Key Takeaways
- Conduit Venture Labs is a new startup studio in Seattle that aims to create a portfolio of hardware companies.
- Founded last year by hardware vet Amish Patel and former Beats by Dre CEO Susan Paley, the studio partners with engineering and design consulting firms to help incubate companies.
- Hardware startup creation has historically lagged because of its capital-intensive nature and other barriers to entry.
A new startup lab founded by a pair of tech veterans aims to help incubate and launch hardware-focused companies.
Amish Patel and Susan Paley last year launched Conduit Venture Labs, a Seattle startup studio with the goal of creating a portfolio of what it calls “physical-tech” businesses, or companies that use a hybrid of hardware and software.
Conduit is a rarity among more than 720 venture studios in the world. The firm estimates less than 1% of these studios are focused on hardware.
Hardware startups have traditionally faced challenges such as high burn rates, supply chain issues, and limited venture capital interest.
“When you have hardware, you’ve added more Lego bricks to the build,” Patel said, sitting in front of a 4,784-piece Lego Imperial Star Destroyer during a video interview with GeekWire. “You’re making a DeathStar now, not a small Millennium Falcon.”
Conduit aims to “de-risk” these hurdles by providing startups with access to a number of resources, such as consulting services from engineering and design firms. It will also provide mentorship through its network of more than 100 hardware professionals, which it calls “fellows.”
Conduit has three target categories: “Enabling Technologies” (sensors and IoT devices); “Connected Planet” (ag-tech and water monitoring platforms); and “Human Health and Performance” (oral health and fitness tech).
Patel began his career at Microsoft, spending eight years working on projects including Xbox Kinect and Microsoft Band. He later jumped into the startup world with tech roles at fitness wearables maker Katalyst and high-tech helmet manufacturer Vicis.
In 2020 he was named VP of product design and software engineering at Propio, a startup focused on developing surgical technology. In his 2 1/2 year tenure, he contributed to the company’s progress from prototype to FDA application readiness.
He then became an entrepreneur-in-residence at Pioneer Square Labs, a Seattle startup studio that rapidly tests new business ideas and launches companies.
As part of his time at PSL, Patel worked with engineering conglomerate Fortive. The role provided a way to learn the economics and mechanics of running a startup studio, he said.
Conduit draws inspiration from PSL and other startup studios. Here’s how its 18-month model works:
- The firm first generates and validates a number of ideas for potential companies by conducting market research, making customer calls, and creating prototypes.
- After projects are narrowed by validity, the studio recruits a team and leverages its network of consultants and mentors to help guide and develop the startup.
- Once the company is mature enough, it’s spun off as a standalone entity and raises seed capital.
To aid in the ideation and creation of the products, Conduit partners with Seattle engineering and design firms Igor Institute and Tactile. Both companies, which contribute resources and consultation, receive equity in the startups that spin out of the program.
The startups will receive mentorship from Conduit’s network of hardware professionals. They will help guide the startups to avoid costly hardware-specific mistakes like manufacturing and supply chain issues.
When the startups are ready to fundraise, they’ll be able to tap into a network of investors aligned with Conduit.
Patel is a general partner and founder of ReAlign Ventures, an early-stage venture firm that backs “emerging and overlooked markets.” It plans to have capital earmarked for Conduit spinouts, investing $250,000-to-$350,000 per company created.
Patel declined to disclose the amount of equity that Conduit itself will take, adding that it depends on the stage of the idea and the market. He added that the equity allocation is influenced by whether Conduit incubated the original idea or if it was conceived by the startup’s founder. Some startup studios have been criticized for taking too much equity in the startups they launch.
The ideal entrepreneur to lead a Conduit startup will have years of experience working with hardware and domain expertise, Patel said.
Conduit joins a growing list of startup studios in Seattle — including Kernel Labs, Pienza, and Madrona Venture Labs — though its focus on hardware is unique. There are some studios globally, such as Sparkling Partners in France and Union Labs in San Francisco, that also help nurture hardware startups.
Conduit’s launch coincides with a number of Pacific Northwest-based hardware startups attracting investor interest, including Carbon Robotics, Roboto, Group14, and others.
Paley was the first CEO of Beats by Dre, the headphone company acquired by Apple in 2014, and the founder of DropLabs, a startup that built immersive sensory experiences. She has also worked in a bevy of advisory and investing roles in the consumer-hardware industry.
Andelene Tan, the venture lead for Conduit, is a Harvard graduate who has worked as the lead strategic designer at Boston Consulting Group’s Digital Ventures and as a senior manager at Fortive’s innovation and growth accelerator.
