkite, uLocate, Pelago, and Google with its Latitude service.

    “People are expecting their phone to know where they are, and to filter information based on their location,” says Trussel, who had a 16-year run at Microsoft before starting Glympse. In terms of building a reliable and mainstream location-sharing service, he says, “We set out to be the quickest, lightest, simplest way to do it.”

    Glympse

    Trussel says Glympse has kept true to its original vision from the company’s founding in 2008. Now it is being flexible about how it is approaching things like integrating into all the online social networks. For example, the fact that Facebook is soon coming out with its own location-sharing service doesn’t seem to concern Trussel. “We look at Facebook not as a competitor but as a great social network we can integrate into,” he says. “The more larger networks are built, and even built around location, the better for us.” One question for startups like Glympse, though, will be whether Facebook will try to “own” its location-based services itself, or keep the software platform open for application developers to build on.

    The Glympse app remains free, and is available on Windows phones as well as the iPhone and Android phones; a BlackBerry version is coming soon too. It sounds like location-based advertising will be a big part of Glympse’s business model, as well as licensing its technology to partners (presumably wireless carriers and handset makers). Trussel declined to comment on the company’s partners, revenues, number of customers, or funding plans. Last year, he said Glympse had been angel-financed and had a half-dozen employees.

    “We feel we’ve hit critical mass now,” Trussel says. “We’ve filed the IP patents. We have breadth on the platform, we’ve got the social network integration, and we’ve distinguished ourselves in the location space, where you can share as much or as little as you want…The good part for us is, the opportunity is much greater than the resources we have.”

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  • Microsoft Talks Kin Phone, Tightens Twitter Ties, Dominates Human-Computer Interactions—A Redmond Roundup

    Microsoft
    Gregory T. Huang wrote:

    It has been a busy week indeed in Microsoft land. While the man on the street has been scrambling to file his taxes, the Redmond, WA, company has been making headway in smartphones, real-time search, and other important areas. Let’s get right to the highlights:

    Microsoft talks up Kin “social phone”
    This is a phone specifically designed for heavy social network users. (In other words, something I won’t be buying anytime soon.) The interface emphasizes your contacts and supposedly makes it easy to do things like share photos and Web information, and stream music and video. It’s coming out in May. You can read some local writeups of the Kin by the Seattle Times, TechFlash, and mocoNews.

    Bing incorporates Twitter updates
    Microsoft’s search engine is amping up its partnership with Twitter, providing up-to-the-minute results from the Twitter stream in its main search results. The Bing team is currently testing the new features with a subset of its users and search queries, so it’s not quite prime-time yet. But it’s the latest move in the increasingly important battle over “social search” between Microsoft and Google, which really only started last year.

    Microsoft outsources IT to InfoSys
    Infosys Technologies said it will be managing internal IT services for Microsoft worldwide. The three-year deal amounts to the Indian company providing employee help desk services and managing applications, devices, and databases for Microsoft in 450 locations across 104 countries. This seems like a pretty big deal, and probably is a way for Microsoft to save a lot of money. The impact on Microsoft’s inner workings and product development remains to be seen.

    Microsoft Research dominates at CHI conference
    At the big international human-computer interaction expo this week (CHI 2010 in Atlanta), Microsoft presented 38 technical papers, or about 10 percent of all papers accepted by the conference. They ranged from a telepresence project to help employees communicate with remote colleagues to efforts in interactive touch displays, pen and touch interfaces, and studying how changing Web content affects people’s interactions with the Web.

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  • Concur Goes Convertible, Frazier and Arch Back Achaogen, Lucid Commerce Gets Cash, & More Seattle-Area Deals News

    Gregory T. Huang wrote:

    Done your taxes yet? If so, sit back, relax, and enjoy this rundown of the week’s deals in the Northwest. It’s a mix of software and biotech financings, some encouraging (and not so encouraging) regional and national venture capital stats, and a new crop of inspiring startups.

    —Lucid Commerce, a Seattle provider of business intelligence software and data for direct marketers, closed its $5 million Series B round, co-led by OVP Venture Partners and new investor Greycroft Partners. Lucid Commerce is led by co-founder and CEO Tyson Roberts, formerly of aQuantive (in the early years).

    —Seattle-based Madrona Venture Group led a new $7 million funding round for Searchandise Commerce, based in Beverly, MA, as Erin reported. Existing investors Cloquet Capital Partners, DFJ Gotham Partners, Draper Associates, Inflection Point Ventures, Milestone Venture Partners, and Wheatley Partners also participated. Searchandise, formerly known as Guidester, makes software that combines paid online search tactics with in-store merchandising practices for e-commerce. Madrona’s investment was led by Brian McAndrews, the former CEO of aQuantive who joined Madrona as a managing director last summer.

    —Mercer Island, WA-based Liberty Dialysis received a new investment from KRG Capital Partners, Bain Capital Ventures, and Ignition Partners. The amount was not disclosed. Liberty operates more than 100 dialysis clinics around the United States.

    —Bruce reported some encouraging (and somewhat surprising) findings that venture investments in the U.S. improved compared to the previous quarter and the same period a year ago, in terms of the number of dollars and deals. The stats were courtesy of New York-based CB Insights. According to the report, Seattle itself had 17 VC deals in the first three months of 2010, worth a total of $41 million; Washington state saw 30 deals for $138 million.

    —The flip side of that news is that VC investments in Washington state companies fell in March compared to the first two months of the year. A report from CB Insights tallied just three venture deals in Washington worth a total of $21.3 million last month. That’s as compared to more than $50 million in each of the first two months of the year.

    —Redmond, WA-based Concur Technologies (NASDAQ: CNQR) raised $287.5 million in convertible note debt financing, to pursue potential acquisitions, strategic transactions, and other corporate purposes. Concur, led by CEO Steve Singh, makes online software for managing employee expenses and corporate travel. Last month, the company said its product was among the initial set of offerings in the new Google Apps Marketplace for businesses.

    —Seattle-based Frazier Healthcare Ventures led a $56 million Series C investment in Achaogen, a San Francisco developer of antibiotics that fight multi-drug resistant infections, as Luke reported. Alta Partners also participated in the deal, along with existing investors Arch Venture Partners, 5AM Ventures, Domain Associates, Venrock Associates, Versant Ventures, and the Wellcome Trust.

    —Not an actual deal, but a bunch of companies looking for deals: NWEN held its First Look Forum in Seattle yesterday, and 12 worthy startups sang for their supper, pitching a roomful of investors, entrepreneurship coaches, and other interested parties. The companies ran the gamut from medical devices to pet food to trucking aerodynamics to online travel software. Some highlights: Crux Medical Innovations, Darwin’s Natural Pet Products, InsideTrip (winner), Nanocel (runner-up), and Zendorse.

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  • Report: Lucid Commerce Closes on $4M

    Gregory T. Huang wrote:

    Seattle-based Lucid Commerce, a provider of business intelligence software and data for direct marketers, has closed a $4 million Series B funding round, according to a report in VentureWire this morning. New York-based Greycroft Partners led the round, the report said, and OVP Venture Partners, in Kirkland, WA, participated. OVP led Lucid’s $2.5 million Series A funding in 2008. Last September, there were reports that the company had raised part of its Series B round. Lucid Commerce is led by co-founder and CEO Tyson Roberts, a former aQuantive employee.

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  • NWEN “First Look” Forum Tells Story of Software Vs. Medical Startups: Online Travel Is the Winner

    NWEN
    Gregory T. Huang wrote:

    Variety was the theme of the Northwest Entrepreneur Network’s First Look Forum yesterday at the Arctic Club Hotel, a venerable establishment in downtown Seattle. There were 11 startup companies with a wide array of ideas, each giving a five-minute pitch to an eclectic audience that included investors, entrepreneurship coaches, media, and sponsors. The startups were there to compete for a chance to win some cool prizes, and of course, score new investments. The “first look” aspect means none had presented previously to investors or venture capital groups—this is the brainchild of NWEN executive director Rebecca Lovell.

    One interesting point: the initial group of companies represented much more than just software and tech. The bunch covered medical devices, techniques for combating everything from obesity to tooth decay to slow and messy colonoscopies, and applications over industries ranging from online travel to trucking to pet care. Only three of the 11 startups in the backyard of Microsoft were software companies.

    But in the end, the five finalists—selected by audience voting—consisted of those three software startups plus two hardware/materials tech companies (though one of those has a biomedical application). Any of these certainly could make a promising business, but it’s also possible that the investors and other voters in the room were just more comfortable with tech than life sciences or medical companies. Or maybe it’s just that tech startups tend to require smaller amounts of startup capital that can lead to higher potential returns.

    Here are my initial impressions and super-short summaries of what each of the 11 Northwest companies presented (plus more details on the finalists and winner below):

    Biomoles
    Developer of higher quality and purity techniques for doing DNA purification for automated DNA processing and life sciences applications.

    Crux Medical Innovations
    Producer of a special biopsy device that makes procedures like colonoscopies (done 20 million times a year in the U.S. to detect colon cancer) faster and more efficient.

    Darwin’s Natural Pet Products
    A six-year-old company that makes and delivers fresh, healthy frozen meals for cats and dogs; it has more than 1,500 customers, mostly in the Seattle area, and wants to go national.

    DragGone Aerodynamics
    Maker of add-ons to trucks that reduce fuel consumption by improving aerodynamics.

    Empowering Engineering Technologies
    Three-year-old company developing an elastic tendon-like medical device that helps people with gait disabilities walk; the orthopedic technology comes Cleveland Clinic and is currently being tested in patients. (This company is also presenting Wednesday at the inaugural meeting of Wings, the Northwest’s new medical device angel network, as Luke reported yesterday.)

    HealthyLogics
    A startup developing “biofeedback” utensils, like a special fork that measures how fast …Next Page »

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  • Beaming Power to UAVs, Space Elevators, and Someday, Earth: The LaserMotive Plan

    LaserMotive
    Gregory T. Huang wrote:

    Think it’s possible to shoot down a swarm of buzzing mosquitoes in mid-air? Or maybe you want to power up a remote flying vehicle? Tom Nugent is your man. The Seattle-area entrepreneur just might be the most versatile guy with a laser you’ve ever met.

    Yes, a laser. Until recently, Nugent worked in the laboratory of Bellevue, WA-based Intellectual Ventures, the invention company led by Nathan Myhrvold, where one of his projects was the so-called “photonic fence.” This effort has gotten lots of media attention, most recently for an impressive demo at the TED conference in February. That’s where Myhrvold showed a video of a laser burning the wings off a flying mosquito in super slow-motion. The idea is this technology, implemented on a larger scale, could help prevent the spread of malaria or protect crops against flying pests.

    But Nugent’s focus now is on something that might be more practical: power beaming. That means using lasers to deliver energy to remote sensors, vehicles, or base stations. It’s a two-way trick: the receiver has to have a solar cell to convert the laser’s energy into electricity. But as long as the solar cell is viable, the technology could be useful in any situation where installing a wire is impractical, where batteries run down, or where it’s too expensive to truck in fuel.

    That’s really just the beginning, to Nugent’s mind. One of his ultimate goals is to be able to beam large amounts of solar power to Earth from space, presumably to help solve global-scale energy problems. For now, though, he’ll settle for beaming power to unmanned aerial vehicles (UAVs) and other remote devices, including very early technology that could help scientists develop something called a space elevator. These ideas, in sum, have turned into a small company called LaserMotive, based in Kent, WA.

    Before dismissing these projects as far-fetched, a little background is required. The idea of power beaming has been around for decades. But advances in cheaper and more energy-efficient diode lasers have made it possible to pursue the idea commercially in the past few years. Even the rise of laser hair removal products (which you might see on late night TV) have helped things move forward. So in 2007, Nugent and fellow physicist (and Intellectual Ventures veteran) Jordin Kare, an expert on laser rocket propulsion who worked on the “Star Wars” nuclear-missile defense system in the 1980s—decided to make a business out of power beaming, and co-founded LaserMotive.

    “We think we can produce revenue while we get experience,” says Nugent, LaserMotive’s president.

    LaserMotive robot for NASA's Power Beaming Challenge

    Their first project: tackling the power beaming aspect of NASA’s “Space Elevator Games.” If you don’t know what a space elevator is, that’s OK—it doesn’t exist yet. The über-futuristic idea is to have a cable anchored to the ground, extending thousands of miles into space, that could be used to launch payloads into orbit. The space end would be unattached, and the Earth’s rotation would keep it taut so a robot “elevator” could move up and down the cable, carrying equipment. Sure, this would take billions of dollars and a few decades to get working, but it could ultimately make space operations much cheaper than using rockets. That’s the idea, at least.

    If a space elevator is ever going to work, it will need power at multiple steps along the way. So, at “Level 1” of the NASA Power Beaming Challenge, held last November in Mojave, CA, Nugent and Kare’s team used a ground-based infrared laser to beam energy to specially designed solar cells aboard an 11-pound robot (see photo, left) driven by an electric motor. (All power must come from the ground.) The robot climbed a 900-meter length of metal cable suspended from a helicopter. Nugent and Kare’s was the only team to make it to the top with an average climbing speed of more than 2 meters per second—their robot went nearly 4 meters per second (9 mph)—beating out two other teams, who failed to reach the top. The prize was $900,000 (before taxes, Nugent laments—yes, it’s that time of year).

    The upcoming “Level 2” competition will be held later this year, …Next Page »

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  • From Apptio to Zillow: Seattle 2.0 Announces Finalists for Startup Awards Bash

    Seattle 2.0 Awards
    Gregory T. Huang wrote:

    The Seattle area’s hippest celebration for local software and technology startups is gearing up for its big night. After receiving nearly 7,000 nominations for 11 “best of” categories in Seattle tech, media company Seattle 2.0 is announcing today the finalists for its annual awards show. (Disclosure: I am one of the 36 judges who helped select the finalists.)

    Now you, the public, are invited to vote on the finalists starting today, to determine the winners. Community voting will be open until midnight on May 11; anyone can vote on the awards website.

    The winners will be announced at the second annual Seattle 2.0 Awards event on May 19th at the Bell Harbor International Conference Center in Seattle. Last year’s event was a smash hit and featured an inspirational talk by Glenn Kelman from Redfin. This year, the keynote speaker will be Jonathan Sposato, the former CEO of Seattle-based Picnik. Picnik, the popular Web-based photo editing startup, was acquired by Google last month in one of the biggest deals of the year. (You can read my interview with Sposato right after the acquisition here.)

    Here is the complete list of categories and finalists (there are a lot of them). Good luck to all:

    Best Startup: Apptio, BlueKai, BuddyTV, Cheezburger Network, Redfin.

    Best Bootstrapped Startup: BigOven, Biznik, Bonanzle, HasOffers, Survey Analytics.

    Best Nonprofit Startup: Jolkona, One Bus Away, Startup Weekend, TisBest, Vittana.

    Best Startup CEO: Rich Barton (Zillow), Sunny Gupta (Apptio), Glenn Kelman (Redfin), Andy Liu (BuddyTV), Dave Schappell (TeachStreet).

    Best Startup Technologist: Damon Cortesi (Untitled Startup), Joe Heitzeberg (WhitePages), Darrin Massena (Picnik/Google), Daryn Nakhuda (TeachStreet), Scott Porad (Cheezburger Network).

    Best Startup Designer: Alex Berg (ex-Wetpaint), Greg Bowers (TeachStreet), Aviel Ginzburg (Untitled Startup), Jenny Lam (Jackson Fish Market), Matt Lerner (Front Seat).

    Best Venture Capitalist: Geoff Entress (Voyager Capital), Michelle Goldberg (Ignition Partners), Greg Gottesman (Madrona Venture Group), Nick Hanauer (Second Avenue Partners), Andy Sack (Founder’s Co-Op).

    Best Angel Investor: Bill Bryant, Clark Kokich, Andy Liu, Dan Rosen, Kelly Smith.

    Best Service Provider to Startups: Pearl Chan (CFO Selections), Geir Hansen (Silicon Valley Bank), Eric Koester (Cooley Godward Kronish), Craig Sherman (Wilson Sonsini Goodrich Rosati), Joe Wallin (Davis Wright Tremaine).

    Best Entrepreneur Blog: Inspired Startup by Andy Liu, Quick Sprout by Neil Patel, Redfin Blog by Glenn Kelman, Startup Front End by Tony Wright, Untitled Startup Blog by Damon Cortesi & Aviel Ginzburg.

    Best Event for Startups: Hops & Chops by Dave Schappell & Daryn Nakhuda, STS Meetings by Chuck Groom & Gaurav Oberoi, TechFlash Live by John Cook, Todd Bishop & Eric Engleman, Ignite Seattle by Brady Forrest et al., Seattle Open Coffee by Andy Sack.

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  • More Funding for Liberty Dialysis

    Gregory T. Huang wrote:

    Mercer Island, WA-based Liberty Dialysis, which operates more than 100 dialysis clinics around the U.S., has received a new investment from KRG Capital Partners, Bain Capital Ventures, and Ignition Partners, according to a press release on Friday. The funding amount was not disclosed. Liberty Dialysis was founded in 2002 and is led by CEO and co-founder Mark Caputo. The firm is backed in part by Seattle-area Ignition’s later-stage growth fund.

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  • How a Business Can Span the Globe and Stay Close-Knit: Microsoft’s “Telepresence” Project

    Microsoft Research
    Gregory T. Huang wrote:

    Stop me if this sounds familiar. You work in a tight-knit team that has one or two colleagues who are located in a different office—across the street, across the state, or across the country. You’d like to communicate with them more regularly, but phone calls, e-mails, and video conferences have to do. Inevitably, you feel like you (and they) miss out on some day-to-day interactions that help all of you stay fully connected to the company’s goals and culture.

    Microsoft feels your pain—and its researchers are trying to do something about it. That’s why a group from Microsoft Research, based in Redmond, WA, is presenting a paper tomorrow at CHI 2010, the big international conference on human-computer interaction in Atlanta. The team, led by senior researchers Gina Venolia and John Tang, has developed a prototype system that gives a satellite colleague a “telepresence” not just in meetings but in the daily workflow of the hub office. They pull this trick with basically a laptop, speakerphone, and webcams on a cart, plus software to coordinate it all. Their project is called “Embodied Social Proxy,” or ESP.

    OK, it’s a pretty jargony name, but it addresses a real and growing need in companies that have satellite workers or that expand to new geographies. The researchers have tested the prototype in four different product groups at Microsoft in addition to their own research group. They’re reporting that it increased the “attention and affinity” of the hub towards the satellite, and that it improved the interpersonal social connections between team members. (Of course, this might be difficult to quantify—more on that below.)

    In this globalized era in which teams are being spread over long distances and “virtual” businesses, a number of tech giants are trying to help companies stay culturally tight-knit as they grow larger. The list includes Microsoft, Hewlett-Packard, IBM, Cisco, and Skype, who have led the way in developing technologies for Web conferencing and remote communications. A whole slew of startups are working in related sectors such as social business software (like Jive in Portland, OR) and online project management (like Smartsheet and LiquidPlanner in the Seattle area).They all share the goal of boosting productivity in the face of complexity. Recently, notable technology and business leaders Kelly Jo MacArthur and Stephen Wolfram have emphasized the importance of remote communications in running an organization.

    Embodied Social Proxy (courtesy of Microsoft Research)

    The Microsoft project builds on years of social science and communications research. It also seems decidedly old-school and low-tech. That is part of what makes it interesting, as a complement to social-media efforts to improve business collaboration (including Microsoft’s relatively new FUSE Labs led by Lili Cheng). Microsoft’s ESP effort began in 2008 when Venolia and Tang’s colleague, principal researcher George Robertson, a co-author on the study, moved to Maine to work from home. The team decided to test out a system that was “as simple as possible, to fix what was most broken,” Venolia says.

    That meant daily interactions and face-to-face contact. So the team assembled a PC, monitor, some decent wide-view cameras, and a speakerphone, and mounted them on a cart that could be wheeled into meeting rooms (see photo above), or left in a dedicated office space that has become Robertson’s de facto “office” in Redmond. In meetings, the Redmond team can see Robertson’s face at the table and hear his voice, and he can interact with people in the room by controlling different cameras that allow him to focus on a particular person, or a whiteboard, or slides. The most interesting thing is …Next Page »

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  • Washington Companies Raised $21M in March, Down from $53M in Previous Month

    Gregory T. Huang wrote:

    This is not good. Less than a month after proclaiming that venture funding may have stabilized at a lower but more sustainable level, I have to report that funding for Washington-based companies in March plunged to $21.3 million in just three deals. That’s significantly down from $53.5 million in 10 deals in February, and $57 million in eight deals the month before that. March looked a lot like December 2009, when Washington companies saw just four deals amounting to $22 million.

    These stats were compiled by our partner, the private company intelligence platform CB Insights. Granted, the list doesn’t include financings under $1 million, and it excludes other Northwest geographies like Oregon, where we’ve seen a lot of activity lately.

    But there’s no mistaking some signs for concern. The only sizable Series A round was $9.8 million from Ignition Partners, Benchmark Capital, and General Catalyst Partners for a stealthy Seattle online travel startup (NewTravelco) founded by former Expedia execs Rich Barton, Greg Slyngstad, Sunil Shah, and Simon Breakwell. And they’re not even talking yet.

    Maybe it’s the calm before the storm, but this low level of funding activity took me by surprise, especially given the excitement in the Seattle entrepreneurial community around things like the TechStars startup program coming to town, the NWEN First Look Forum happening next week, and the University of Washington business plan competition just around the corner. Let’s see if the venture deals pick up, together with the busy event schedule around Seattle in the next month.

    Here is the very short recap of March 2010 venture deals (of more than $1 million) in Washington state:

    .

    Venture Capital Deals in Washington State, March 2010

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  • Concur Raises $287.5M in Debt Financing

    Gregory T. Huang wrote:

    Redmond, WA-based Concur Technologies (NASDAQ:CNQR) announced this week it has raised $287.5 million in convertible note debt financing, payable at an annual interest rate of 2.5 percent. The notes will mature on April 15, 2015, and will convert into equity if the stock price is above $52.35 per share, which represents a 25 percent increase over $41.88, the closing price of Concur’s common stock on March 30, 2010. Proceeds from the financing will be used for “general corporate purposes, including potential acquisitions and strategic transactions,” according to the release. Concur, which is led by CEO Steve Singh, makes online software for managing employee expenses and corporate travel. Last month, the company announced its product was among the initial set of offerings available in the new Google Apps Marketplace for businesses.

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  • Who Should Microsoft Acquire in Health IT? Who Is InnovateHealth? A Blog Sampler

    Health IT
    Gregory T. Huang wrote:

    With this week’s opening of our national Health IT news channel, we’ve been ramping up our coverage of all things healthcare, medical computing, and electronic health records. So a couple of Seattle-related items caught my eye this week.

    —First, the Texas-based online resource site Software Advice, which profiles electronic health record software (among other things), has a provocative piece about Microsoft written by vice president Austin Merritt. For about three years, Merritt has been advising medical software buyers on which systems to look at. He argues that Microsoft needs to acquire a big player in electronic health records to really compete in the medical market.

    Merritt writes that Microsoft’s recent efforts such as Amalga and HealthVault (which we’ve reported on here, here, and here) “are on the periphery of the market and do not really target the sweet spot: electronic health records [EHR] for physician practices.”

    Microsoft would probably disagree, but Merritt says HealthVault is “designed to be a reference point for consumers, not a substitute for medical records. If Microsoft were able to introduce an EHR to the market and enable its users to make records accessible to patients, labs, specialists and pharmacies via HealthVault, then they would really be on to something.”

    Merritt goes on to evaluate in detail what he thinks are the top 10 candidates for the next Microsoft healthcare acquisition—NextGen, GreenWay, Pulse, Aprima, AllScripts, eClinicalWorks, Eclipsys, Athena, Epic, and Cerner—in terms of their market share, sales channel, software architecture, and how scalable their products are. It’s an interesting read. (We’ve written about Microsoft’s recent acquisition of Boston-area-based Sentillion and what it means for its Health Solutions Group strategy.)

    —In other news, I’ve recently connected with the folks behind innovateHealth, a group of leaders in healthcare technology and services who are raising the profile of health-IT companies in the Northwest. The group was founded by venture capitalist Rob Coppedge of Faultline Ventures, Peter Gelpi of Clarity Health Services (former Aldus and Adobe veteran), and Tobin Arthur of physician network iMedExchange, all based in Seattle.

    Last May, innovateHealth organized a summit to address the challenges in financing innovation in health-IT. Many prominent investors, financiers, entrepreneurs, and CEOs attended, and my main takeaway from the event transcript is that there was a lot of caution—smart caution—in the room. That might just be easing up a little now, but there is still a lot of aversion to risk in this emerging sector.

    According to Coppedge, the top-of-mind issues right now are cost containment (we can’t just keep spending on healthcare while adding more people to the system), and the shifting of risk (and costs) from providers to patients. Although things are messy and difficult, that also means there are tons of opportunities for smart entrepreneurs and investors. “There’s been no more exciting time to be investing or starting a business in this space,” Coppedge says.

    We hope to have more on this soon. Meantime, we at Xconomy Seattle are gearing up for our Health IT event on May 12, which you can read about here.

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  • Big Ideas Need Work, Amazon Isn’t Too Late in Mobile Apps, and More from VC Tom Huseby

    Tom Huseby
    Gregory T. Huang wrote:

    Breakthrough ideas and management “dream teams” by themselves are overblown. What really counts is hard work and the ability to adapt. That’s one of my main takeaways after chatting with Seattle-area venture capitalist and mobile guru Tom Huseby. He also shed new light on the dynamics between Apple, Google, and Amazon in the mobile sector—and explained why he has had to raise his game as the playing field in mobile has become more level.

    Huseby, a prominent VC with SeaPoint Ventures, Oak Investment Partners, Covera Ventures, and Voyager Capital, spoke with me recently on a wide range of topics—sort of a state of the union for the Seattle-area mobile industry. First, I wanted to get his take on the importance of thinking big and working on breakthrough ideas—ones that could truly change the world—as that was the theme of our Xconomy Forum last week.

    “Most of the big ideas are just negative energy,” Huseby said—until they get worked on. That’s because most entrepreneurs tend to sit on big ideas; either they don’t tell people about them for fear of revealing too much to competitors, or they’re too busy with other things. “A good idea that isn’t acted on is just negative energy—a sinkhole—it sits there and draws your attention,” he said. He stressed that the key is what people do with their ideas. “You can make a bad idea happen if you work on it. Good ideas won’t work if you don’t work on them. At big companies, they usually don’t work,” he said. “Good ideas have to morph.”

    In particular, to make a breakthrough in the mobile sector, he said, “you have to have an almost unbelievable value proposition.” As for Web companies, Huseby said giants like Google and Amazon are examples of “massive vision,” followed up with smart execution and thorough analyses of what it would take to carve out large slices of their respective markets in search and retail.

    Given all that Apple, and now Google, have done to change the landscape of mobile software with their applications platforms, I asked whether Amazon is getting into the game too late. Huseby doesn’t think so.

    “You can’t be too late to an app store,” he said. “You could be too late to a music store. [iTunes] gave Apple a huge advantage on the app business.” But right now, mobile applications are still restricted to specific devices, which means there is opportunity for more big players. Huseby added that he thinks the Amazon Kindle e-book reader will eventually carry voice signals using a microphone attachment; even though he said Amazon’s revenue from that would be zero, I took this to mean the move could make the firm more competitive in the mobile sector.

    Meanwhile, Huseby thinks Google’s Nexus One phone was a bit of a surprise, because Google could make so much money from its Android operating system and running its services on other companies’ phones—why bother having its own phone? He thinks the answer probably has …Next Page »

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  • Galgon, Ex-aQuantive, Joins Market Leader

    Gregory T. Huang wrote:

    Kirkland, WA-based Market Leader (NASDAQ: LEDR) announced today that Mike Galgon has joined its board of directors. Galgon is the co-founder of online advertising technology firm aQuantive (along with Nick Hanauer and Scott Lipsky) and the former chief advertising strategist for Microsoft (NASDAQ: MSFT). Hanauer is also a board member and investor in Market Leader, which was formerly known as HouseValues, and makes marketing software and tools for the real estate industry. (History lesson: rumor has it that Galgon was about to join Pacific Coast Feather, Hanauer’s family business, when they hatched the plan for Avenue A Media, which became aQuantive.)

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