Morning Take-Out


Nasdaq Said to Weigh Competing Bid for NYSE Euronext Nasdaq, left out of a global merger frenzy among exchanges, is reportedly exploring options that include teaming up with a partner on a rival bid for NYSE Euronext. (DealBook reported last week that Nasdaq and and the Intercontinental Exchange were in talks to team up for a bid.) In the event that it fails to mount a rival bid, Nasdaq is looking to buy another exchange or sell itself to avoid marginalization, The Wall Street Journal said.

Traders who profit from mergers and acquisitions are more convinced than ever that Deutsche Börse’s $9.5 billion takeover of NYSE Euronext will get trumped by a competing offer. The owner of the New York exchange traded as much as 97 cents higher on Tuesday than Deutsche Börse’s offer price — the biggest “negative premium” since the all-stock deal was announced on Feb. 15. REUTERS | WALL STREET JOURNAL | BLOOMBERG NEWS | DEALBOOK

In German Deal, Will Wall Street Rule? A close look at a merger filing with the Securities and Exchange Commission reveals that in the long run, the New York exchange could end up in the driver’s seat, despite Deutsche Börse’s larger market cap. REUTERS | S.E.C. FILING

TMX Chief Warns Canada of Risk in Blocking L.S.E. Deal The head of the TMX Group warned that Canada would risk damaging its free-trade credentials if it blocked the Toronto exchange’s proposed merger with the London Stock Exchange, as Canadian political opposition picked up steam. REUTERS

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Rio Tinto Gets Offer for Talc Unit Rio Tinto said it had received a binding $340 million offer from the industrial materials group Imerys for its talc business. Selling the business is part of Rio’s strategic plan to focus on large-scale assets; the miner has made divestments of more than $11 billion since 2008. REUTERS | PRESS RELEASE

Vattenfall Said to Plan a $4 Billion Sale Vattenfall, one of the largest electricity producers in Europe, has hired investment banks, including Deutsche Bank, to sell businesses worth more than 3 billion euros, Reuters reported.REUTERS

First-Round Bids Come in for Warner Music Among the parties said to have made preliminary bids for part or all of Warner Music are Kohlberg Kravis Roberts, through its BMG Music Rights joint venture with Bertelsmann; the billionaire Len Blavatnik, who already owns around 2 percent of Warner Music; Vivendi’s Universal Music Group; as well as Sony Music Entertainment and Sony’s song publishing joint venture with ATV Publishing. REUTERS | SKY NEWS

More Deals Coming for Mining Merger and acquisition activity in the global mining sector is expected to accelerate in 2011, fueled by strong commodity prices and repaired balance sheets, Ernst & Young said. REUTERS

Strong Start for Energy Deals Merger activity in the energy and power sector is off to its fastest annual start ever, with nearly $94 billion in deals announced in 2011. REUTERS


Ruling May Give a Boost to Boutique Advisory Firms A Delaware judge’s public rebuke of Barclays over conflicts of interest in the sale of Del Monte Foods may become a calling card for boutique advisory firms like Rothschild and Greenhill.BLOOMBERG NEWS

Bright Across the Border Canadian banks, ranked the world’s soundest for three straight years by the World Economic Forum, may report higher first-quarter earnings on rising fees from mortgages and credit cards, and fewer bad loans.BLOOMBERG NEWS

Blankfein Was Against Wide Salary Increases Goldman Sachs’s chairman and chief executive, Lloyd C. Blankfein, warned against raising base salaries on Wall Street less than eight months before his own more than tripled to $2 million.BLOOMBERG NEWS

Citi Accused of Ignoring Signs of Madoff Fraud Citigroup saw several red flags in the dealings of Bernard L. Madoff’s firm years before the multibillion-dollar fraud was exposed in late 2008, the trustee seeking to recover assets for Mr. Madoff’s victims said in a newly unsealed lawsuit. Irving H. Picard’s accusations echo similar charges he has made against JPMorgan Chase. REUTERS


Not a Gold Mine but Close Enough The backers of Molycorp — Resource Capital Funds, Pegasus Capital Advisors and the Traxys Group — paid $80 million to buy the company from Chevron in 2008. Now they are making $2.6 million a day in profit on the rare earth metals that it mines. WALL STREET JOURNAL

A Brighter Day for Fuld? Life seems to be looking up for Richard S. Fuld, the former chief executive of Lehman Brothers. Business has been picking up steam at Mr. Fuld’s firm, Matrix Advisors, and the former Wall Street chieftain has had at least one meeting with financial executives involving a private equity transaction, according to FOXBusiness. FOXBUSINESS | BUSINESS INSIDER

GTCR Raises More Than Expected for 10th Fund GTCR, the Chicago-based private equity firm, has closed its 10th fund in less than eight months, outstripping its $3 billion target with more than $3.25 billion in capital commitments. FORTUNE| PRESS RELEASE

Conexant Gets Stronger Buyout Offer Conexant Systems, which designs semiconductors for audio, modem and video products, said on Monday that a competing bid from Golden Gate Capital to buy the company is higher than one its board approved from Standard Microsystems in January. Golden Gate Capital is offering $2.40 a share in a bid worth $196.3 million. OC REGISTER

Steward Bids for Jackson Health System The Steward Health Care System, which was created after Cerberus Capital Management bought six Catholic hospitals in Massachusetts in November, is making an aggressive effort to expand nationally with a $1.1 billion bid for medical facilities in Florida. BOSTON GLOBE


Hedge Funds’ Most-Wanted List Some of the favorite picks of hedge fund managers at the end of 2010 included Apple, Citigroup, Microsoft, JPMorgan Chase and Google, according to Goldman Sachs.

Northwest to Raise New Asia Fund Northwest Investment Management, a company in Hong Kong sold by RAB Capital in 2009, plans to raise $250 million in a year for an Asia-focused stock hedge fund. BLOOMBERG NEWS

Pimco Hires Former Citadel Research Chief The Pacific Investment Management Company has hired Ravi Mattu, a former head of research and strategy for Citadel Securities, as managing director in charge of analytics.BLOOMBERG NEWS

Fortunes of Japan Hedge Fund Industry Set to Turn? After a sharp drop since the industry’s 2006 peak, hedge funds are once again turning their attention to Japan and are set to attract more capital on expectations that a pick-up in M.&A. and share buy-backs there would yield strong returns. REUTERS


Is Archstone Plotting the Biggest Real-Estate I.P.O. Ever? Archstone, the commercial real estate investor that was taken private by Lehman Brothers, Tishman Speyer Properties, Bank of America and Barclays at the height of the buyout boom, appears to be a likely candidate for an initial public this year that could raise as much as $5 billion, according to The Wall Street Journal. WALL STREET JOURNAL

Milestone Capital Shelves I.P.O. Plans Milestone Capital has withdrawn its draft prospectus for a proposed initial public offering. Milestone was seeking to raise funds to put toward the initial investment for the company’s infrastructure fund, the purchase of new offices and general corporate purposes. VC CIRCLE | DOW JONES

S.E.C. Investigating Private Share Trade The febrile traffic in shares of unlisted companies like Facebook and Twitter is being watched by the Securities and Exchange Commission, which is monitoring possible conflicts of interest, according to The Wall Street Journal. WALL STREET JOURNAL

Viacom Announces Debt Offering Viacom, whose share price has risen more than 50 percent in the last year, said it had sold $500 million in corporate bonds to raise money to buy back some of its higher-interest debt. LOS ANGELES TIMES |PRESS RELEASE


With Eyes on an I.P.O., Fisker is to Start Production After several rounds of delays and price increases, the electric car start-up Fisker said it would begin production next month for the Karma, a luxury plug-in hybrid priced at $95,900.

The company raised $150 million earlier this month at a $600 million valuation, and its backers include the venture capital firm Kleiner Perkins Caulfield & Byers and New Enterprise Associates. Production of the Karma will start March 21, so it looks like the company is on track to begin selling vehicles in March or April.VENTUREBEAT

Ashton Kutcher Bets on SeatGeek The celebrity investor Ashton Kutcher is at it again, using his venture capital fund, A Grade Investments, to pour an undisclosed amount of money into the online ticket search start-up SeatGeek. Mr. Kutcher’s firm has previously invested in companies like Flipboard, Nowmov, Optimizely, Blekko and Quora. VENTUREBEAT


Vivendi Wins Ruling to Narrow $9 Billion U.S. Investor Suit Vivendi, the French media company, has won a big court victory. It said a federal judge’s ruling eliminated more than 80 percent of potential damages in a $9.3 billion lawsuit accusing the firm of misleading shareholders about its finances in connection with a giant merger a decade ago. REUTERS

Former Wall Street Star Struggles for Votes in Peru The presidential hopeful Pedro Pablo Kuczynski had a stellar Wall Street career and is widely seen as qualified to lead Peru, but he is struggling to win over poor voters who view him as a light-skinned outsider. REUTERS

Dubai’s Unfortunate Building Complex Construction sites are buzzing with work across the Persian Gulf sheikdom more than two years after the financial crisis set off a real-estate slump that caused values to fall by more than 60 percent. In the next two years, tens of thousands of new properties will come onto a market where about 40 percent of homes and offices are empty. BLOOMBERG NEWS

Fallen Regimes, Dirty Money and a Swiss Crackdown The Swiss authorities and banks have been quick to go after money laundering as revolution sweeps across the Arab world. Officials in Bern filed 30 reports on accounts tied to the regime of the deposed Tunisian leader Zine al-Abidine Ben Ali, acting more quickly than other countries as ousted leaders and their coteries might be attempting to protect their nest eggs. WALL STREET JOURNAL

Justice Holdings Looking to Put War Chest Into Action William A. Ackman, Martin E. Franklin and the Parisian billionaire Nicolas Berggruen have combined forces to found Justice Holdings, the largest cash-shell investment vehicle ever seen on the British market, and they are now hunting for deals.

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Are Irrational Design’s Ideas Strong Enough to Bootstrap?


Last week, we published a case study that discussed the challenges facing Irrational Design, a technology start-up that is determined to bootstrap. Its co-founders, Jared Cosulich and Adam Abrons, say they believe they will be freer to take risks and experiment without pressure from investors seeking a quick return. But operating on a shoestring has meant releasing imperfect products — a datingWeb site, an application that serves as an online suggestion box for businesses, and a goal-sharing message board.

Irrational Design plans to stay the course, ultimately bringing its disparate offerings together under an umbrella brand that can compete with online consumer and lifestyle communities like Yahoo. “We’re not simply throwing Web sites against the wall to see what sticks,” said Mr. Cosulich, who emphasized the importance of taking the time to build communities around each product.

Reader comments were overwhelmingly supportive of Irrational Design’s decision to fly solo, which didn’t surprise Mr. Cosulich. “It’s a shame that out here in the Valley, in tech, V.C. funding has become the default,” he said. The comments, he said, reflected his opinion that bootstrapping shouldn’t be “out of the norm.”

There were, however, some naysayers. In a brief interview, Mr. Cosulich reacted to a few of the challenges raised by other owners and readers.

Q: Elizabeth Charnock, chief executive of Cataphora, noted that a better-funded competitor could easily replicate your simple products. Does that concern you?

Mr. Cosulich: Not necessarily. It’s not a matter of copying features. Look at Craigslist. It doesn’t have a lot of features, and yet no one’s been able to copy it because it’s about community, not features and functionality.

Q: One reader doubted that Irrational Design was serving its customers.

Mr. Cosulich: I think we are. We’re not offering a lot of features, but we’re focusing on the important ones. People are staying with us — sticking to their goals and posting updates on Secret Goals and dating on The Matching Game.

Q: Another reader suggested that venture capital was not even an option for a prerevenue company like yours. Do you agree?

Mr. Cosulich: No, you don’t have to be making money to raise it. Plenty of start-ups raise capital before they even have a product.

Q: So you think you could have obtained venture capital for Irrational Design had you chosen to do so?

Mr. Cosulich: I think we would have had more luck finding angel investment. I’m guessing our long-term vision may be too ambiguous for a traditional V.C., but a smaller angel may be willing to invest in a crazy idea if they think the founders can deliver. Down the road, if we had significant traction in any of our products, I’m sure we could raise venture capital, but I think we would struggle if we tried now.

Q: What’s the biggest misconception about bootstrapping?

Mr. Cosulich: People think that, if you’re bootstrapping, you’re only interested in building a lifestyle brand, and you’re not taken as seriously. It’s too bad that that’s the mentality. While V.C.’s do bring a lot to the table, there’s no proof that a bootstrapped company can’t grow and build long-term value. Our philosophy is that it takes time and patience to build a fantastic business.

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Top Silicon Valley Execs to Meet With Obama

In the latest in a series of meetings involving President Obama and business leaders, a small group of top Silicon Valley executives plans to meet with Mr. Obama at a dinner on Thursday at the home of John Doerr, a prominent venture capitalist.

The list of executives attending, not yet released by the White House, includes:

•John Doerr, partner, Kleiner Perkins Caufield & Byers
•Carol Bartz, president and chief executive officer, Yahoo
•John Chambers, C.E.O. and chairman, Cisco Systems
•Dick Costolo, C.E.O, Twitter
•Larry Ellison, co-founder and C.E.O., Oracle
•Reed Hastings, C.E.O., Netflix
•John Hennessy, president, Stanford University
•Steve Jobs, chairman and C.E.O., Apple
•Art Levinson, chairman and former C.E.O., Genentech
•Eric Schmidt, chairman and C.E.O., Google
•Steve Westly, managing partner and founder, The Westly Group
•Mark Zuckerberg, president, and C.E.O., Facebook

The meeting has been shrouded in some secrecy. The White House press office confirmed that Mr. Obama would be in Silicon Valley to meet in private with business leaders. Only his arrival and departure on Air Force One are open to the press. The White House has said that Mr. Obama will travel from California to Hillsboro, Ore., on Friday, where he will visit an Intel plant.

A person familiar with the Silicon Valley meeting said that it will be over dinner at the Woodside, Calif., home of Mr. Doerr.

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BMW to Create Sub-Brand For Battery-Powered Cars


FRANKFURT — BMW, the German luxury car builder, said on Monday that it would create a sub-brand known as BMW i to market a line of battery-powered cars starting in 2013, and gave the most complete picture yet of how the vehicles made of carbon fiber and aluminum would look.

Though the introduction of the so-called Megacity vehicle is two years away, the promotional campaign has been under way for at least a year, with BMW executives slowly revealing information about the new line’s design and technology.

The information drip continued Monday with an event in Munich, broadcast on the Web, where the company, formally Bayerische Motoren Werke, showed off crucial details of the body design and the slanted “i” logo that will be used to market the cars.

BMW also said that at least two models, not just one, would be introduced in 2013: a four-seat, battery-powered vehicle intended for urban areas and known as the i3; and a hybrid sports car, the i8, that the company promised would be able to reach nearly 100 kilometers an hour, or 60 miles an hour, in five seconds, while burning no more fuel than a subcompact.

Additional BMW i vehicles will follow, BMW executives said.

“There is room for more products,” said Klaus Dräger, the head of development.

By deciding to label the new cars BMW i, BMW seems confident that they will enhance the image of its core brand — and not damage it by falling flat in a still unproved market for electric vehicles.

The new BMW brand name is not a total surprise. The effort to design and build electric cars, begun in 2007, has been known as Project i. The plug-in cars will retain the kidney-shaped grill design on the front end that is one of the most recognizable elements of a BMW, even though that grill is not needed by a battery-powered vehicle and will have no function.

The cars will also have computers that can be loaded with applications. BMW said that it had formed a venture capital fund to encourage the development of such applications. The fund, BMW i Ventures, already has a stake in MyCityWay, a start-up in New York that offers location-based information, like where to find parking.

BMW hopes to generate additional revenue with services that may also be sold to people who do not own a car, like high-end car sharing. BMW is betting that there is a market among young, affluent buyers for cars that are sporty and stylish yet guilt-free.

“This group has a keen sense of design and style along with passion for the environment,” said Ian Robertson, the director of sales and marketing.

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A Bubble in Private Internet Companies?

Zynga, the company behind many of the Web’s most viral games, is close to a deal that would value it at nearly $10 billion and is considering an initial public offering as soon as the first quarter of 2012. Valuations of Facebook and Groupon are similarly stratospheric. Bill Gurley of Benchmark Capital weighs in on whether there is a bubble in private Internet companies in this CNBC video.

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Zynga Nears Deal Valuing It at Close to $10 Billion


Zynga, the company behind many of the Web’s most viral games, is in advanced discussions on an investment that would value the company at nearly $10 billion and could pave the way for an initial public offering next year.

The company is in talks with the mutual fundgiants T. Rowe Price and Fidelity Investments, among other investors, for a round of financing near $500 million, said two people close to the discussions, who spoke on the condition of anonymity because the talks are confidential. Zynga is also contemplating filing for an initial public offering as soon as the first quarter of 2012, two other people said.

The investment negotiations and the lofty valuation they imply could further drive investors’ intense interest in social media companies, highlighted by last month’s deal between Facebook and Goldman Sachs.

It would also add to the debate over whether the enthusiasm for these fast-growing Internet companies points to an overheated market. As part of its deal with Goldman, Facebook raised $1.5 billion in January, giving it a $50 billion valuation.

In the same month, the social buying site Groupon closed a $950 million round, with investors like T. Rowe Price and Fidelity Investments. Groupon is considering a public offering that could value the company at $15 billion or more, according to people close to the matter. LinkedIn, a professional social network, has also filed for an initial public offering.

Although the Zynga financing has not yet closed and may still fall apart, there has been significant investor interest, these people said.

A spokeswoman for Zynga declined to comment. The Wall Street Journal reported the talks with potential investors on Monday and the possible $500 million round was reported Thursday by All Things Digital.

Zynga has emerged as one of the fastest-growing companies on the Internet, propelled by the popularity of games like CityVille and FarmVille.

In CityVille, which began in December, users create and manage virtual cities, constructing buildings and collecting taxes.

The game, like most in Zynga’s stable, has flourished on Facebook, where it reigns as the site’s top-ranked game with 96 million active users a month, according to AppData. FarmVille is second, with 51 million players.

All together, Zynga’s games attract more than 275 million users every month on Facebook, making it the most popular gaming service on the platform and a major contributor to the social network’s revenue.

The bulk of Zynga’s revenue, estimated to be more than $500 million, is tied to the virtual goods it sells on Facebook, analysts say. But Zynga has taken several steps in the last two years to become more independent. The company has signed partnerships with other social networks, like Yahoo, and it has expanded its reach on mobile devices, with applications for the iPhone and iPad.

In what could be its boldest move to date, Zynga is also preparing to start a stand-alone gaming destination that will allow users to play its games outside of Facebook, according to three people briefed on the matter. The project, known as Zynga Live, will also serve as a gaming social network and is expected to make its debut in the middle of this year.

“We’re always looking for ways to improve the user experience, but we don’t ever comment on what we may or may not be working on,” Zynga said in a statement. “We’re focused on building a new form of entertainment that’s connecting the world through games.”

For Zynga, it is a critical step forward as the company considers filing for a public offering, which could come as early as the first quarter of 2012, according to the two people close to the matter.

Although people said the company was still reviewing its options, Zynga has laid the groundwork to be a public company. In July, Zynga hired David Wehner, an investment banker from Allen & Company, as its chief financial officer, a move many interpreted as a precursor to an initial public offering. And in 2009, Zynga and its accounting firm, Ernst & Young, began reviewing its books and looking at Sarbanes-Oxley compliance issues, said a former employee.

Zynga declined to comment on its income and revenue, or on a possible I.P.O.

Zynga is profitable, but analysts say the success of an offering would hinge on the company’s ability to prove to investors that it is not at the mercy of Facebook. The relationship has been strained at points over disputes concerning Facebook Credits, its virtual currency system, and changes to the site’s notification system. Tensions flared last year, but the pair worked out a deal in May and signed a five-year agreement to keep Zynga on the platform.

Experts say the creation of an independent destination site would only strengthen Zynga’s stability.

“If you look at some of their recent actions, it’s clear that they’re making way for an I.P.O.” said Atul Bagga, an analyst at ThinkEquity. “If and when they go public, they’ll have a better story to tell.”

Zynga, founded in 2007 by Mark Pincus, its chief executive, has aggressively expanded its staff and international footprint in the last 12 months, thanks to its sizable war chest. It has also raised more than $500 million from backers like DST Global, Google, Kleiner Perkins Caufield & Byers, and Andreessen Horowitz.

With that cash, the company has expanded its products abroad, especially in Asia. It has made nine acquisitions in the last nine months, buying gaming companies like XPD Media of Beijing and Unoh of Tokyo. As Zynga balloons, management is making way for a larger staff. According to two people close to the company, Zynga will double its staff this year, to 3,000.

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Can You Start a Tech Company Without Venture Capital?


We just published a case study that highlights the challenges confronting Irrational Design, a tech start-up that is determined to bootstrap. Founded in April by Jared Cosulich and Adam Abrons, the company has introduced three products: a dating Web site, an application that serves as an online suggestion box for businesses and a goal-sharing message board.

Mr. Cosulich believes he and Mr. Abrons will be freer to “try crazy things” without investors on board. But the two also recognize they pay a price. They must gain customer validation of their concepts as quickly as possible, which means releasing products that are still rough around the edges. Despite the challenges, the co-founders believe they can build a company with the potential to be more profitable than a venture-backed start-up.

We asked other business owners what they thought about Irrational Design’s strategy. You can read their thoughts and then share your own in the comments section below. Next week, in a follow-up blog post, we will tell you how things are going at Irrational Design and we will have the co-founders to respond to your comments.

Elizabeth Charnock, chief executive of Cataphora, a software maker that also chose to bootstrap: “When we started Cataphora, an adviser said that, as a bootstrapper, I had to understand that a V.C. would ultimately give someone $20 million to compete with us, which buys an awful lot of market advantage. So you need a ‘secret sauce’ like technology or brilliant guerrilla marketing. In our case, it’s complex, high-value behavior-modeling technology that would require specialized expertise to replicate. Now it’s patent-protected to boot. Irrational Design’s strategy of deploying a few simple applications to see what will gain traction may be risky.”

Nichole Goodyear, chief executive of Brickfish, an online marketing platform: “I’ve built businesses with my own cash and V.C. money. The challenge with bootstrapping by consulting is, somewhere, another team is spending 100 percent of their time on a competing product and benefiting from an experienced board. Instead of $500 a month toward marketing efforts, they’re spending tens of thousands. I recommend a hybrid approach for Irrational Design. With their proven concepts, they can now seek funding to grow and scale the business.”

Guy Hirsch, chief executive of SayHired, a job-candidate screening service: “Irrational Design wrongly correlates freedom of risk-taking with not raising venture capital. From personal experience, bootstrapping forces you to become risk-averse to whatever doesn’t help you prove a core business hypothesis. That’s great at the pre-seed stages, but leaves you almost no room for error down the road and certainly won’t support abnormal growth. There are plenty of investors who let you do crazy things on their dime.”

What do you think?

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Energy Firms Aided by U.S. Find Backers


WASHINGTON — In late 2009, the federal government gave $151 million in grants to advance 37 clean energy ideas deemed too radical or too preliminary to attract much private financing — like electricity storage that mimics photosynthesis and batteries that double or triple the energy stored per pound.

Since then, six of the projects have made enough progress to attract $108 million in private venture capitalfinancing — about four private dollars for every dollar that the taxpayers spent to get them rolling — the Department of Energy plans to announce Thursday.

While none of the projects are expected to produce commercial products for years to come, the Obama administration is emphasizing the early signs of success as it seeks to persuade a sometimes skeptical Congress to approve more money for clean energy innovation.

Success is probably 10 to 20 years away, said Arun Mujamdar, director of the program, which is called the Advanced Research Projects Agency-Energy.

But the private investment is “a good sign, an endorsement of some sort,” he said. “The best thing the government can do is to catalyze investment.”

While 31 projects have not yet attracted outside help, all are continuing, according to the department. Josh Lerner, a professor at the Harvard Business School and an expert on venture capital, said he would have been surprised if most of the projects had attracted private financing quickly.

If all the projects had quickly drawn private money, it would have suggested that the projects would have happened without government intervention, Mr. Lerner said.

With a track record of six of 37 being picked up, “it’s hard not to feel it’s a reasonable indicator that they’re doing something right,” he said.

While the government took ownership stakes in automakers and banks that got taxpayer help, it has not done so with the energy companies it has financed through the program, known as ARPA-E, so taxpayers reap no direct benefits.

Congress modeled the program after the better-known Defense Advanced Projects Research Agency, or Darpa, which provided early seed money for the Internet andsponsored competitions to build sophisticated robot vehicles, among other projects. Most of Darpa’s projects fail to produce commercial products, but the basic research it finances has sometimes led to breakthroughs.

For the first round of ARPA-E projects, the Energy Department focused on wind and solar energy production, energy storage and the capture and storage of carbon dioxide.

No carbon storage project attracted outside investment, in part because investors no longer expect a government cap on carbon dioxide emissions to help drive demand.

But sun and wind power and storage technologies did lure investors.

Envia Systems, which received $4 million in government money, used a material licensed from Argonne National Laboratory to build a better cathode, or negative terminal, for a battery. Envia, which is based in Newark, Calif., recently signed a contract with General Motors to begin delivery in 2014 of a material that will let batteries store roughly twice as much electricity per kilogram compared with the batteries now going into the Chevrolet Volt, said Michael Sinkula, the co-founder of the company.

Envia raised $17 million recently from an alliance of investors that included G.M., and it is now pursuing research on a better anode, or positive terminal, which will yield an even bigger improvement in the weight-to-energy ratio, Mr. Sinkula said.

Another battery company, 24M, a spinoff of the Massachusetts Institute of Technologyand A123 Systems, got a $2.55 million federal grant and took in $10 million in venture capital money. It is also working on a lithium-ion battery with much higher energy density.

A solar cell company, 1366 Technologies, got $4 million from ARPA-E and has raised $33.4 million in private money. 1366, based in Lexington, Mass., casts silicon wafers, a basic building block of solar cells, directly into their final form, which is 0.008 inch thick. That cuts the price of the finished solar cells about 40 percent, the company says.

Sun Catalytix, of Cambridge, Mass, uses a catalyst to help break up water molecules when they are exposed to electric current. The hydrogen from the water is absorbed by other molecules into an energy-rich material that can be burned in an internal combustion engine or converted back into electricity, said Amir Nashat, who is the acting chief executive of the company and also a principal in a venture capital firm Polaris Venture Partners.

Polaris and others, including Tata of India, have put $9.5 million into the company, after it got a $4 million ARPA-E grant. But Sun Catalytix is still years from shipping a product, Mr. Nashat said.

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A marketing expert turns her skills to the dating scene with a website that advises love-seekers on how to impress.

By Jennifer Wang |

Entrepreneur: Laurie Davis, former Fortune 500 marketing consultant and founder of eFlirt Expert, a coaching service for online daters.

“Aha” Moment: One of her marketing clients got burned in the Madoff financial scandal, and Davis saw the writing on the wall. Then it hit her: Online dating was the same thing as a personal branding campaign. “The skills I had built up about key messages and target audiences and e-mail conversion rates were perfect for this,” she says.

What Possessed Her: An early adopter of online dating, Davis has been facilitating matches and makeovers since she uploaded her first profile in 2000. “One of my friends is even getting ready to buy a ring,” she says. “I love to help make a match, and I realized not a lot of help for online daters existed.”

Startup: In spring 2009, Davis bought a domain and template website from Go Daddy and set up a credit card account for the business. “I came up with the concept, and in 48 hours I published the site and was ready to go,” she says.

Customers: People who want to make a better virtual first impression. Usually, they’re Internet-savvy–about 40 percent of the client base finds eFlirt Expert through Davis’ social media campaigns.

Relationship Payoff: The ex was a naysayer, so Davis ditched him shortly before meeting her current love interest, who’s also a dating coach. “He’s fabulous and the love of my life,” she says. (They met on Twitter.)

Payoff: Revenue grew 459 percent in the first three quarters of 2010, even before the holiday season kicked off.

Sample Services: Unlimited dating advice by e-mail ($49 per month); wing woman ($149 for two hours); profile from scratch ($149).

Next Up: Davis is hiring more “eFlirters,” opening offices across the country, launching a new web platform and working on a book proposal and realityshow deal.

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Let Your ‘Story’ Frame Your Business Plan Don’t think of it as a formal document but as a collection of your stories, combined with concrete goals.

By Tim Berry |

I believe stories can contain as much or more truth than pure “facts.” Think of the power of the phrases sour grapes, crying wolf, or the emperor’s new clothes. Don’t they tell us something instantly, regardless of historical fact, because we understand the story? My favorite part of an investment pitch or an elevator speech is where the entrepreneur talks about how some ideal customer has a problem and this new business solves it.

Suspend your image of a business plan as a document, for a while, and think of it as a collection of all your stories, combined with concrete specifics or goals that aim to make those stories come true. Essentially, your strategy is the story of you and your business. It tells how and why you started and what you do well. It’s what you like to do. It’s the story of why your customers need what you sell, how they find you and how you give them what they want. It’s the story of how you focus in on the most important parts of the business.

As you imagine what those stories are, break them down into meaningful, trackable parts. Set tasks associated with those stories, assign tasks to people and give them dates. Think about your long-term objectives story. Are you looking for wealth and fame, or to do what you like? What does success look like to you? Is it getting financed and making millions, or taking off at 4 p.m. to coach your kids’ soccer team?

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