Seacoast Science Avoids VCs, Finds Other Money to Develop Tiny Chemical Sensors

I wanted to meet with the founders of Seacoast Science since I learned in late October that the Carlsbad, CA, startup is part of a government-sponsored initiative to embed tiny chemical sensors in cell phones.

Seacoast’s technology is impressive: tiny microchips—about the size of the typeface on a postage stamp—each containing multiple individual sensors, or “chemical capacitors.”

A microelectromechanical system (MEMS) in each sensor is coated with a chemically sensitive polymer, which acts like a sponge to absorb gaseous chemicals from the atmosphere. Once a polymer has absorbed a chemical, the sensor’s ability to conduct electricity changes in a way that can be precisely measured and compared with the conductance of known toxic or hazardous chemicals. If there is a match, the microchip can trigger an alarm.

Microchip Sensor on Stamp

Microchip Sensor on Stamp

I wondered how a little startup develops such specialized capabilities.

Seacoast president Louis Haerle and the vice president of research, Sanjay Patel, told me they started Seacoast with a third co-founder six years ago, after all three had left Graviton, a wireless sensor company that was one of San Diego’s more spectacular failures. (Todd Mlsna, the third co-founder, continues to serve as Seacoast’s chairman after leaving in July to join Mississippi State University as an associate professor of analytical chemistry.) Graviton went bust in early 2003 (four years after it was founded) after burning through $66 million in venture capital from Kleiner Perkins Caufield & Byers, Qualcomm Ventures, Siemens, Sun Microsystems, Mitsui USA, Omrom, Nanogen, Earlybird Venture Capital, and In-Q-Tel, the venture firm formed in 1999 by the CIA.

Three Sensor Array

Three Sensor Array

Haerle and Patel tell me they learned a variety of lessons from their experience at Graviton. So far, for example, they have avoided venture capital funding—relying instead on government funding. They also are operating with a much narrower business focus and a relatively straightforward goal of commercializing their proprietary sensor technologies. “One of the things that didn’t work at Graviton was that they were trying to do everything,” Haerle says, “from the transducer to the customer interface and back-end development. We decided to focus just on the sensing.”

Haerle says they acquired the necessary rights from Graviton, which had licensed the underlying sensor technologies from the Naval Research Laboratory and Oak Ridge National Laboratory. What Graviton found at the beginning of the decade, Haerle says, “was that the chemical sensors were not ready as a commercial off-the-shelf technology.” After founding Seacoast Science, Haerle and Patel say they figured it still would take another five to seven years to develop the sensing technology, and they tell me, “we’re still pretty much on schedule with that plan.”

Haerle says Seacoast funded its technology development primarily through a variety of Small Business Innovation Research (SBIR) grants from the Environmental Protection Agency, Department of Homeland Security, U.S. Army, U.S. Navy, and other military agencies. He estimates the grants total roughly $3 million.

Mini Gas Chromatograph

Mini Gas Chromatograph

But Seacoast doesn’t want to just develop technology for the government—it wants to sell the product in the wider marketplace. Last year, Seacoast Science introduced its first mass product, a compact gas chromatograph that is about half the size of a shoebox, which the company developed in partnership with Vernier, a Beaverton, OR, distributor of scientific instruments and products for the university, college, and other educational markets. The device, which sells for $1,750, also reflects another aspect of the startup’s strategy. “Because we’re just 12 to 13 people, we’ve gone out to look for industrial partners with marketing and distribution networks,” Haerle says.

In its development of chemical sensors for cell phones, Seacoast Science has been working with Qualcomm, the wireless technology giant based in San Diego. Seacoast’s Patel concedes that the widespread deployment of chemical sensors in ordinary cell phones could raise some privacy? objections. But he says, “The first level is handing them to the first responders—the police, security, emergency medical services, military. Even without getting into to the general public, that’s a big market.”

A few years ago, Haerle says, Seacoast started working with the springboard program at Connect, the San Diego nonprofit group that supports technology and entrepreneurship. “But we didn’t really fit their mold,” Haerle says. We had some funding, enough for four people. But we really weren’t interested in venture capital. We’d seen what had happened at Graviton, where a huge investment had brought in more executives than employees. And we knew that VCs would demand a one-to-three-year timeline to commercialization, which wasn’t enough time.”

So, instead of gunning for a big return on VC investment, Seacoast chose to use government funding to pursue niche markets. “The chemical sensing industry is very nichy anyway,” Haerle says. “You don’t get rich making chemical sensors, unless you’re selling oxygen sensors to auto manufacturers,” which are used in engine diagnostics and to monitor emission controls. In general, he adds, industry demand for chemical sensors depends largely on government regulations. Still, the market encompasses industrial process controls, quality assurance, and emission controls needed to monitor volatile organic chemicals, solvents, pesticides, and potential pollutants.

The company has been working with military agencies and the Department of Homeland Security because of their high interest in detecting chemical warfare agents and in monitoring U.S. stockpiles, although Patel says the military is showing broad interest in other areas. For example, he says, “We’ve been working with the Navy on a program to look at biofuels and the purity of refining needed to make fuels in remote locations. The Department of Defense is looking at this kind of thing to reduce their transportation cost by setting up a mini-refinery in Iraq, or someplace like that.”

Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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