Venture Capital: Slipstream Ventures incubates 'hard goods'

TUCKED ABOVE the Old Spaghetti Factory on Elliott Avenue, a new venture capital model is taking root. Dubbed Slipstream Ventures, it is the latest spin on the time-tested incubator concept.

Business incubators have been created in the past to help jump-start new Internet, biotechnology and medical device companies. Atlas Accelerator, Curious Office Partners and Y Combinator have targeted some of the emerging software and Internet ideas in town, while Seattle-based Accelerator Corp. is germinating early-stage biotechnology startups.

Slipstream, however, is focusing on a new segment: those inventions that involve the design and production of physical products. That can range from electronics to sporting goods to lab equipment, basically what Slipstream Ventures President Stuart Jamieson dubs "hard goods."

It's an area in which Slipstream has some expertise. Over the years, the six-member team of designers and engineers has helped companies such as K2, Microsoft Corp. and YakTrax develop everything from snowboards to game consoles to snowshoes. Now, with the hiring of Jamieson last November, Slipstream is looking to help inventors get their ideas off the ground.

"It is an incubator in its truest sense, versus just a roof over your head," Jamieson notes. "We are very, very hands-on. We can take an inventor on their own and put the management, sales, finance, product development, marketing and PR around a single idea and move it forward to the point where we create some value."

The goal is to swing for base hits, not home runs. Jamieson said they are looking for $5 million to $20 million payouts over a short period of time, sometimes taking majority stakes in the startups.

The London native, who received his master of business administration from the University of Washington, knows the challenges of getting a hard-goods company launched. Along with three teammates, Jamieson won the 2004 UW business plan competition with a chemical monitoring device for pools, hot tubs and aquariums. That startup, dubbed AquaStasis, was sold in a positive outcome to Virbac last year.

The experience taught the 39-year-old a lot about what it takes to build a consumer product company.

"We started off with no idea, not a clue of how to make stuff," says Jamieson, who recalls the challenges of getting a prototype developed and financed.

Now, looking back at AquaStasis, Jamieson says, "I know we wasted months ... that we didn't have to."

That's an experience he wants to help other inventors avoid.

So far, Slipstream has one portfolio company, a lab disinfectant equipment maker called Cirrus BioSystems. Spun out of the UW with an idea from researcher J. Preston Van Hooser, Slipstream got involved late last year and helped secure $300,000 in funding in June. It showed off the device at a Boston trade show in August, with production and first sales expected early next year.

While there are plenty of resources for software and Internet companies in Seattle, Jamieson said that is not necessarily the case with companies trying to build physical products. There is a big difference in the funding requirements, he said, as hard goods require upfront cash to create working prototypes.

"I believe there is a gap we are filling," said Jamieson. "I gotta believe there are people out there who think they want to do it and they think they have a great idea, and yet they are sitting behind a desk doing their day job without any idea how to take that leap."