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Entrepreneurs bloom in the Gorge

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Ben Jacklet
Wednesday, April 27, 2011

By Ben Jacklet

It’s always a treat to take a drive through the Gorge, but for me the best time to head from Portland to The Dalles is in the spring. Every living plant is glowing green and reaching for sunlight after six months of rain. You can almost witness the process of photosynthesis taking place through the window at 70 miles per hour.

Plants need light the way entrepreneurs need capital. It’s been a long, long, soggy winter in Oregon in more ways than one. The recession has finally receded, but the money is far from flowing. Especially if you’re trying to start up a new company with fresh ideas but limited resources.

Yesterday’s Gorge Angel Conference 2011 event at the Columbia River Gorge Discovery Center outside of The Dalles was more than just the usual elevator pitch contest. It was a collective cry for cash. The entrepreneurs in attendance had plenty of ideas: a new winch for securing loads on flatbed trucks, a simple cloth wrap to keep babies warm and safe in the neonatal intensive care unit, an electronic product registration system to do away with the annoying rebate’s-in-the-mail ritual and more. Great ideas — they just need a little sunlight to rise up out of the muck and blossom.

The winner turned out to be SwaddleKeeper, a Hood River company started by former labor and delivery nurse Kim Stolte. Stolte’s experience caring for newborns and teaching parenting classes has convinced her of the importance of swaddling newborns, and the “Gorge-sewn, Earth-friendly” product she invented makes this practice simple — for busy nurses and sleep-deprived parents alike.

Stolte launched SwaddleKeeper in 2007, and she has sold over 5,000 swaddle blankets to date. Now she is ramping up the business by adding two new products. One is specifically designed for the “preemie” babies in the Neonatal Intensive Care Unit, or NICU. The other is made for the common practice of jaundice treatment, when the baby needs to be exposed to light but still swaddled.

Those new products could expand SwaddleKeeper’s reach dramatically. Stolte recently landed her first hospital contract, and she has started meeting with purchasing directors and medical product brokers. Of the 4.1 million babies born in the U.S. each year, 615,000 end up in the NICU. And given the intensity of the environments in which they work, NICUs are not hesitant to spend money on products that improve health outcomes. Particularly on women-owned businesses selling a simple, inexpensive solution to an ancient problem.

“We have solutions, we know how to move fast, and we have no major competitors,” Stolte told the crowd. As winner of the event, she now has the opportunity to negotiate for an angel investment of up to $135,000. That investment could lead to additional funding, and if it does, it will mean more jobs for SwaddleKeeper and more work for the home sewers of the Gorge, because the business makes its products in Oregon.

The other presenting finalists also have potential. Copa di Vino president James Martin recently starred in the ABC reality show Shark Tank and received coverage in USA Today. He’s projecting $4 million in revenue over the next year for his innovative business of bringing wine into the single-serving beverage market, growing to $75 million by 2016. That’s if he can land the necessary capital. No sunlight, no photosynthesis.

Martin launched Copa in 2006 in The Dalles after linking up with a French partner who caught his attention by selling millions of single-serving wine glasses on the bullet trains of Europe. His idea is that wine is the last drink out there that is not widely available in single-serving sizes, and the market potential is huge in supermarket deli sections and at theaters, outdoor festivals and arenas. Copa is selling in 23 states.

But as one member of the due diligence team pointed out, Copa’s balance sheet is “not particularly favorable.”  Martin is trying to bring in $750,000 in convertible notes to improve his capital position, and to raise $2 million to increase production and expand marketing. He still exudes confidence when he pitches the business and fields questions, but he needs cash quickly to develop the market he launched, before competitors move in and start “screwing up the market with bad products.”

Martin is much further along with his wine-by-the-glass business than the other finalist in yesterday’s event, Blue Dog Mead, whose CEO Simon Blatz will be graduating from the University of Oregon’s Lundquist College of Business this summer. But Blatz and his young team of entrepreneurs have plenty of energy to make up for their lack of experience. Their idea is to break into the wine and beer market with a new product specifically marketed to the 21-35 demographic. Blatz calls it “the original liquid sin: mead.”

Mead, which is brewed from honey, is older than beer and wine. Blatz and his crew want to make it new by pitching it at music shows and youth events and through social media. They’ve got plans to hop the stuff up and make it into beer, distill it down into spirit form, even amp it up with caffeine for the buzz market (look out!).

One good thing about being young and hungry is you don't need much to survive. Blue Dog’s burn rate is a mere $350 per month. Blatz points out that as recent college grads, a salary of $1500 per month is “a lot of money for us.” The business they’re taking over sells all the mead it produces, but it only produces 40 cases per year. They want to ramp up production, increase distribution and market their Blue Dogs far and wide.

In addition to the presenting companies, there were also some promising businesses making short pitches at yesterday’s event. The people’s choice winner ended up being Mostly Cloudy Solutions, which co-founder Scott Anderson succinctly described as “helping IT companies succeed in four clicks or less.”

On the other end of the technology spectrum, but equally compelling, was Two Brothers Winch, which improves on the slow and dangerous process of securing loads for transport by adding a superior ratcheting mechanism. The business doesn't have a website but it does make a smart product.

Another interesting idea came from John Mullikin, a software developer at the fast-growing Gorge powerhouse Insitu. With his startup True Owner Mullikin wants to tackle two problems at once: the premanent loss of prized possessions through theft, and the widely loathed mail-in rebate system for retail goods. His idea involves a product registration service done electronically and instantly at the point of sale. It’s an idea with real potential, and Mullikin is not looking for a lot of money — just enough to allow him to survive for six months while he builds a prototype.

They don’t need much, these budding entrepreneurs. But they do need something, and most of them are not getting what they need. As lunchtime speaker Sen. Ron Wyden pointed out, the banks that received massive bail-outs from taxpayers are not lending to small businesses the way they should be. Wyden is on a campaign to convince financial institutions of all shapes and sizes — banks, credit unions and venture capital firms — to get the money flowing again now that the panic has passed - and spur the type of recovery that brings jobs. The angels are doing all they can. They could use some help.

Ben Jacklet is Managing Editor of Oregon Business.

 
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