Most Successful U.S. Startups 2008


While 2008 was clearly an awful year for business, a look back shows entrepreneurs running startups managed to raise significant amounts of capital to fund their plans for growth. In fact, venture capitalists invested more than $7 billion in seed and early-stage companies in the past four quarters — more than any calendar year since the dot-com bubble burst in 2001.

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With this in mind, BusinessWeek set out to find the hottest new businesses across the U.S., based on the collective judgment of the venture capital community. To do so, we followed the money, looking at deals that took place in the four most recent quarters available, from October 2007 to September 2008, based on the MoneyTree Report from the National Venture Capital Association and PricewaterhouseCoopers. We then reached out to a selection of the seed and early-stage companies that raised the most money. For profiles of 25 of these startups, click on. Then weigh in on how you measure a startup's potential for success in this post on our staff blog.

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Courtesy: Fisker Automotive

Fisker Automotive

Irvine, Calif.
Founders: Henrik Fisker and Bernhard Koehler
VC investment over the last four quarters: $90.5 million

Henrik Fisker and Bernhard Koehler met at BMW, where both worked as auto designers (Fisker is credited with designing the Z8). In 2007, they founded Fisker to build plug-in hybrid luxury cars, with the goal of selling to car buyers who want to improve their impact on the environment but not have to make a compromise when it comes to style. The 45-employee company, which is still in the development stage, is predicting the recession will improve by midyear 2009 and that consumers will be turning to eco-friendly cars for good, explains Fisker spokesperson Russell Datz.

Key to startup success: "Have a solid business plan and stick to

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Courtesy: Sapphire Energy

Sapphire Energy

San Diego
Founders: Jason Pyle, Mike Mendez, Yan Poon, Bryan O'Neil, Kristina Burow, Stephen Mayfield, Steve Briggs, Nathaniel David
VC investment over the last four quarters: $85.4 million

Launched in 2007, Sapphire Energy is a biofuel company developing a way to make renewable fuel equivalent to crude oil using microorganisms like algae. The 80-person company has raised more than $100 million in venture capital on the promise of "green crude production" that could be a renewable source of gasoline and jet fuel. Despite the plunge in crude prices since July, "once the current financial crisis ends, expanding economies will outpace available energy supplies again and the tight margin between production and demand will cause another price runup," a company spokesperson says in an e-mail. "Nations [that] plan for the long term are doubling their efforts to secure energy sources during these times, not pulling back."

Key to startup success: "Understand that your product must fulfill a critical need. ... Commit to the long term and build your team from the ground up, using all the talent they can apply."

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Courtesy: Elevance Renewable Sciences

Elevance Renewable Sciences

Bolingbrook, Ill.
Founders: Collaboration between Cargill and Materia
VC investment over the last four quarters: $48.77 million

A company spun out of a partnership between Cargill and Materia in 2007, the 40-employee Elevance develops chemicals from natural oils for use in goods as diverse as candles, personal-care products, and motor oil. The company is betting on natural plant-based oils being more efficient and renewable than petroleum-based chemicals. The firm, formed with an undisclosed investment by Cargill and Materia, works in partnerships with other companies to commercialize its innovations. Elevance estimates it will bring in $20 million in revenues for 2008.

Key to startup success: "We believe that innovation is critical to a vibrant, healthy business, and work to create it in all aspects of our organizations and offerings. However, perpetual innovation can be challenging and too expensive to do it all yourself, so collaboration is equally important. These two attributes are tightly integrated into our brand and our business model and have helped us be successful."

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Courtesy: AVA Solar

AVA Solar

Fort Collins, Colo.
Founders: W.S. Sampath, Al Enzenroth, and Kurt Barth
VC investment over the last four quarters: $41 million

Founded in 2007, AVA Solar, which has fewer than 150 employees, says it has perfected a process for producing solar photovoltaic modules at a cost below $1/watt, significantly reducing the cost of generating solar electricity. Its founders are optimistic about its prospects, despite the recession, with Vice-President of Marketing Russell Kanjorski explaining in an email that "while some things have gotten tougher and valuations have certainly suffered, the outlook for solar PV is still very strong in Europe. Plus, the environment in the U.S. and other parts of the world appears to be growing as well." Apart from the venture capital investment, the company received two rounds in 2007 and a grant from the Energy Dept. as a winner of the Solar America Initiative.

Key to startup success: "Contrary to what others interested in thin-film photovoltaic [manufacturing] were focused on in the early 1990s, our founders concentrated on creating a low-cost, manufacturing process that could scale. Without this solid foundation, there is no way we could have taken a lab process to high-volume manufacturing in 2½ years. They knew that electricity is a commodity, and for solar to compete, it needs to be low-cost and simple to scale."

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Courtesy: Ophthotech


Princeton, N.J.
Founders: Dr. Samir Patel and Dr. David Guyer
VC Investment over the last four quarters: $37.47 million

Founded in 2007, the 15-employee Ophthotech is a biotech company developing treatments for age-related macular degeneration, a common cause of vision loss in older adults. The co-founders' prior venture, Eyetech, was acquired by OSI Pharmaceuticals in 2005 in a deal valued at $900 million.

Key to startup success: "[Our] in-depth understanding of the specific specialty pharma space, coupled with an experienced management and venture investors, has been key to our success."

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