Bill Aims to Make Outdoor-Gear Startups More Competitive

Bill Aims to Make Outdoor-Gear Startups More Competitive Caleb Diehl

Early-stage funding proves difficult for consumer products companies


Business leaders testified yesterday in support of a bill that would fill a gap in funding for outdoor industry startups.

The legislation allows the state’s economic development agency, Business Oregon, to make matching loans and grants to outdoor-gear and apparel startups. The program requires half a million dollars from the general fund. It is sponsored by four senators and six members of the House of Representatives.

Outdoor industry leaders say the bill would allow outdoor startups to overcome a harsh business climate. Most angel investors and venture capital funds target companies in the medical and technology sectors. Startups in consumer products, and especially outdoor gear, get less attention.

“There are hundreds of small struggling companies out there,” says Gary Bracelin, founder of Bend Outdoor Worx, an outdoor products accelerator. The year-long program has graduated six cohorts of outdoor startups, including Cairn, a subscription-based outdoor products retailer.  “Traditional institutions don’t quite understand the complexity of the business.”



 

Mike Wallenfels, vice president of global sales at Hydro Flask, also supports the bill, partly because of his experience in startup funding with the Cascade Angel Fund. When he first joined the fund, he saw its leaders, mostly from the healthcare and tech industries, allocating most of the money to companies in that vein.

“There were some outdoor-related companies,” he says, “but it became evident to me that all the activity seemed to be funneling toward tech companies.”

A tech startup offers a shorter life cycle from founding to exit compared to an outdoor products enterprise. Wallenfels was involved in founding Mountain Hardware, a now household-name manufacturer that took 10 years to make an exit. He says that’s too long for most angel investors.

The new bill takes a slice of the precious general fund pie for which everyone from the judicial branch to state universities hungers.



 

But Wallenfels says the investment will bring countless returns. Portland-headquartered Keen Footwear, for example, estimates it has returned about $770,000 to the state in trails programs and outdoor recreation initiatives. He says the bill will give graduates of the nascent programs in outdoor product management, like the one at Oregon State University Cascades, the confidence to start the next Keen.

The outdoor industry contributes more than $16 billion to the state economy, according to the national trade group Outdoor Industry Association. Various state initiatives, such as the appointment of a director of outdoor recreation, have shored up the industry cluster. It is one of Business Oregon’s target industries.

The legislation keeps Oregon in the competition with other outdoor-oriented states like Utah, Alaska and Colorado. With generous economic development incentives, Utah has succeeded in luring companies, such as ski manufacturer Salomon, from Oregon.

Rather than handing out tax breaks to large out-of-state corporations, however, Oregon is taking a different approach to growing its outdoor industry cluster. The matching funds would allow Business Oregon and outdoor industry accelerators or more established companies to nurture new gear startups from the ground up. These upstarts, the backers of the bill hope, will grow into the Keens, Columbias and Hydroflasks of the future. Ultimately, the supporters say, this strategy offers the best return on investment.

“The big companies like Nike and Columbia are doing fine on their own,” Bracelin says. “This is about the next generation.”


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Caleb Diehl

Caleb Diehl is a reporter at Oregon Business

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