VentureBeat

Rumors are swirling around Gao Xiqing, the general manager of the China Investment Corporation, and his visit to the United States. Gao is reportedly traveling with Wei Christianson, who runs Morgan Stanley’s business in China. Morgan Stanley’s stock values are plunging, and an anonymous source told Bloomberg that the state-owned CIC (which is China’s sovereign wealth fund) could buy as much as a 49 percent stake in the investment bank.

Meanwhile, another Chinese investment group, CITIC Securities, is denying rumors that it’s in talks to acquire Morgan Stanley, and says it has no interest in acquiring foreign banks during the credit crisis.

Alas, I don’t have much insight into the truth behind those rumors, but I did catch a talk that Gao gave in Redwood Shores yesterday to a small audience of finance industry professionals — mainly Chinese Americans, from what I could gather — before heading to New York. As you might expect, Gao didn’t offer any concrete statements on the Morgan Stanley rumor, but it was still interesting to hear the comments of a man recently named by Esquire magazine as one of the 75 most influential people of the 21st century (the magazine dubbed him “the investor of China’s money“) on U.S. financial markets, as well as his take on venture capital.

Someone asked Gao if he thinks the United States is a good area for investments right now. Again, Gao offered little specifics, but he did note that when the CIC was mulling its first investments last year, it actually tried to “underweight” the United States due to the subprime crisis — in other words, to invest less in U.S. firms than their role in the global economy might warrant. However, given the CIC’s connections (Gao went to law school at Duke University, for starters), U.S. investments like the CIC’s $3 billion stake in Blackstone were hard to avoid, which led to the impression that the CIC favors U.S. firms. That’s an assertion Gao denies.

Gao was also asked if he thinks the current financial crisis marks a turning point in the global economy — the comparison drawn by one speaker was to the fall of the Roman empire. It’s far too early to count the U.S. out, Gao responded, although some shift in global financial power is probable.

One audience member, Greg Tarr of CrossPacific Capital, asked Gao about his view on investing in venture capital firms. Gao said the CIC has a small portion of its budget allocated for venture capital, but overall he says the venture market is too risky for a substantial investment. That doesn’t preclude opening an office in Silicon Valley or elsewhere in the United States, he said, and the CIC does speak to venture firms and high-tech companies regularly. In fact, Gao said he visited the Google campus in Mountain View earlier that day.

“Personally, I’m a strong believer in the development of technology and scientific programs, but that’s very different [from my investments at CIC],” he said.

[Image from Esquire]

Representing a potential medical quantum leap similar to, but even more important than the commercialization of X-ray imaging, Pacific BioSciences has taken a whopping $100 million to make it possible to affordably map out an individual’s entire genome in a matter of minutes, and for under $1,000 dollars.

While several startups, including 23andMe and deCODEme, are already offering cheap genetic testing for individuals, the technology Pacific Bio is looking at is about as different from those as looking at a satellite image of a town is to walking through it. The company is working on a system to “read” each DNA letter in a person’s genetic makeup, providing an in-depth view of every factor affecting a given person’s health.

The idea sounds fairly simple: Individial DNA molecules are captured in tiny holes on a chip, where they are pulled apart and rebuilt with enzymes identical to those present in the body, but with the addition of chemical markers. A type of digital camera takes a picture of the process, identifying the specific fragment being looked at. We covered the technology in more depth when it was first revealed, and have mentioned various competitors, most notably Complete Genomics and BioNanomatrix, who want to do sequencing for under $100.

In practice, of course, operating at such tiny scales is difficult, and accurately sequencing thousands of genes at once seems nearly impossible. But the company says it will be ready to commercialize by 2010, a Herculean feat if it can pull it off. The new funding indicates that it is at least gaining the confidence of venture capitalists.

If and when that happens, it will be time for early investors including Alloy Ventures, Kleiner Perkins Caufield & Byers, and Mohr Davidow Ventures — who collectively plowed more than $70 million into Pacific Bio over four previous rounds — to rake in the money.

However, it will just be the beginning for a whole new field of medical technology centered around finding uses for all the new information in individuals that becomes available. Preventative medicine is the obvious use, but others, like data mining for new cures and information on diseases, are also possible. Laws regulating the use (and misuse) of such information by insurers, employers and others will also have to be formulated.

A passel of new investors joined the funding, starting with co-leads Deerfield Management and Intel Capital. Also in were Morgan Stanley, Redmile Group, T. Rowe Price, and an unnamed “large financial institution.” Other previous investors Maverick Capital, AllianceBernstein, DAG Ventures and Teachers’ Private Capital also participated.

Cellulosic ethanol producer Range Fuels has heaped more than $50 million extra onto a $100 million round we reported two months ago, picking up the support of Passport Capital, Morgan Stanley Capital Group and others.

While the company originally planned to keep the round to $100 million, it appears to have received intense interest in its project. While the round was at first over-subscribed to $130 million, according to Ethanol Producer Magazine, Range has now taken a total of $158 million, according to a regulatory filing obtained by VentureBeat. The cap on the round is currently $166 million.

The additional funding should give Range the edge it needs to speed ahead in the race to open the world’s first full-scale cellulosic ethanol refinery in Soperton, Georgia, which broke ground last November. At 100 million gallons per year of capacity, the plant will be larger than many existing facilities that make ethanol from corn. Importantly, it has trees from the surrounding forests on-hand for use, rather than counting on next-generation feedstocks like switchgrass that have yet to be planted at scale.

Size is important for Range, because the thermo-chemical process the company uses works better at large scale. Yet even with its size advantage, a number of onlookers have speculated that the company may suffer from the pitfalls of being first to try out a complex process. Just breaking down woody fibers into a product isn’t good enough — Range’s ethanol must also be cheap enough to compete with fossil fuels, albeit with the help of subsidies.

Its investors either don’t have the same expectation, or have been caught up in the drama of (maybe) leading a (possible) revolution.

Range’s competition for the distinction of being first is from two companies. One, Coskata, has a partnership with a plant construction company and plans for a 40 million gallon per year plant. The other, Mascoma, took on $50 million more in February and just today announced a partnership with General Motors, which also backs Coskata.

The round was led by Passport, with participation from a passel of others: PCG Clean Energy & Technology Fund, Khosla Ventures, Blue Mountain Venture Capital, Leaf Clean Energy, Pacific Capital Group, Morgan Stanley, and possibly some unlisted investors.

Kapow Technologies, which sells software to companies that lets them assemble their own “mashup” applications by gathering data from around the web, has raised a $11.6 million third round of financing.

Mashup technologies have become increasingly important lately, now that data has proliferated around the Web and new technologies such as RSS allow people to pipe it directly to their computers, versus having to go get it themselves. A research analyst covering the retail sector, for example, no longer has to go visit the Victoria Secret web site to scour it for data and paste it into their spreadsheet. Now she can create a feed from Victoria Secret and all other major retailers, and have it all sync in a single spreadsheet within her Kapow dashboard.

Kapow, based in Palo Alto, Calif., lets her also configure a way to gather data from other places, such as internal enterprise resource planning (ERP) application or database that might be behind a corporate firewall. She can then mash it all up into whatever application format she wants.

Even if a site doesn’t provide an RSS feed, Kapow can create an RSS feed by using a robot to crawl the site. Kapow then relies on an application like Excel to allow you to pull it all together, or other receptor applications provided by companies like IBM and Serena. Kapow can even deliver it to your mobile phone.

Other companies doing something similar are Dapper, but that company has been less focused on serving large companies, more focused on consumers.

There are an array of other mashup companies, for example other mashup interface makers, such as Backface and Jackbe, but they too focus less on actually gathering data from other places, and more on helping you do the mashup application itself. Other companies, such as Connotate, provide a mashup service to automate the process for you, relying on outsourced help, and providing less customizable features.

Kapow says customers include Wells Fargo, Bank of America and Credit Suisse Boston, and that some 3,000 companies have installed the technology worldwide.

New investors include Steamboat Ventures, a venture capital firm affiliated with The Walt Disney Company, and Morgan Stanley’s Strategic Investments Group. Previous investors Kennet Partners and NorthCap Partners also participated in the round.

TODAY’S HEADLINES:

• Specialty pharma Innocoll raises $30M for collagen technologies (release)
• Immusol changes name to ItherX Pharma, names Jeffery McKelvy CEO (release)
• Austin’s Santé Ventures raises $130M healthcare VC fund (release)
• Belgium’s AlgoNomics, immunogenicity screener, names Philippe Stas as CEO (release)

Specialty pharma Innocoll raises $30M for collagen technologies — Ashburn, Va.-based Innocoll, a developer of collagen-based drugs and drug-releasing implants, raised $30 million in an equity financing. Investors included Camulos Capital, NewSmith Asset Management and Morgan Stanley. In addition, previous investors Rolf and William Schmidt converted $16 million of existing loans into convertible preferred stock.

The company doesn’t yet have a Web site — even the link in its release doesn’t work — but apparently specializes in biodegradable surgical implants that release drugs over a period of time, as well as topical versions of existing drugs. Its main product is an implant that releases the antibiotic gentamicin at the site of surgical procedures. Innocoll is also developing a topical form of gentamicin and an implant for the control of postsurgical pain.

Austin’s Santé Ventures raises $130M healthcare VC fund — Santé Ventures, a newly formed Austin, Tex., VC firm, raised a debut $130 million healthcare fund. The fund will invest in seed and early-stage companies working on new medical technologies and healthcare services.

Santé traces its roots to three organizations — Ascension Health, a network of Catholic hospitals; Ascension Health Ventures, an associated $150 million VC fund; and Austin Ventures. The firm will invest nationally, although with a focus on the central U.S., and has offices in Austin and Nashville, Tenn.