By Jessica E. Vascellaro Silicon Valley start-ups are trying to re-create the milkman. A host of new tech companies are creating ways to buy food directly from local food producers, cutting out grocery stores and some of the middlemen. They are also providing new services to educate consumers about what they are eating, down to the growing conditions of a carrot.Founded by alumni from tech giants like Google Inc., the companies are using the same sorts of online tools that changed how people rent an apartment or find a date to make it easier to buy locally grown food. They are part of a growing class of start-ups targeting food and eating, from sites that deliver celebrity-chef meals to your door to a business that aims to turn roofs into vegetable patches. Many are steering clear of delivering fresh foods to your door, trying to avoid the pitfalls that felled some food-delivery companies in the past.Among the new entrants is Farmigo Inc., a San Francisco company that has 50,000 subscribers after launching late last year. Founded by Microsoft Corp. and SAP AG veteran Benzi Ronen, Farmigo allows consumers to search for and buy produce and meat from local farms that deliver to pick-up locations in their neighborhood, including offices like Yelp Inc., Twitter Inc. and Google. Many of those inclined to shop from the source rather than the store currently have to hunt for a seller via word of mouth. Farmigo tries to automate that process and hopes its technology increases the number of farmers that sell directly to consumers in the first place. "At the end of the day farmers want to be in the field," not cobbling together technology, says Mr. Ronen. The company has raised $2 million from Silicon Valley angel investors.Farmers like Annie Salafsky, just south of Olympia, Wash., say they appreciate how Farmigo lets customers register themselves online rather than having to enter in all their data manually. Farmigo takes a 2% cut of a farm's sales through the system and allows farmers to build their own Web store to sell additional products like lamb and honey. Those add-ons have brought Ms. Salafsky's farm, Helsing Junction Farm, about $35,000 in sales over the past year or so, out of annual sales of $500,000, she says. Meanwhile, former Silicon Valley engineer Karl Rosaen co-founded Real Time Farms LLC and is building a database of farms and their growing practices, making it possible, for instance, to find a place to buy a tomato grown without synthetic pesticides with a few clicks. So far, the site has growing-practice information for a few hundred farms.And Rob Spiro, co-founder of Good Eggs Inc. in San Francisco, left Google in June to start developing software for local food producers, testing ideas like allowing them to sell their products via mobile apps and helping them market with email newsletters. Good Eggs is testing a consumer site offering information about where local foods are available, along with recipes. The goal is to "make local food even more convenient than typical grocery shopping" for national food brands, Mr. Spiro says. His company—which raised an undisclosed amount of funding from Silicon Valley venture-capital firms Baseline Ventures and Harrison Metal Capital in August—plans to launch its service this year. Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com ...

By Emily Maltby President Obama's State of the Union Address Tuesday night touched on deficit reduction, tax and regulatory reform, exporting, and other issues of interest to small business owners. But some entrepreneurs and small-business groups said that they believe the speech didn't go far enough in citing specific solutions that can help spur growth and hiring, among other things. The president highlighted the importance of small firms in the U.S. economy. He also emphasized the need to help them grow and hire in the U.S., through tax reform and regulatory reform. But he stopped short of listing the small-business tax provisions and regulatory challenges he hoped to change. For a detailed look at other aspects of the address, click here. For an analysis of his proposals for Congress to consider, click here. Small-business owners didn't get anywhere near the level of attention that they received in his State of the Union address two years ago. Then, Mr. Obama mentioned small businesses more than a dozen times. He also called on Congress to craft several pieces of legislation that directly impact small businesses, a few of which were later signed into law.Leading up to this year's address, Mitch Marrow, founder of SPOT Group LLC, a New York doggie day care and dog services firm, said he hoped the president would address liquidity issues facing small firms. His company has grown to 135 employees at six locations and is poised for expansion. But Mr. Marrow has had trouble accessing a line of credit that could help his firm meet its potential because, he said, he's only been in business for about a year. Mr. Obama touched on capital constraints but didn't offer specifics on how to loosen credit for small firms. Mr. Marrow, who formerly worked in the hedge fund industry, said he was discouraged that the president opted instead to speak about the need for strict oversight in the financial sector because "that equates to less lending and liquidity," he said. Mr. Marrow says he is a fiscally-conservative Independent who didn't vote for Mr. Obama in 2008. Mr. Marrow also wanted to hear about employment incentives, such as tax breaks for hiring and training new employees. But the president focused instead on incentives for bringing overseas jobs back to American shores, which doesn't apply to Mr. Marrow's business. "My general reaction was that it came off much more like a campaign speech," said Mr. Marrow. "He sort of pushed the ball back to Congress. That didn't give any immediate hope of getting anything done."Spokespeople for the National Small Business Association and the National Association for the Self-Employed, both trade groups in Washington, D.C., said they were pleased that the president noted the importance of creating a level playing field for businesses, despite the absence of details. "I forgive politicians who run a country and have one hour to outline plans," said NSBA Chair Chris Holman, adding that Mr. Obama's key themes of eliminating regulations, cutting the deficit and creating a fair tax code, were on point. The NSBA, a non-partisan organization that does not endorse candidates, has 150,000 members. Kristie Arslan, president and chief executive of NASE, said that the overall message of fairness resonated with the self-employed population because "they are dealing with their own legal work and regulatory work, as well as being CEO." NASE is a non-partisan organization that represents about 200,000 member businesses. It does not endorse candidates. "[Our members] wanted to hear concrete steps and it was short on details," said Cynthia Magnuson, spokesperson for the National Federation of Independent Business. The group, a conservative lobby based in Washington, D.C., has about 350,000 members. It has a track record of endorsing more Republican than Democrat politicians, but it does not endorse presidential candidates, according to Ms. Magnuson. Mr. Obama lingered on the idea of international trade, without specifically mentioning the role small firms play. The Export-Import Bank, the export credit agency of the U.S., authorized $789 million to small firms in the first quarter of fiscal 2012, ended December 31, 2011. And the number of small-business customers went up 10% compared to a year earlier. Between 85% and 87% of the transactions that Export-Import Bank does is for small businesses, said Fred P. Hochberg, the agency's chairman. But the agency, whose charter expired at the end of September, is running on a temporary charter. For some small firms, exporting is a critical path to growth, said NSBA's Mr. Holman. And a reauthorization of the Export-Import Bank, he said, is "a no-brainer."Mr. Obama also called for immediate and comprehensive immigration reform, and mentioned the need to support "everyone who's willing to work and every risk-taker and entrepreneur who aspires to become the next Steve Jobs."Steve Case, chair of the Startup America Partnership, a public-private program intended to spur entrepreneurship, said he is in favor of a variety of legislative proposals that aim to keep high-skilled and entrepreneurial-minded workers in the country, as well as reforms that can make it easier to go public and to get funding through crowd-based platforms. "There are almost a dozen bills in Congress" that touch on these issues, Mr. Case said. Although the president didn't call out any one particular legislative proposal, Mr. Case said he was pleased that Mr. Obama asked on Congress to put pro-entrepreneurship policies in place. "He said, we should get this done now," Mr. Case said. "That was encouraging." Write to Emily Maltby at emily.maltby@wsj.com Corrections & Amplifications The Export-Import Bank is running on a temporary charter. An earlier version of the article incorrectly stated that the agency was running on temporary funding. ...

By Sarah E. Needleman The small-business help desk is going corporate, with initiatives from companies like Apple Inc. bringing new competition to independent consultants who typically handle the IT needs of U.S. start-ups and small companies. The move comes as the use of external IT support among small businesses is exploding. Information-technology services can include setting up new computers, upgrading software, protecting against malware and troubleshooting. U.S. businesses with less than 500 employees spent roughly $23.5 billion on IT services last year, and are projected to spend $27.2 billion on IT services by 2015, according to estimates by research firm IDC. Best Buy Co. sees "significant, untapped potential" in small business IT, a company spokeswoman said. The national retail chain in December bought Mindshift Technologies Inc., a Waltham, Mass., provider of IT services to more than 5,400 small and midsize businesses nationwide. Apple in June formed a partnership with OnForce Services Inc., an eight-year-old IT services network based in Lexington, Mass., to provide small businesses with IT help on their own premises. "Everyone's talking small business right now. There's a huge opportunity," says Peter Cannone, chief executive of OnForce.Apple stores already feature a "Genius Bar," where customers have their products serviced. A year ago Apple introduced "JointVenture," a program providing small businesses with limited tech support offered by Apple employees in Apple stores and over the phone. That program starts at $499 a year for those who buy a new Mac. But in-store support isn't ideal for many business owners who may need to carry multiple computers or devices from their office into an Apple store.While many small businesses and start-ups are still reluctant to hire new employees, spending on technology and IT services is seen generally as smart if it can help a company operate more efficiently, or make it possible for an owner who travels to manage his or her business from a remote location. "I don't have an IT department," says Kevin Kay, owner of an Easley, S.C., health-care company with just 53 employees. "It's not a luxury I can afford." Mr. Kay, who says he has been cautious in his overall spending in recent years due to the economy, sought Apple's help in updating and transferring accounting software to three new iMac computers from older personal computers earlier this month.Apple referred him to OnForce, which then dispatched a technician from its roster of more than 100,000 partners—independent IT-service providers nationwide who pay OnForce a referral fee of 10% of sales—to Mr. Kay's business. Mr. Kay paid the technician $1,050, or $150 an hour, for seven hours of labor, an amount he describes as "costly but necessary." That's on top of the $5,600 he shelled out for computers, iPads, software and data backup.Thanks to the advent of cloud computing, the options now available to small businesses go well beyond what was typical for a help desk just a few years ago. They include analytics, software customization, disaster recovery and video conferencing, for instance. Such options and others only recently became feasible to dispense on a widespread scale—and at prices the average small business can afford. Spending on IT services by U.S. companies of all sizes has been growing at a rate of about 3.2% annually over the past five years, and reached $304 billion last year. That total is about 55% more than their spending on computer hardware and software sales combined, according to research firm Gartner Inc. About 71% of small and midsize U.S. companies said they planned to increase their IT budgets by an average of 5.2% over the next 12 months, according to a July survey of 602 companies with less than 500 employees by the Computing Technology Industry Association, a trade group.The small-business IT market is alluring to many in part because no single player dominates it, even though some large corporations have been in the space for longer than Apple and Best Buy, including International Business Machines Corp., Staples Inc. and AT&T Inc.PlumChoice Inc., a midsize IT-services firm in Billerica, Mass., has signed partnerships with five large corporations in recent years to provide help-desk support to those outfits' small-business customers. "When things don't work, you can't even run your business in many cases," says Ted Werth, its founder.There are roughly 300,000 independent IT consultants, and another 114,000 small IT companies, according to the trade group. Some independent consultants believe they can thrive despite potentially increased competition for mom-and-pop shops and other small-business clients. "A college kid offers better pricing than I do but I'm able to give my clients the answers they need in ways they can understand," says Allan Sabo, an IT consultant in Flushing, N.Y., who charges $100 an hour, or $500 a month, for service for clients who have one server and as many as five workstations. Small-business owners "want to work with local people," says Jason Comstock, an independent consultant in Marysville, Ohio, who says he visits his clients on site at least once a month even though he can assist them remotely with many IT issues. "They want to know who you are, where you go to church, are you a member of the local chamber of commerce, all those things. They're really about the relationship."Best Buy so far isn't planning to carve out dedicated space in its stores for Mindshift, as it currently does for Geek Squad, its tech-support service for consumers. Rather, Mindshift will serve the businesses in most cases via remote access to a customer's computer or over the phone. "We can do 99% of the work remotely," says Paul Chisholm, Mindshift CEO. "More and more customers want to go to the cloud, and the independents and small regional providers don't have the financial capital and expertise to develop scalable cloud offerings."Keeping a team of IT professionals can be too costly for a start-up. "The minute you bring them in, unless you spend a tremendous amount on training and keeping them up to date, their skills deteriorate," says Rick Rodgers, co-founder of Tesaro Inc. The two-year-old biopharmaceutical company, based in Waltham, Mass., paid Mindshift about $40,000 for all of its 2011 IT needs. Write to Sarah E. Needleman at sarah.needleman@wsj.com ...

By Julie Jargon Fast-food chains are extending their hours to feed a burgeoning market of night owls and ultra-early risers and help wring more sales out of their existing restaurants.At McDonald's Corp.—which reported another quarter of strong earnings Tuesday—the hours of midnight to 5 a.m. are the fastest growing time segment in its U.S. business. Nearly 40% of its U.S. outlets are now open around the clock, up from about 30% seven years ago. Burger King Holdings Inc., which requires its U.S. restaurants to remain open until midnight on Fridays and Saturdays, and until 11 p.m. the rest of the week, now has several hundred restaurants around the country open 24 hours, according to a spokeswoman. And Dunkin' Donuts has doubled its number of 24-hour restaurants in the past 10 years, with nearly a third of its more than 7,000 U.S. outlets now open all day and night.Industry executives and analysts say the trend is driven partly by changes in the American work force. One-fifth of all employed Americans now work mostly in the evening, at night or on a regularly rotating schedule, according to Harriet Presser, a University of Maryland sociology professor and author of the book, "The Economy that Never Sleeps.""Whether it's taking on an additional job or just working a late shift, we're seeing more people out later at night," says Steve Levigne, McDonald's vice president of consumer and business insights. The company wouldn't disclose what percentage of overall sales come between the hours of midnight to 5 a.m., but said those hours have experienced double the growth rate of its lunch or breakfast business. Pat Treffiletti, a franchisee who owns four McDonald's in Albany, N.Y., was taken aback when a student in a college class he addressed a few years ago asked him why he couldn't get a Big Mac at 3 a.m."I said it's because we're not open," he responded.He decided to see if there was any reason to be open at that hour, so he drove around the city late at night and was surprised by how much traffic he saw on the streets. Health-care centers were open late and delivery drivers were dropping off goods at stores."I started talking to my customers and they said they'd love it if we'd be open late. Customers' lifestyle patterns have changed dramatically. Years ago, convenience was about having the right location. Now it's a lot more than that," he says.Mr. Treffiletti, who put two of his restaurants on a 24-hour schedule two years ago and a third 18 months ago, recently began offering a limited breakfast menu after midnight, in addition to burgers and fries, since some people are just starting their day when they come in and others are ending it. McDonald's said one reason for its growth in the latest period was its efforts offer more convenience, which includes things like extending hours. For the fourth quarter ended Dec. 31, McDonald's beat analyst expectations with profit of $1.38 billion, up from $1.24 billion a year earlier, on revenue of $6.82 billion, which was up 9.8% from a year earlier. The company forecast global same-store sales in January will be up 5.5% to 6.5%, after rising 7.5% in the fourth quarter.He says his wee-hour customers are a mix of college students seeking a bite after the bars close, late-shift workers, some of whom have taken on second jobs to make ends meet, and elderly patrons who are up early.At 2 a.m. on a recent Friday, more than 20 customers were dining inside a 24-hour McDonald's on Chicago's North side.Ernest Roberson, a security guard at the McDonald's, said the customers usually consist of bar hoppers and homeless people, but also a steady stream of police officers, transit workers, parking attendants and construction workers."This time in the morning it's about the only place you can eat," said Mike Pittman, a 65-year-old construction worker eating a cheeseburger on his break. He's been working nights renovating a nearby store, and has been frequenting this McDonald's on his break.To some degree, McDonald's and others are just satisfying late-night appetites that have long had few options. But companies say market research shows demand is growing. Dunkin' Donuts, long a morning destination, has been pushing deeper into the evening because "our research and feedback from franchisees indicates we're seeing very strong growth in the evening hours," says John Costello, chief marketing and innovation officer for Dunkin Brands Group Inc. He declined to break out specific sales trend information."I think we really have moved to a clockless day," Mr. Costello said. "People are working longer hours, in many cases multiple jobs, and are more time-starved than ever before and they want the flexibility to have a full variety of products that aren't limited by time of day." Write to Julie Jargon at julie.jargon@wsj.com ...

By Angus Loten Angel investors—wealthy individuals who provide capital to start-ups with the potential for fast growth—are an increasingly important source of capital to early stage companies, including in Europe, one recent report says. The report by the Organization of Economic Cooperation and Development is among the first to gauge angel investing activity around the world. Calculations by the Paris-based think tank suggest that the total amount of capital raised from angel investors in the U.S. was $17.7 billion in 2009, compared to $18.7 billion for venture capital. The bulk of the venture capital money went to companies that were at later stages in their growth cycles, the report notes. In Europe, the angel market in 2009 reached $5.5 billion, surpassing all venture capital funding by some $250 million, according to the report, which is based on interviews with roughly 100 investors, entrepreneurs and business leaders in 32 countries. With banks reining in all but the safest loans since the recession, and venture capital firms now targeting less risky late-stage business startups, angel investors are nearly alone in backing young, fast-growth companies, the report says.The VCs tend to target high-tech hubs, like Silicon Valley. But angels are more prone to support entrepreneurs in their own back yards, with typical funding rounds ranging from $25,000 to $500,000, the report says. At the same time, they're less sensitive to ups and downs in the economy and tend to invest in a "much wider range of innovation" than VC investment firms, the OECD report concludes. In the U.S., angel investors are now putting more cash into biotechnology and health-related ventures, rather than IT, which was an investor magnet for decades, for instance. That's partly due to the rise of angel investing groups over the past decade. By pooling smaller sums together into big funding rounds, these groups are able to spread the risk of betting on promising ventures in less hot sectors. As a result, angel investing itself is becoming a more formalized process – complete with more rigorous due diligence. Beyond cash, angels play an often overlooked but crucial mentoring role for new business owners as successful entrepreneurs themselves, offering hands-on experience and a network of valuable contacts, the report notes. But policy makers have tended to focus efforts on the higher profile venture capital market, however. To better drive the global economic recovery, the OECD recommends tax incentives for angels and angel groups, co-investment programs, or even public funding for national angel associations.Many fast-growth, entrepreneurial ventures that attract angels are the same start-ups that create jobs. Led by start-ups, small firms have generated 65% of net new jobs over the past 17 years, according to the Small Business Administration.Still, some critics say wealthy investors shouldn't need costly tax incentives to back promising ventures, especially as many countries enact tough austerity measures aimed at balancing national budgets in the wake of the financial market crisis. Others worry tax breaks will draw in institutional investors. Institutional investors may not provide start-ups with the business-management expertise or potentially valuable contacts as the typical individual angel investors might provide. Of the $8.9 billion in total investments by angels in the first half of 2011, 39% went into seed and start-up ventures, up from 26% of $8.5 billion in total investments over the same period in 2010, according to data from the University of New Hampshire's Center for Venture Research. It hasn't yet released data for 2011's second half. Write to Angus Loten at angus.loten@wsj.com ...

By Barbara Weltman About 52% of all businesses are run from home. The number of teleworkers is growing annually.It's good to know that some tax savings can result from this work arrangement. A portion of personal expenses for your home can be turned into a business deduction -- if you meet certain rules.To claim a home-office deduction, you must use the space in your residence as a principal place of business, as a place to meet or deal with customers on a regular basis, or as a separate structure used for the business. You also must do the above regularly and exclusively for business.If you're an employee, you must use the space for your employer's convenience and not for your own preference. Working after hours at home rather than staying late at the office is probably your own choice and not for your employer's convenience. Usually, "employer's convenience" means that the employer does not have space for you on the company's premises.But while the home-office deduction rules are written in black and white, there are some uncertainties that could affect your home office deduction. Think of them as gray areas.One is the meaning of exclusive use. Clearly, the space must be available 24/7 for business and cannot be used by you or your family for personal reasons at any time during the day or night. Thus, if you use a TV room as an office during the day and your family watches TV there in the evening, you fail the exclusive-use test.But what about walking through a room? The Tax Court has said that even occasional use of space, such as using a bathroom by family or guests, means your business use is not exclusive. However, the court has also said that incidental use of space, such as family members walking through the office to get to another part of the home, is minimal and won't cause you to fail the exclusive use test. What's the difference between occasional and incidental use? This is a gray area, but it seems that passing through is not equivalent to using the space.Storage of some personal items in a space claimed as a home office won't violate the exclusive-use test. The court has allowed a home office deduction for a garage in which some personal items were kept. So, people, no. Things, yes.A common belief is that claiming a home office deduction is a red flag to the IRS, practically inviting an audit. There is no IRS data to support this belief and, unfortunately, the belief may be responsible for some taxpayers forgoing the deduction needlessly even though they are otherwise eligible for it. The best course of action is to talk over your personal situation with a tax advisor to make sure you meet the home office deduction rules.Keep good records of all expenses related to the home office, and take a photo of the space used as a home office. The photo can help in case the IRS questions your return after you've stopped using the space for business.To learn more about the home-office deduction rules, see IRS Publication 587, Business Use of Your Home. ...