In order to assist in the incubation and launch of hardware-focused firms, two industry veterans have launched a new startup lab. Conduit Venture Labs was founded by Amish Patel and Susan Paley in Seattle, Washington, last year with the intention of building a portfolio of “physical-tech” firms, or those that use a combination of hardware and software.
Among the more than 720 other venture studios in existence, Conduit stands out as an outlier. The company believes that fewer than one percent of these studios are dedicated to hardware.
High burn rates, supply chain problems, and a lack of venture capital interest are just a few of the difficulties that hardware entrepreneurs have historically encountered.
In a video interview with GeekWire, Patel explained, “When you have the hardware, you’ve added more Lego bricks to the build.” The Lego Imperial Star Destroyer in the background has 4,784 pieces. You’re not building a Millennium Falcon anymore, but rather a DeathStar.
Connecting entrepreneurs with resources
By connecting entrepreneurs with resources like consulting services from engineering and design firms, Conduit hopes to “de-risk” these obstacles. In addition, it will offer guidance from its “fellows” community of more than a hundred experienced hardware specialists.
“Enabling Technologies” refers to Conduit’s focus on sensors and IoT devices; “Connected Planet” refers to Conduit’s focus on ag-tech and water monitoring platforms; and “Human Health and Performance” refers to Conduit’s focus on oral health and fitness technology.
Patel started his career with Microsoft, where he stayed for eight years and contributed to products like Xbox Kinect and Microsoft Band. Later, he entered the startup scene, working as a programmer for fitness wearables maker Katalyst and for high-tech helmet maker Vicis.
In 2020, he was promoted to the position of vice president of product design and software engineering at Propio, a company that specializes in the creation of medical equipment. He worked for the company for 2 and a half years and saw it through from prototype to FDA application readiness.
Later, he joined Pioneer Square Labs, a Seattle incubator for emerging businesses, where he could put his own ideas to the test.
Patel collaborated with the engineering giant Fortive throughout his time at PSL. He appreciated the opportunity to gain insight into the inner workings of a startup studio through his position.
The startup studio Conduit was influenced by PSL.
The 18-month plan functions as follows:
- The company starts by brainstorming a large number of business concepts, which it then evaluates through activities including market analysis, client interviews, and the development of working prototypes.
- After projects are vetted for viability, the studio assembles a team and draws on its extensive network of advisors and mentors to help shape and grow the business.
- It is then spun off as a separate company and begins to seek initial funding.
Seattle-based engineering and design companies Igor Institute and Tactile collaborate with Conduit on product development. Companies that participate by providing funding, resources, and advice are rewarded with stock stakes in the resulting startups.
Conduit’s hardware industry connections will provide entrepreneurs with guidance. They will assist new businesses in avoiding production and supply chain problems that are unique to hardware and may be very expensive to fix.
When it comes time to raise capital, the entrepreneurs can reach out to a group of backers who are already familiar with and invested in Conduit.
Patel is a general partner at ReAlign Ventures and the firm’s founder. The company invests in “emerging and overlooked markets.” It intends to set aside funds specifically for Conduit spinoffs, allocating $250,000 to $350,000 for each new business.
Startup studios take too much of a cut
Patel said it depended on the ideas and the market’s current state, therefore he wouldn’t say how much equity Conduit Venture Labs would take. Whether the idea was incubated by Conduit or came from the startup’s founder is also a factor in the distribution of stock, he said. It has been said that certain startup studios take too much of a cut of the companies they help get off the ground.
Patel claims that the perfect entrepreneur to head a Conduit Venture Labs firm will have deep subject knowledge and years of experience working with hardware.
Conduit’s concentration on hardware sets it apart from other Seattle startup studios like Kernel Labs, Pienza, and Madrona Venture Labs. Sparkling Partners in France and Union Labs in San Francisco are only two examples of studios around the world that are actively engaged in the growth of hardware businesses.
The release of Conduit Venture Labs coincides with the rise in popularity of several hardware firms in the Pacific Northwest, such as Carbon Robotics, Roboto, Group14, and others.
The creator of DropLabs, a startup that specializes in immersive sensory experiences, is credited as the brains behind the concept. She also has extensive experience in the consumer-hardware market in a variety of advising and investing capacities.
Andelene Tan, Conduit’s venture head, is a graduate of Harvard who has served as the lead strategy designer at Boston Consulting Group’s Digital Ventures and the senior manager at Fortive’s innovation and growth accelerator.