A RETURN TO HISTORICAL PATTERNS

While venture capital investments are more concentrated in the biomedical sector today than they were in the late 1990s, focusing on the rising trend since that time fails to put investors’ interest in historical perspective. As the figure below shows, 2000 was the low point for venture capital focus on biomedical ventures because it was the height of the dot-com bubble.

Looked at over a longer time horizon, venture capital investment in the biomedical sector simply appears to have rebounded from an abnormally low level.

When measured in terms of the share of dollars rather than deals, the numbers are similar. As the figure below shows, the percentage of dollars invested by venture capitalists in biomedical ventures was high in the early 1990s, fell during the dot-com boom, and has been returning to historical levels. (We are closer to the peak biomedical share when measured in dollars rather than in deals because biomedical deals tend to be large.)

THE SOURCE OF BIOMEDICAL SECTOR DEAL GROWTH

What types of deals are driving the biomedical sector’s return to its historical share of venture capital? CB Insights argues that “the strength in healthcare investment has been driven largely by venture capital investment in medical devices and equipment.” I’m not so sure.

True, medical device deals have grown a lot since the end of the dot-com boom. But since 2000 they have grown more slowly than biotechnology deals, as the figure below shows. This subsector’s share of venture capital deals is now at its highest level since 1980, hitting 14.2 percent of all investments in 2009. The real laggard has been health care services, which has accounted for a declining share of venture capital deals since 1996.

As the figure below shows, the patterns are similar when measured in terms of share of dollars rather than share of deals. Since 2000, biotech has had the highest growth on this measure of any biomedical subsector, hitting a record share of dollars invested last year.

In short, the story of investment by venture capitalists in the biomedical sector seems different from what has been told elsewhere. The share of venture capital investment in this sector is returning to pre dot-com era levels from an abnormally low point. While medical devices are part of that resurgence, the growth is also being driven by biotechnology, with only health care services being left out of the picture.

Anyone who spent an equal amount on shares of Dehaier Medical Systems Ltd., Anthera Pharmaceuticals Inc. and 41 other Nasdaq-listed IPOs this year would have lost 5.2 percent, more than the 3.5 percent drop in the S&P 500 during the same period, data compiled by Bloomberg show. From 1999 to 2009, initial offerings by Nasdaq companies from Google Inc. to Priceline.com Inc. beat the benchmark index for American equity by 42 percentage points a year on average, the data show.

Newly listed Nasdaq companies aren’t growing fast enough to justify higher valuations, according to Tim Loughran, a finance professor at Notre Dame’s Mendoza College of Business in Notre Dame, Indiana. Sales will increase 20 percent as fast as the historic average for Nasdaq IPOs, analysts’ estimates compiled by Bloomberg show. All of the companies taken public by leveraged buyout firms this year have fallen on even smaller projected revenue gains.

“I’m trying to buy the next Google when I invest in an IPO,” said Loughran. Nasdaq IPOs are supposed to be “young companies with a lot of potential. If we went back in time and talked about the most cutting-edge companies we would talk about all these young companies, but they’re not there now,” he said.

Annual Gains

IPOs of companies on the Nasdaq Stock Market climbed in nine of the past 10 years, outperforming both the S&P 500 and the Nasdaq Composite Index, according to data compiled by Bloomberg. The only time before this year that new Nasdaq shares declined was in 2008, when they fell 13 percent on average. The S&P 500 and the Nasdaq Composite both slid 30 percent in the same period, the data show.

Nasdaq IPOs gained each year in the 2000 to 2002 bear market as technology stocks plummeted. They advanced an average 0.3 percent in 2000, beating the S&P 500 by 8.8 percentage points, data compiled by Bloomberg show. Investors in the Nasdaq Composite would have lost 36 percent.

So far this year, 32 of 43 Nasdaq offerings have fallen, according to data compiled by Bloomberg. The declines contrast with an average rise of 1.5 percent for initial sales on the New York Stock Exchange.

Mitel Networks Corp. of Ottawa, which sells software that lets businesses make telephone calls over the Internet, and Anthera, the Hayward, California-based developer of drugs for cardiovascular diseases and lupus, have lost more than 47 percent since their IPOs for the biggest slumps.

X-Rays, Replacement Organs

Dehaier Medical, the Beijing-based maker of X-ray machines, sleep apnea treatments and breathing devices, and Tengion Inc., the East Norriton, Pennsylvania-based company trying to grow replacement organs, have dropped more than 39 percent.

Sales for companies that debuted on the Nasdaq this year will climb 27 percent in 2011, according to analysts’ estimates compiled by Bloomberg. Revenue from Nasdaq companies in the past decade has jumped by an average of 125 percent in the year after their IPOs.

Google, the Mountain View, California-based owner of the world’s most popular search engine; Priceline.com of Norwalk Connecticut, the second-largest online travel company; and Beijing-based Baidu Inc., which operates China’s biggest search engine, increased sales by at least 92 percent in the first year after completing their IPOs, data compiled by Bloomberg show.

No Profits

Mitel’s revenue may rise 7.2 percent next year, according to analyst estimates, while neither Anthera nor Tengion had sales or profits at the time of their IPOs, filings with the U.S. Securities and Exchange Commission showed.

This year’s six Nasdaq IPOs backed by private equity firms — which typically use borrowed money to take controlling stakes in companies — will report average revenue growth of 11 percent, analyst estimates compiled by Bloomberg show. That’s 61 percent less than the average for all IPOs.

Buying their shares would have resulted in a loss of 24 percent this year, versus 2.1 percent from IPOs of companies that weren’t backed by LBO firms.

NXP Semiconductors NV, the largest Nasdaq IPO this year, may increase sales 3.9 percent in 2011, an estimate by London- based Independent International Investment Research Plc showed.

The chipmaker, acquired by New York-based KKR & Co., Bain Capital LLC of Boston and three other private equity firms at the height of the credit-market bubble in 2006, has slid 14 percent since its IPO last month. The S&P 500 declined 3 percent in the same period, Bloomberg data show.

NXP, KKR

NXP dropped more than 18 of the 20 publicly traded companies that it listed in its regulatory filing as competitors, data compiled by Bloomberg show.

KKR, the firm founded by billionaire investors Henry Kravis and George Roberts, said last month that its stake in the Eindhoven, Netherlands-based maker of semiconductors used in everything from radars to pachinko machines was now worth 50 cents on the dollar.

“We had a lot of innovative new companies coming out in the past which needed financing to grow the next market share and to grow themselves,” said Tim Hartzell, who oversees $300 million as chief investment officer for Houston-based Sequent Asset Management. Now, “a lot of this is just stuff from the private equity bubble that’s getting purged out from private equity firms,” he said.

Slower Economic Recovery

New Nasdaq companies have also fallen as concern the economic recovery is deteriorating sent stocks lower.

While the S&P 500 posted its biggest August drop since 2001 as the Federal Reserve said the economic rebound was weaker than it had anticipated, rallies by companies from Primerica Inc. to JinkoSolar Holding Co. have helped NYSE IPOs advance this year.

Primerica, the Duluth, Georgia-based insurance business that Sanford I. “Sandy” Weill used to build Citigroup Inc., has gained 42 percent since its initial offering in March. The S&P 500 retreated 6.6 percent in the same period.

The distributor of consumer-finance products from term-life insurance to mutual funds is valued at 9.53 times estimated earnings for the next year, compared with 11.4 times for the S&P 500, data compiled by Bloomberg show.

JinkoSolar, the maker of silicon wafers and solar cells based in China’s Jiangxi Province, surged 162 percent since its May IPO as the S&P 500 fell 5.7 percent. The company trades at 7.86 times next year’s profit, data compiled by Bloomberg show.

‘Degree of Optimism’

NYSE-listed IPOs are 32 percent cheaper than those on the Nasdaq, which are valued at an average of 21.9 times 2011 earnings, according to data compiled by Bloomberg.

“You have to have a certain degree of optimism and hopefulness to invest in a Nasdaq IPO, just because of the promise of the future and the growth that lies ahead,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion. “With the level of uncertainty on the economic horizon, it’s certainly going to impact prospects for investors to embrace Nasdaq IPOs.”

Fear not, of course there is! Here are some tips to help you improve and write better content. It’s like 10th grade English without the fear of getting called on when you’re not paying attention.

Before you start writing…

1. Identify the goal of the content: One reason it takes us so long to write good content is because we don’t stop to decide what it is we want to say. What are you hoping your content will accomplish? Is the purpose of your article to explain how something works, put a customer on a determined conversion path, build brand trust? Whatever goal you’ve decided on, have it in mind before you start writing. Knowing your goal beforehand will help set the tone (and sometimes the filter) for everything that’s about to come next.

2. Decide on a hook: Every piece of content you write should have a hook. Just like in fishing, your hook is what you’re using to catch a reader in your net. Whether it’s a news hook, an attack hook, a humor hook or an ego hook, you want to decide how you’re going to draw people in. Keeping the hook  in mind will help you frame your article and organize it in your head. It will also determine the writing style that you use. You wouldn’t write a news hook with the same juice you’d use to write an incentive hook.

3. Think like your reader: Before you put fingers to keyboard, get in the mindset of your audience because your content is for them. If you’re attempting to explain something, talk about it from their point of view. How deeply would they need something broken down? Which terms would they use? Where might they get confused? Put yourself in the place of your customers and write like they would. Don’t use your view of the world. You’re the expert. It’s tainted with jargon.

4. Get rid of distractions: Log out of Facebook. Close Twitter. Stay away from YouTube. While it’s easy to head to these sites during a brain lull, they’ll only make your content sound more fragmented and make you spend three times as long trying to write. When it’s time to write, turn them off.

When you’re writing…

5. Only include what’s relevant: Do you still have the goal of your content fresh in your mind? Good. When you start writing, keep that goal in mind so that you only include information that supports your goal. Just because you know the whole alphabet about a subject doesn’t mean all of it belongs in one piece of content. For example, if you’re writing about how to make a good vanilla latte (my drug of choice), then you don’t need to include a five-page summary on the history of coffee, where the best beans are located, and how to brew the perfect cup. Leave the kitchen sink at home. The more irrelevant information you include, the further you take people away from your goal and the more you confuse them along the way.

6. Let yourself write: Stop me when this starts to sound familiar: You write a sentence. . . then you delete. You write three more and delete two. Then you get rid of a whole paragraph and pick at your title. Stop it! Writing and editing are two different stages of the content cycle, which means you shouldn’t attempt to do them simultaneously. When you sit down to write, just write; don’t self-edit. Focus on getting everything out that you want to say and putting it all down. Once it’s written down, then you can edit and make it sound cohesive. But the more time you spend self-editing as you’re writing, the longer and more fragmented your copy is going to sound.

7. Use short sentences: Short sentences are easier for writers to get out. They’re also easier for readers to take in. Stick with them and stop confusing people with overly complicated writing. Like short sentences, it’s that simple.8.

8. Use clear, direct titles: One of the best things you can do to improve your writing is learn to write killer titles. Direct titles aren’t always the most fun to write (who doesn’t love a good pun?), but they do the best job of telling readers and the search engines what your post is about. And that is your title’s main goal – to set up your content and make someone want to read it. Avoid getting so clever with your titles that you make it impossible for readers to predict what’s coming next or, even worse, set them up to be disappointed when your content isn’t about what they hoped it was. When all else fails, say what you mean. It’s true in life and in Web content.

9. Make it scannable: In our post on 4 things to consider when writing Web content,I encouraged readers to consider the medium when writing. Writing on the Web is different from other formats. Online, scannable content reigns supreme, as users still aren’t so great at reading on the Web. If there are five things you want readers to take away from your page, break them out into a numbered list and make it easy for users to grab on to them.  Lists, white space and short paragraphs are your best friends on the Web (other than links).

10.Use your voice: The quickest way to make your content unreadable is to remove yourself from it. In order for people to care, you have to give them a little bit of you. Voice an opinion, wear your heart on your sleeve, and write like it matters to you. It will take a little experimenting to find your blog but once you do it will make all the difference in engaging readers and bringing them into your site and your company.

Before you publish…

11. Read your content aloud: If you want to improve your content, read it aloud to yourself before you publish it to the Web or hand it to a customer. If you stumble over something  or think you’re being too wordy, so will your reader, and it may turn them off. I never publish or commit to any piece of writing before I’ve read it aloud to myself several times. Once I can get through it without stammering, I trust that it’s “ready.”

12. Read backwards: If you often fall victim to typos and misspellings, then scan your copy backwards to allow your brain to see words out of context instead of subconsciously seeing “what you meant.”

Those are some of my tried-and-true ways of improving my writing. What tips have you picked up over the years? Whose writing do you most try to emulate?

The World Health Organization recommends mothers use Viramune to prevent passing the AIDS-causing virus to their children in the womb, and give infected infants a cocktail containing Kaletra after birth. Of 195 HIV-infected children under 2 years given that initial treatment, switching back to Viramune kept the virus under control in 56 percent of them, compared with 42 percent who stayed on Kaletra, the study showed.

About 1,000 children are infected with HIV every day, according to the Geneva-based WHO. More children in Africa are likely to start receiving anti-AIDS drugs after a previous study showed they do better when treatment begins earlier, researchers led by Louise Kuhn at Columbia University wrote in the Journal of the American Medical Association. That makes it important to ensure the drugs used are affordable and effective, they said.

The result shows children “could benefit from the switch strategy, which would allow reductions in costs of pediatric treatment programs,” Kuhn and colleagues said yesterday.

UNITAID and the William J. Clinton Foundation negotiated a price of $53 a year for pediatric Viramune in developing nations in 2010, compared with $220 annually for Kaletra, according to the Clinton foundation’s website.

Kaletra has an unpleasant taste, must be refrigerated, limits options for second-line treatment and causes side effects including raised levels of fats in the blood, the researchers said.

Resistance

Confounding the findings, Viramune failed to control the virus in about 20 percent of the children, compared with 2 percent whose disease didn’t react to Kaletra. Most of those who failed to respond to Viramune had pre-existing resistance to the Boehringer drug after being exposed to it in the womb, the researchers said.

Previous studies have shown resistance to Viramune develops in about half of children exposed to it in the womb when women take it on its own. When they combine it with other drugs, Viramune resistance drops to about 17 percent. The switch strategy should only be used where children can be tested for resistance, the researchers said. The cost of that testing could be offset by the lower cost of Viramune, they said.

The children’s guardians agreed to their participation in the trial, which was funded by the U.S. National Institute of Child Health and Human Development and Bristol-Myers Squibb Co.’s Secure the Future foundation.

Boehringer, based in Ingelheim, Germany, is the world’s biggest family-owned drugmaker. Kaletra earned Abbott Park, Illinois-based Abbott $1.37 billion last year, making it the company’s second-best seller after the arthritis drug Humira.

Below are five ways to increase user spread of your content.

1. Use Twitter Buttons

Twitter continues to be one of the most popular ways for Web users to share and pass on content in their networks. Users like sharing content on Twitter because it’s fast paced, it allows them to play the role as discoverer, and they can use it to start their own conversations. However, you need to encourage them to share it. In order for the typical user to share your resource on Twitter, they need to find it, use a link shortening service to shorten the link, and then go back to Twitter to tweet it out to their network. That may be too many steps for them. To help encourage spread, embed a service like TweetMeme on your site to allow people to tweet your post directly from that page. You can add the TweetMeme Retweet functionality to your blog via their widget or WordPress plugin.  Once it’s there, it’s one click to increased brand and content exposure.

2. Add the Facebook Like Button

The Facebook Like button is another way you can encourage users to share your content and was created to replace the Facebook Share button (though some peopleprefer to use both). The way this works is that when a user clicks the Like button on your site, a story appears in the user’s friends’ News Feed with a link back to your Web site. This serves as a powerful testimonial for your piece and gives that person’s network a chance to read the post and possibly become a member of your community. To add the Facebook Like button to your Web site, simply use the Facebook Like button configurator or use the Facebook Like Button Widget Plugin.  We’re starting to see more and more users adopting the Facebook Like Button as Facebook continues its fight for local and social domination.

3. Sharing Plugins

Social sharing plugins give site owners another effective way to encourage users to share their content. By adding the plugin to your Web site, it allows visitors to quickly and easily post your content to their favorite social media Web sites. The advantage to using one of these plugins is they capture a greater number of sites so that you can use one plugin instead of multiple site-specific ones. Many will also offer an option to e-mail a post for users who aren’t yet comfortable on sites like Twitter and Facebook. Some examples of basic sharing plugins include:

• Sociable
• ShareThis
• Add To Any
• Social Dropdown
• GetSocial [a little more intrusive than the others]

4. Make it easy to save your logo

This is a great piece of advice I’ve stolen from the super smart Andy Sernovitz and now live by. If you want people to share your content and your brand, then make it easy for them to lift your logo off your site. In fact, maybe even offer different sizes and shapes of logo. Why? Because your logo is your identity. When people talk about you, they’ll often want to use your logo to go along with their comments. You can either make it easy for them to properly represent your company or you can make it difficult and force them to represent your brand in some other, non-approved way.  I’d opt for the former.

5. Ask!

If you want to encourage people to share your content, not only should you make it easy for them to do so with appropriate widgets, but you should also remember to ask. One place where I think the “asking” technique is very underutilized is with e-mail newsletters. Are you asking people to forward your newsletter to their friends who may find it useful? If not, why not? Your e-mail newsletter goes out to people who have taken the time to opt in to what you’re doing. These people have told you they want a closer relationship with your company.  Use that to its fullest. Also, you may find customers are more inclined to forward an e-mail than to share something on Twitter because it’s just one extra click and a process they’re already very familiar with.  Don’t force them to learn new tools.

Note that none of this is to say that you should randomly litter your Website with different sharing plugins and applications. Instead, find out how people are sharing your content and then make it easy for them to do that. Empower them to do that.

If you’re not sure HOW people are sharing your content:

• Check your analytics. What are the top referrers? If you’re seeing a large amount of traffic from sites like Twitter or Delicious, then you know those are popular in your community. Make sure you’re using those buttons on your site.
• Use SEO for Firefox to see where your best content is already being shared and the kinds of stuff people like sharing. Any surprises?
• Go to Quarkbase and put in your URL. Then, take a look at how people are sharing your content, what sites/types of sites are most popular and who’s doing the sharing. Put in a URL for one of your competitors and note the same thing to spot favored sites in your industry.

Those are some of my preferred ways to encourage users to share content that I’ve written.  What methods do you swear by?

The bond funds took in a net $3.83 billion in the week ended Sept. 1, according to research firm EPFR Global. Stock funds lost $6.87 billion, the most in 14 weeks. Those buying debt and equities in emerging markets extended their streak of inflows to 14 weeks.

“Emerging market equity funds fared better than their developed market counterparts, while bond funds fared best of all,” the firm wrote in a press release dated yesterday.

A Bank of America Merrill Lynch index of corporate bonds around the world has rallied 8.8 percent this year as reports from U.S. home prices to Japanese gross domestic product suggest the global economy is slowing. The MSCI World Index of shares in 24 developed nations is down 4.1 percent for 2010.

The equity index pared its year-to-date loss last week as American and Chinese manufacturing reports raised optimism that the economy will avoid a recession.

Investors also withdrew $4.1 billion from money-market facilities and took $1.1 billion from funds that buy both debt and equities, the Cambridge, Massachusetts-based company said. EPFR Global tracks funds with about $13 trillion in assets worldwide.

Mine includes exaggeration, combination and reversal, but one of my favorites is anthropomorphism, or more simply. . . talking animals.

When I get bored with a traditional scene or setup I drop in a bear, a mongoose or, in this case, a bunch of bees.  Then I set my mind on figuring out what’s going on. It’s a good way to lubricate the ol’ brain, and it’s just plain lots of fun.

The only problem is figuring out how to draw bees in a hive conference room, which I think I could still work on.

The goal is to position Malaysian “laws as the law of choice for Islamic finance transactions globally,” the central bank said in a statement Aug. 30. Disputes about compliance with Shariah principles are a risk to the industry’s expansion, it said. Persian Gulf companies have traditionally based cross- border contracts on U.K. law to take advantage of the country’s developed legal system and neutrality, according to Unicorn Investment Bank BSC in Bahrain.

“Whilst there is nothing wrong with the Middle Eastern legal systems, many of them are archaic in their procedures,” said Nida Raza, senior vice president of capital markets at Unicorn, an Islamic investment bank in Manama. Malaysia can be “an alternative jurisdiction” as it has sukuk expertise and a system based on British common law, she said.

The Islamic finance industry, with assets of more than $1 trillion expanding 15 percent annually, needs to develop services that can win global investor confidence while taking into account different interpretations of the Koran. U.K. courts lack the expertise to decide on religious matters, according to Hussain Hamed Hassan, chairman of the National Shariah Coordination Committee of the Islamic Financial Institutions in the United Arab Emirates, and Mohamed Azahari Kamil, the head of Qatar Islamic Bank’s Malaysian unit.

Investment Dar Co., the Kuwait-based owner of half of luxury carmaker Aston Martin Lagonda Ltd., had an appeal thrown out of a U.K. court this year in a case where the company argued that financing from a bank breached Islam’s ban on interest payments.

‘Lack of Knowledge’

“Courts prefer not to decide on issues of Shariah compliance given their relative lack of knowledge in this area,” the Malaysian central bank said. “The underlying laws don’t provide sufficient platform to satisfactorily resolve dispute.”

The government set up a special committee in July to improve legislation, Muhammad Ibrahim, deputy governor at Bank Negara Malaysia, said in a speech that month in Kuala Lumpur.

The new Law Harmonisation Committee is headed by the former Chief Justice of Malaysia Abdul Hamid Mohamad, who is also a member of the National Shariah Advisory Council.

Potential changes could range from amendments to bankruptcy legislation to ensuring interest-free damage awards, Madzlan Mohamad Hussain, a partner in Kuala Lumpur at Zaid Ibrahim & Co., Malaysia’s biggest law firm, said in a Sept. 6 interview.

Middle East Acceptance

The challenge will be to gain acceptance in the Middle East because of different religious interpretations in various jurisdictions, Priya Uberoi, director of Islamic derivatives and structured products in London at Clifford Chance, the third- largest U.K. law firm by revenue, said in a Sept. 6 interview.

“Malaysia has a very good model,” Uberoi said. “It’s very robust and very sophisticated, but you can’t take one law and impose it in another country because a product that’s run in Malaysia doesn’t mean that it will be automatically acceptable in Saudi.”

Global issuance of Islamic debt dropped 12 percent to $10.3 billion so far this year, according to data compiled by Bloomberg. Malaysia accounted for more than half of the sales in the first half, the central bank’s Muhammad said.

Islamic bonds returned 10 percent so far this year, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index, while debt in developing markets gained 13 percent, JPMorgan Chase & Co.’s EMBI Global Diversified Index shows. The spread between the average yield for sukuk and the London interbank offered rate narrowed 87 basis points so far this year to 380, according to the HSBC/NASDAQ Index.

Final Say

The extra yield investors demand to hold the Dubai Department of Finance’s dollar sukuk rather than Malaysia’s 3.928 percent Islamic note due June 2015 narrowed 23 basis points this month to 390 basis points, according to Royal Bank of Scotland Group Plc data.

Malaysia practices a dual legal system with a civil court system and a separate Islamic one to govern marriage, inheritance and other family matters for Muslims.

Disputes arising from Islamic finance contracts are tried by the civil court. A central bank act issued in 2009 makes the Shariah advisory council at the central bank and the Securities Commission the highest authority in such rulings.

A group of scholars in Kuala Lumpur is helping to set up a committee to prepare the first global certification for Shariah experts, Aznan Hasan, the president of the oversight committee, said last month.

“Malaysia has an infrastructure to put finality to Shariah-based disputes” such as Investment Dar’s, Madzlan of Zaid Ibrahim said.

Statistics from the industry organization Opportunity Finance Network show that 56 percent of microfinance lenders received a greater number of loan applications this year.

Microloans are made by nonprofit organizations that are funded by the Small Business Administration (SBA); federal, state and local government agencies; or private donations. But the recession has put a crunch on microfinance organizations at the same time that more entrepreneurs are turning to them for help.

Even though they receive funds from other sources to lend to businesses, microlending organizations have to put up some of their own capital as a “loan loss reserve” in case loans go bad. With many organizations today lacking the funds to create this reserve, available microloan money is sitting unused.

Bank of America is taking steps to help. The bank has announced it will make $10 million in grants to help nonprofit lenders such as Community Development Financial Institutions (CDFIs) create the loss reserves they need to continue microlending to small and rural businesses. The grants could unleash as much as $100 million in low-cost financing for small business over the next 12 months.

“Even the smallest grant enables a CDFI to leverage as much as ten times that amount to lend to small businesses, which helps initiate a ripple effect impacting job growth, spending and overall economic expansion,” said David Darnell, president of Global Commercial Banking, Bank of America, when announcing the move. “Bank of America is empowering these entrepreneurs by directing private sector capital to unlock exponentially greater amounts of federal dollars for their businesses.”

Bank of America is already the nation’s largest investor in CDFIs; it has made over $1 billion in loans and investments to 120 CDFIs in 37 states.

One microlending organization cited in a San Francisco Chronicle article surveyed 2,600 clients who received assistance between 2004 and 2008 and learned the clients had created 2,244 jobs at a cost of just over $4,000 per job. That, I’d say, is a pretty good return on investment.

Yet rather than ask managers to come up with a fix, Pitney Bowes (PBI) executives put the challenge to the workforce. Within days, employees proffered a solution that the company then implemented. “It goes far beyond management deciding to change and to innovate, and there are so many good ideas that could be acted on that are with the people who are right there every day, dealing with customers,” says Pitney Bowes Chief Executive Officer Murray Martin. A measurable increase in customer satisfaction was “almost immediate.”

Under pressure to add growth while keeping research costs in check, companies are striving to get better at tapping in-house expertise. Pitney Bowes, AT&T (T), Cisco Systems (CSCO), Electronic Arts (ERTS), Wal-Mart Stores (WMT), and MetLife (MET) are using software and other tools to mine the collective intelligence of their workforce, organize the resulting suggestions, and then predict which ones are most likely to succeed.

Pitney Bowes, which in the past used a suggestion box to get input from employees, now relies on a program called Idea Central from U.K.-based Imaginatik Plc (IMTK:LN). Since 2008, Pitney Bowes executives have asked workers to tackle 42 different challenges and received about 3,000 ideas. The company has implemented or plans to put in place about 700 of those, Martin says. About 10,000 employees of Stamford (Conn.)-based Pitney Bowes use Idea Central.

$250 MILLION MARKET

Companies spend an annual $250 million on collective intelligence tools, says Imaginatik Executive Vice-President Luis Solis, who estimates that the market is growing 15 percent to 30 percent a year.

Video game publisher Electronic Arts (ERTS) wanted to do a better job predicting which games would succeed to more effectively allocate marketing dollars. So it surveyed employees using software from San Francisco-based Crowdcast. Forecasts based on that polling turned out to be more accurate than the company’s own projections, according to Crowdcast CEO Mat Fogarty.

AT&T, the largest U.S. telephone company, uses software sold by Spigit Inc. to let employees generate ideas and bet on which ones will succeed. AT&T now has about 40,000 employees that have signed up for its internal network called The Innovation Pipeline. AT&T was among 164 companies that attended an Aug. 19 customer conference sponsored by Spigit in Half Moon Bay, Calif. “We wanted to democratize how we innovate at AT&T and take it out of the labs,” AT&T innovation leader Patrick Asher said at the conference.

The company spends several million dollars a year on collective intelligence, Asher said. It has sought feedback in such areas as customer service and how to deploy Long-Term Evolution, a next-generation wireless technology, more rapidly. Each quarter, AT&T senior executives fund a handful of what they consider the best ideas.