Dr. Tom Jones was teaching medicine at the University of Chicago in the 1980s when he first realized that information technology could revolutionize health care.
As computer networks changed the way he communicated with students, it became clear they also could improve the handling of medical information, he said.
"I got involved in an early version of electronic medicine," Smith said. "I saw how much easier this is."
Today, he's chief medical officer at Tolven Inc., a Sonoma startup that helps doctors, hospitals and patients put medical records online.
Tolven received $3.6 million in venture capital in the fourth quarter last year, its first round of venture funding since launching the business in 2006.
Tolven is one of a dozen Sonoma County tech companies that raised more than $200 million from investors in 2010.
The county's venture funding total was down from $312 million in 2009, but private equity remains a growth driver for early-stage companies.
For Tolven, the investment means hiring employees, improving software and expanding its medical records platform. The startup has 16 employees and plans to add four more this year.
It's also a validation of Tolven's technology, which allows the secure entry, storage and sharing of medical records by patients, doctors and other providers.
The records can include medication lists, medical history, lab results, immunization records and doctors' instructions.
"Traditional vendors have not been able to provide health information across the entire spectrum," Jones said.
Easily accessible records help reduce medical errors and delays in treatment, he said.
The $3.6 million for Tolven came from the corporate venture fund of Reed Elsevier Group, a London-based publishing and information technology conglomerate.
Tolven is part of the open-source movement, making its software available free to the public and allowing users to modify and improve it. Tolven makes money by providing service, training, technical support and consulting for customers who use its platform.
Its products include electronic personal and clinician health records, which let consumers, physicians and other health care professionals access medical records.
Another Tolven program allows medical data to be used in clinical studies without identifying the patient.
Tolven customers include independent software vendors, system integrators, academic medical centers, clinical researchers and pharmaceutical companies.
Open-source software is a good solution for health care providers because it's inexpensive and easy to adapt, Jones said.
Jones and two of his partners at Tolven had worked at Oracle developing health care technology before launching the startup. It generated more than $1 million in sales in 2010 and forecasts $2.5 million in revenue this year.
The electronic medical data sector is still in its infancy, Jones said. "The potential is huge."
Tolven wasn't the only Sonoma County tech startup to attract venture funding in the fourth quarter.
Petaluma's Cyan Optics, which makes broadband access technology for telecom networks, raised $30 million from a group of private equity investors including Juniper Networks and Meritech Capital Partners.
Cyan, founded in 2006, rolled out its next-generation optical communications technology two years ago. It's aimed at phone companies, Internet providers and cable networks struggling to deliver a flood of digital services.
Earlier this month, Cyan won a contract to supply packet-optical transport technology for a $42 million broadband project in southern Illinois. The Clearwave Communications project includes a regional data center and 740 miles of fiber network serving businesses, government, schools, homes and health care facilities. Much of Clearwave's funding comes from the U.S. broadband stimulus program.
Cyan won the Clearwave contract in competition with industry giants Cisco Systems and Alcatel-Lucent, a sign that its technology is gaining traction with carriers.
"We went up against the who's who," said Cyan CEO Mike Hatfield. "You always want to go against the best."
Cyan has about 100 employees in Petaluma and has raised $90 million in venture funding since it started business. The latest round will allow Cyan to hire more software engineers, expand research and development and increase sales and marketing, Hatfield said.
In a third venture deal last quarter, Santa Rosa medical technology startup Sonoma Orthopedic Products raised $1.5 million.
Sonoma Orthopedic, founded in 2005, has developed two implant devices for repairing fractures of the wrist and collarbone.
So far, the startup has raised more than $25 million. The company's investors include EDF Ventures, Asset Management Co., Split Rock Partners and MedVenture Associates.
Most of the county's venture deals in 2010 were for startups in telecommunications, information technology, medical technology and renewable energy.
In last year's third quarter, medical device developer Synecor, which has a technology incubator in Santa Rosa, raised $10 million from investors.
The funding will help the Santa Rosa unit grow, said Michael Williams, Synecor's chief technology officer. The lab's work on coronary and obesity treatments already has spawned three companies outside Sonoma County.
Synecor's Santa Rosa incubator is now working on minimally invasive treatments for congestive heart failure, pancreatic cancer and embolic stroke.
The startup, which employs a half-dozen engineers in Santa Rosa, expects to add another employee, Williams said.
Synecor, which was founded in 2000, didn't disclose the source of the latest funding round.
Nationwide, investors put $26.2 billion into 2,799 venture deals last year, up 11 percent from 2009, according to Dow Jones VentureSource, which tracks private equity financing.
The median U.S. deal size was $4.4 million, down from $5 million in 2009.
"The health care and IT industries accounted for more than half of venture investment in 2010, but they're not currently driving the growth," said Jessica Canning, research director at VentureSource. "Investment in business technologies, consumer solutions and energy companies gained the most traction last year."
You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.
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