Next Hot Companies

...continued

Investing a Day at a Time
SAVEDAILY.COM: Eric Solis' blue-collar background has served him well. It inspired him to create a Website called SaveDaily.com Inc., where any average Joe can make microinvestments in the stock market. The 37-year-old, who was a stockbroker at Merrill Lynch and then later founded eSolis brokerage, got the idea when his old friends couldn't afford the products he sold. After the Net arrived he came up with an idea that allows any person to invest in a mutual fund by putting up as little as $5 at a time.

By using the Web, SaveDaily.com, based in Irvine, Calif., is able to offer an investment tool that would be too expensive to manage otherwise. Participants can transfer money electronically from their own checking accounts to a SaveDaily account. They can also earn "microrebates" by buying online from merchants who have agreed to participate in the program. With $4 million in VC backing, SaveDaily.com has signed up the online arms of 80 vendors, including Wal-Mart, CVS, and Disney, who offer rebates of 1% to 3%. It has registered 10,000 customers, and its portfolio is close to $1 million.

A Chip Fights Blindness
SECOND SIGHT: Mark Humayun and Gene de Juan Jr., retinal surgeons at Johns Hopkins University, have developed the prototype for an artificial retina. It may sound more science fiction than academic, but it's very real. Since discovering certain blind patients still have healthy neurons, the partners have been working on developing a tiny camera to put in eyeglasses that would convert images into electronic signals, which would then be transmitted to a computer microchip implanted in the retina. With one in four senior citizens already suffering from macular degeneration and that number expected to skyrocket, Humayun and de Juan are eager to turn their research into reality.

Refusing VC money, the doctors turned to noted philanthropist Alfred E. Mann, 74, who had gotten rich with a rechargeable pacemaker in the '60s and a miniature insulin pump in the '80s. Mann agreed to license the technology, and, in 1998, Second Sight LLC in Valencia, Calif., was born. Although it could be eight years before it has a positive cash flow, Second Sight has raised $5 million. It's also participating in a $12.5 million grant from the National Institutes of Health. Even Stevie Wonder, a patient of Humayun, is a fan.

Blocking Hackers
SECUREWORKS: It was no mystery to Joan Wilbanks and Mike Pearson, friends and co-workers at CompUSA, why small- and medium-sized business were not buying security systems to keep hackers out of their PC networks. Existing intrusion detection systems were too costly and complicated. So the duo founded SecureWorks Inc., an Atlanta company, with a better way.

The company sells its clients a hardware firewall box called the iSensor that sits behind a network router, or switch, and is connected to the SecureWorks network operation center. If the client gets a hacker attack, the system will not simply send out an alert, as rival systems do, but will shut down the port or e-mail address under siege. The price, including iSensor box, is $1,495 to get started and $2,400 a year for the service.

SecureWorks' price makes it a good option for tiny firms that want to outsource their security systems. That's a market valued at more than $8 billion, according to the Gartner Group. Because of that sales potential, SecureWorks has raised $30 million from such firms as Noro-Moseley and GE Capital. To outdo rivals like CheckPoint, SecureWorks has OEM (original equipment manufacturer) deals with hardware makers like Sun Microsystems. Wilbanks hopes sales will hit $100 million by year's end.

Halting Runway Collisions
SENSIS: Although radar tracks planes in the air and warns pilots to stay away from one another, planes on the ground rely mostly on the naked eyes of pilots and traffic controllers to avoid collisions. The reason is understandable. Radar bounces off so many buildings, parked planes, trucks, and other obstructions on the ground that the signals are too confusing to be useful. But the consequences can be tragic, as they were for a Singapore Airlines plane that tried to take off in Taipei, Taiwan, and took a wrong turn onto a closed runway.

So with $10 million from the Federal Aviation Administration (and some help from the aerospace company Raytheon), Sensis CEO Jud Gostin is developing radar-processing equipment that will work for planes on the ground, much as a Global Positioning System works for a boat or a car. As a 747 taxis toward a foggy runway, for example, two sensors will track the plane's changing position and allow the controller to detect obstructions in its path.

Triangulation itself is not a novelty. The contribution of Sensis Corp., based in DeWitt, N.Y., is a system that works well in complex airport surroundings. Though the company brings in about $40 million a year in other revenue, the new radar technology is too young to be generating sales. But after testing this year, it will be deployed in 25 U.S. airports.

Sealing the Cracks
SERVICEENGINE: Angering a customer by ignoring him is something every business fears. Big corporations can afford expensive systems to keep track of customers' questions and complaints as they come in over the Web or phone. Now smaller firms can too with ServiceEngine Inc. of Shelton, Conn. CEO Jared Schulman, COO Douglas Fischer, and CTO Michael Sengstock, who've created search engines before, are co-founders.

Here's an example of how it works: A company with three or fewer customer-service representatives pays an initial fee of $299 and then $79 a month. ServiceEngine then tracks all online inquiries and responses, organizes customers by mailbox, and keeps tabs on employee productivity and performance. Management is alerted to overdue inquiries. ServiceEngine customers include the Empire State Building and PriceClick. Hewlett-Packard is on board as a partner and investor.

Connecting at Home
SHAREWAVE: If you have two computers at home and only one has a broadband Internet connection, it would be handy to link the two without running a cable through the living room. One barrier keeping them from being hooked together wirelessly is that your house is full of noise created by your appliances.

Bob Bennett, once a marketing director at Intel, recognized that barrier as a deterrent to high tech while he was at home researching consumer behavior for Intel. So he and a colleague, Amar Ghori, started El Dorado Hills, Calif.-based ShareWave Inc. and developed semiconductors that foil the noise. That is especially important if you want to share high-quality digital audio and video. The first device that will incorporate the new chips is a wireless networking card from Panasonic.

With $60 million in funding from a long list of corporate VCs (including Cisco and Intel), as well as from Microsoft co-founder Paul Allen's Vulcan Ventures, ShareWave is well positioned. It hopes investors will help forge deals to get its product to market.

Solving Protein Mysteries
SIGNATURE BIOSCIENCE: Now that the human genome has been mapped, attention is turning to the next step: functional proteomics. Proteomics is the science of understanding the structure and function of proteins that follow the genes' instructions and in turn control life processes, fight disease, and determine how the body responds to drug therapy. Among the pioneers is John Hefti, who has both a medical degree from Stanford and a doctorate in physics from U.C. Berkeley.

While at Stanford, Dr. Hefti observed the limitations of existing techniques for observing proteins; the techniques were slow, expensive, and often used artificial conditions that don't show how proteins behave in nature. So as a newly minted physician, he decided to take two years off to find a better method. Dr. Hefti set up a small lab and went to work with a $50,000 piece of equipment the size of a refrigerator to produce microwaves.

The result is a company, Signature BioScience Inc., and its technology, Multipole Coupling Spectroscopy. The technology bombards proteins with microwaves, and the charged properties reveal the structure and movement of proteins as they perform their natural tasks. Signature estimates that MCS could cut two years off the four- or five-year period that manufacturers of new drugs routinely go through before they reach clinical trials. The company, which has raised $21 million, expects revenues (including fees from pharmaceutical and scientific instrument companies) to reach as high as $10 million this year, leaping to $100 million in three years' time.

Say What You Want
SKYFLOW: Nibha Aggarwal, an MBA graduate of UC Berkeley, wanted to start a business, but she wasn't quite sure what she wanted to do. She needed a partner, so she made a pitch by e-mail to an extremely busy man on the Berkeley campus, Anthony Joseph, an assistant professor of electrical engineering and computer science, who was leading a team researching the future of telecommunications. Lucky call. Aggarwal and Joseph hit it off.

After months of brainstorming, they focused on an opportunity that Joseph reasoned would become greater with the proliferation of cell phones and other handheld wireless devices (cell phones alone claim 800 million subscribers worldwide): software that makes developing applications easy.

Software applications in the wireless world, as it turns out, have not kept pace with those in the wired universe. When a wireless company wants to add a service to a particular device—a pager, let's say—the procedure takes months. So Joseph set to work devising software that would allow wireless companies to add services with a minimum of fuss. Over the summer of 1999, he invented voice command software that allows multiple networks and standards to interconnect immediately.

Aggarwal, meanwhile, crunched numbers and examined the marketing prospects. By January 2000 the partners had written a business plan for the company that would become SkyFlow Inc. They submitted it to the UC Berkeley business-plan competition, which proved to be a smart step. They not only won $50,000, but they also got some invaluable advice. Top Silicon Valley VCs who sit as judges counseled the first-time entrepreneurs to concentrate on particular markets.

They did. They recognized that they didn't have the money or market power to establish SkyFlow as a consumer brand. So they developed a business model through which they will license their technology to major telecom providers, such as Verizon and Sprint. If your cell phone service company were using Skyflow software, for example, you could simply say into the phone, "Send my bank balance to my pager," or, "Fax the Benson report to my home."

SkyFlow has raised $3.5 million in VC (it also won a Hewlett-Packard Garage e-Scholarship that comes with a $150,000 prize) and has moved from the UC Berkeley incubator into subleased quarters within the offices of a marketing firm in Emeryville, Calif. Joseph has no doubts that SkyFlow will succeed. "Our software is reliable and flexible enough to handle new technologies as they arrive," he says. And adds, "What we're doing is much more about where the market is going than where it's been." So far SkyFlow has snared one customer, Bravanta Inc., a company in the rewards-redemption business. Revenue forecasts are optimistic: The company projects $500 million in sales by 2006.

Diagnosing Snorers at Risk
SLEEP SOLUTIONS: Hard to believe, perhaps, but although myriad sleepers snore harmlessly if annoyingly, a whopping 20 million Americans suffer from a condition called obstructive sleep apnea. OSA lowers the blood oxygen level during sleep and may lead to life-threatening hypertension. How do physicians evaluate snorers at risk? The traditional method is to send them for a night to a sleep clinic for examination. The experience is not painful, but it costs about $2,500, and the foreign setting sometimes upsets normal sleep patterns and distorts the reading.

So Sleep Solutions Inc., of Palo Alto, has created the Bedbugg, which snorers pay $500 to use for a three-night sleep study. The Bedbugg contains two microphones embedded in headgear that slip in place in front of the nose and mouth. Other parts of the device monitor heart rate, oxygen saturation, and respiration. The snorer sends the kit back to Sleep Solutions for evaluation and follow-up by a physician.

Bedbugg has competition, but Tom Fogarty, who designed the hardware, has an impressive record. He is the founder or co-founder of 25 medical-surgical companies, including one that invented the catheter that led to the world's first balloon angioplasty. Financial backers include Johnson & Johnson, which has helped raise $35 million for the enterprise. Sleep Solutions is supplying its technology primarily through ear, nose, and throat physicians, and expects to reap revenues this year.

The Web Comes Alive
SORCERON: For all of us spoiled by the rich, breathtaking visual effects of contemporary movies, the computer screen is a very dull place. Animated Websites look hokey, and streaming video appears in a small box with fuzzy images and voices that sound canned. Jonathan Prince, who began his extraordinary career as a jaw and facial surgeon and later became a film producer, wants to bring the PC to life.

His company, Sorceron Inc., based in New York City, has created a media-distribution technology that makes a narrowband transmission into a PC look like broadband and a broadband transmission look and sound as dazzling as digital TV. Chief creative director Devin Shelley designed some of the spectacular effects for Titanic. Sorceron is targeting large businesses that want to create lively, interactive Websites for their customers. Its official launch is slated for the second quarter of this year. The company, which has more than $20 million in funding from ETF Group, Hiver Capital, and other investors, expects to have $15 million in revenue this year.

Aiding the Disabled Online
SSB TECHNOLOGIES: Because of their physical limitations, some disabled people can find the Web to be a lifeline. The Internet takes them to resources that are hard to reach, such as shopping centers, without someone else's help. Unfortunately, because the Net was not designed with the disabled in mind, it can be difficult for many of them to navigate it.

Two Stanford graduates, along with Princeton alum Marco Sorani, raised about $500,000 in angel financing and founded SSB Technologies to correct that. Among its services, the San Francisco-based company has designed a diagnostic tool that goes through HTML and integrates descriptive sound into Websites for the blind or enhanced graphics for the deaf.

For companies that do business with the government, adapting their sites may be more than a goodwill-gesture. As of June, Section 508 of the Rehabilitation Act will require that all technology, including Websites be accessible to the 54 million Americans with disabilities. While the company won't disclose revenues, it already has 25 clients, including AT&T; and the U.S. Social Security Administration.

Memory Plays Catch-Up
T-RAM: Moore's Law, as everyone knows, states that computing power doubles every 18 months. But that refers only to the advances of microprocessors, the glamour chips. It is somewhat embarrassing that the power of the mundane random access memory chip has barely doubled over the past 10 years. Industry uses two kinds: dynamic and static. D-RAMs are dense but slow; S-RAMs are fast but can hold less information.

Now two Iranian-born engineers who met as graduate students at Stanford and last year won the school's business plan competition—Homan Igehy, 27, and Farid Nemati, 29—have come up with a chip that could give memory a big shove forward, the T-RAM. T stands for thyristor, a 40-year-old technology. Until Igehy and Nemati worked on it, thyristor was very slow. Now it combines the speed of the S-RAM with the capacity of the D-RAM. It will likely take years before their company, T-RAM Inc. of Mountain View, Calif., can bring the new chip to market; but when it arrives, it will speed up PCs, servers, routers, and other devices. To date, they've raised $11 million from Mayfield Fund, Tall Wood Venture Capital, and U.S. Venture Partners.

Calling All Fans
UPOC: If teens in Europe are doing it, why not here? That's what Gordon Gould, 31, CEO of New York City-based Upoc Inc., is figuring. With $3.5 million from U.K. VC firm Arts Alliance, Upoc has developed a platform to let teenage cell phone and pager users create the equivalent of mailing lists.

Using the Short Message Service (SMS), which most wireless carriers support, or wireless application protocol e-mail, Upoc lets users send brief group messages via cell or pager. In parts of Europe, SMS is more popular with teens than TV. Gould—former president of Rising Tide Productions, the parent company of the Silicon Alley Reporter—hopes to jump-start the enthusiasm among America's Generation Y and friends. Considering there are 56 million Americans between the ages of 15 and 29, it's not a bad idea. That's what giants like AT&T; and VoiceStream think: Both have signed on with the two-year-old startup as distribution partners.

College Miles
UPROMISE: When he was a student at Boston University, Michael Bronner, 42, had to struggle to pay his tuition. Now he's trying to make it easier for other kids by helping their parents save.

Bronner's latest venture, Brookline, Mass.-based UPromise Inc., works like an affinity program. When participants buy goods or services from certain companies, a percentage of what they spend goes into a college savings program, where the money can grow tax-free until it's needed for tuition. After all, 38 million people take advantage of the American Airlines Advantage card, which doles out frequent-flier miles. Why not use the same idea to help kids pay for college? Bronner must be on to something; he actually turned down about $30 million from wannabe investors, content with the $90 million he'd already raised. He's also landed powerful partners—i.e. Citibank, AT&T;, and — that have committed $100 million to market his concept.

Distant Intensive Care
VISICU: After making the morning rounds of the hospital's most critically ill, the intensive-care physician goes about other business. If an ICU patient enters a crisis, the staff is not always able to reach the doctor immediately. Deliberating on this time lag, two Johns Hopkins physicians, Michael Breslow and Brian Rosenfeld, created a monitoring system that's the medical equivalent of an air traffic control center.

Their company, Visicu, based in Baltimore, wires the vital-signs monitor at each bed in the ICU to a software interface that transmits data to a center that could be many miles away, but is continuously manned by ICU physicians. The doctors have all the records of each patient at hand and they are ready to advise the staff instantly should one patient start to fail.

Visicu has raised $18 million from VCs. Although its system has not yet replaced traditional monitoring at most hospitals, a pilot study at Johns Hopkins produced some very impressive results, including a 60% decrease in mortality. Visicu declines to speculate on revenues in the next few years, but the potential market is sizable: 50,000 ICU beds in the U.S. tended by far too few ICU physicians.

Diagnostics in a Vest
VIVOMETRICS: The patient is in no immediate danger, so there is no pressing need to keep her in the hospital. Her heart is damaged and frail, however, and requires constant monitoring. She would be a candidate to wear LifeShirt, a vest that weighs only six ounces despite being embedded with an array of sensors that keep track of 40 cardiac and respiratory signs around the clock. VivoMetrics Inc., the Ventura, Calif., startup that created the vest, was founded by Andrew Behar, who was once a documentary filmmaker.

The idea began with Behar's father-in-law, Marvin Sackner, M.D., a quarter of a century ago. Dr. Sackner developed technology that monitored a patient's breathing in a hospital bed, but the measuring instruments were so bulky and heavy they couldn't be worn while the patient was walking. His son-in-law persisted, and with the indispensable help of the miniaturization of electronics components and $11 million from investors, he succeeded. Pundits say that one day it's possible LifeShirt will not only monitor vital signs but also dispense drugs directly into the body to abort medical crises. Currently LifeShirt is undergoing safety testing. An undisclosed pharmaceutical company is doing clinical trials on the product. This year's projected revenues: $3.7 million.

Fetch My Passport
VVAULT: Three years ago, William Ho's brother was temporarily stranded overseas after his passport and other vital documents were stolen. The misfortune inspired Ho to create a "virtual vault" in which people could store documents and send them over the Internet anywhere in the world. Ho, who had spent a decade building client-servers, databases, and Internet software for Oracle and others, founded vVault Inc. with the help of William Aldrich and Sharif Rahman.

The San Francisco-based vVault, which has raised about $5 million from VCs, provides its technology to telecom carriers and PDA software makers, who pay vVault an undisclosed licensing fee. The customers then use it as a service to attract more clients.

The customer sends his crucial documents by fax or e-mail to the telecom, which keeps them in storage. When the customer needs his birth certificate, say, he can use any Web-connected PC or PDA and have it forwarded to a fax number or e- mail address. Wireless carrier OmniSky is the first to offer vVault. Still, Ho expects revenues to grow from $500,000 this year to $22 million by 2003.

Picking Compounds Fast
XANTHON: Isolating compounds that might be useful in drugs is such a laborious manual task that it could take 80 years for a lab to sift through 10,000 of them. With that daunting burden in mind, Holden Thorp, a chemistry professor at the University of North Carolina at Chapel Hill, has invented a way to get a reading on the likely uses of compounds so remarkably fast that researchers can analyze 10,000 of them in a day and a half. Thorp, aided by Carson Lumas and Jim Skinner, has founded Xanthon Inc., in Durham, N.C., and raised $20 million from VCs.

Its device, the Xanthon Xpression Analysis System, looks like a large microwave oven hooked up to a desktop computer. Once a compound is placed inside the Xanthon, electrons are pulled out of its nucleic acids; the changes to the messenger RNA are measured, indicating whether the compounds might have useful properties. The equipment can analyze as many as 96 compounds simultaneously in a few minutes, a capacity and speed that may help bring drugs to market much sooner. At press time Xanthon was negotiating deals with drug companies to test its product in their labs so it can be commercially available next year.

Safe on the Doorstep
ZBOX: Silicon Valley attorney Tony Paikeday had no time to shop and wait for deliveries from e-commerce merchants. One day he got so fed up with packages being returned because he wasn't at the delivery site to claim them that he started his own company, zBox Co., with his wife, Tina Shah, and his friend Mike Duran.

The San Francisco-based company hopes to supply consumers with a plastic strongbox for $5 a month that would hold packages left by delivery services. Worried someone would steal your stuff? An algorithm changes your combination daily, and when you make an order online, deliverers get only a temporary combination printed on the shipping label. It may sound too good to be true, but the U.S. Postal Service has already agreed to help market it, and a subsidiary of General Electric is lined up to manufacture it. FedEx and UPS, which lose money on every missed delivery, are also getting in on the act, agreeing to use the box when it debuts later this year. Baccharis Capital has been the lead investor on the project, which has raised about $5 million.

When Half a Car Will Do
ZIPCAR: Maybe you don't need a whole car, or maybe you need a car and a half for those occasions on which your spouse wants a vehicle but you need the family auto to get to work. The answer could be Zipcar, a company founded by two women in the Boston area: Robin Chase, former managing editor of Public Health Reports, and Antje Danielson, once project manager for the Harvard University Committee on the Environment.

Zipcar buys cars and negotiates with local governments and businesses for parking spots in urban areas. Members join at the Zipcar Website and pay a $75 annual membership fee. Each car is equipped with a smart card and a wireless hookup to a central system that tracks where it is and whether it's in use. When a customer wants to use a car, he or she goes online, locates the nearest available vehicle, and then pays 40 cents a mile and $4.50 to $7 an hour, depending on the location.

Zipcar hopes to fill the niche between inconvenient public transportation and expensive rental cars. It's much cheaper than owning and operating your own car, which costs on average $8,147 a year in Boston. Using Zipcar for 15 hours a month will cost as little as $1,300 a year. The company plans to expand and will introduce its cars into Washington, D.C., San Francisco, Chicago, and New York City this year.

Next Hot Companies

Next Hot Companies

Next Hot Companies