Microstaq building 'The little valve that could'

Tiny silicon chip will regulate flow in auto’s air-conditioning system,replacing bigger, heavier valves

Microstaq COO Jeff Chance holds up the silicon chip he hopes will soon replace the current valve that controls the flow of refrigerents in a vehicle’s air conditioning system

by Dave Gallegher
   A Bellingham company is hoping a new product smaller than a Tic-Tac can make some big waves in the auto industry.
 Microstaq, formerly known as Alumina Micro, has finished development on a tiny silicon chip capable of controlling the flow of refrigerants in a vehicle’s air conditioning system. The company plans to be in full production mode within thenext 18 months, said Jeff Chance, COO of Microstaq.
   “It’s a very exciting time for us. We’re frequently getting calls from people interested in the product as well as looking to invest in the company,” Chance said. “We don’t exactlyknow what is going to happen in the next 18 months, but we do know we’re going to be a very different company than we are now.”
   This micro-electro-mechanical systems(MEMS) product would replace a traditional valve, which is about the size of a regular flashlight. A much smaller MEMS product installed in cars would increase fuel economy and reduce power consumption of the vehicle by helping lower the overall weight, Chance said.
   “It offers exciting cost-savings for manufacturers and suppliers,” said Steve Booth, who co-founded the company with Chance.   
   “Even a half-mile-per-gallon increase in fuel efficiency could translate into eliminating hundreds of thousands of metric tons of auto emissions every year.”
   Chance and Booth believe the product has the potential to be used in other parts of a vehicle as well, including stability control, transmissions and other fluid systems.
   “We are only focusing on the air conditioning system in automobiles at the moment, but we think this product has the potential to benefit not only other systems in a vehicle, but in other industries, such as aerospace and biotechnology,” Chance said.
   The company was founded in 2000 by Chance and Booth with the idea of bringing this flow-control technology to the auto industry. Chance and Booth, both former employees of General Motors, moved from New York to Bellingham when they started the business, to get closer to West Coast venture-capital groups.
   Ironically, their first round of funding came from the East Coast. In 2001 the company received a $2 million award from the National Institute of Standards Technology’s program to develop a micro-valve.
   “The technology was out there, it just hadn’t been developed for the marketplace, and we thought we could do it,” Chance said. “Winning that federal award played a big role in getting this to the market in a shorter time frame.
   “The award has also played a big role in attracting investors as we head to the next stage of this process. The award immediately gave us credibility, especially to venture capitalists outside the area,” he said.

Help from strangers
   Microstaq’s new valve will continue to go through a rigorous testing process, and within 18 months Chance hopes they will start to produce it for interested automobile companies.
   At this point Chance said they’ve been working with two auto companies that he couldn’t specifically name, but said one is based in Detroit and the other is in Japan.
   “Right now we are really testing the durability of the valve,” Chance said. “So far, the testing has gone well.  
   Some of the other parts to the air conditioning unit are wearing out before our silicon chip, which is a good sign.”
   Once Microstaq is ready to begin selling their product to the auto industry, they plan on outsourcing the actual production to a silicon-fabrication company. However, Chance expects to increase the workforce at Microstaq from its current level of 10 employees to around 40 employees once business ramps up.
  Chance said there is potential for this valve to eventually go into every car in the world, but it will take some time.
   “The way things work in the auto industry when it comes to new technology is it is introduced slowly, sometimes in high-end vehicles, to test the market,” Chance said. “But the value miniaturization has in this industry could speed up the process.”
   The reason Microstaq has been able to continue their work is that they’ve been able to receive venture- capital funding from groups in Vancouver and Seattle.
   “We’re one of the few Whatcom County companies fortunate enough to receive venture-capital funding from outside the area,” Chance said.
   “The federal award helped, but we also had assistance from local business people who were interested in what we were doing and had connections to some of these venture capitalists. Networking locally really made a difference.”
   Chance said another factor that improved their odds of getting noticed by venture capitalists was the media exposure across the country. They had signed up with PR Web, a firm based in Ferndale, to send out press releases.
   “We were surprised by the number of phone calls we received from the media about this product,” Chance said.
   As the company began getting its product known in the industry, Chance and Booth decided to change the company name from Alumina Micro to Microstaq earlier this year.
   “People kept asking us what Alumina Micro meant, and we couldn’t really give a simple answer,” Chance said.
   They chose the name Microstaq to better represent their product. The silicon chip is actually stacked in three layers, and “staq” is an acronym for Silicon Thermally Activated Quick response.
   Even though Microstaq was successful at attracting the interest of venture capitalists, it was difficult to get the $3 million in funding they needed.
   “Looking back at the process, the biggest thing we would have done differently was hire a consultant to help us with our presentation to the venture capitalists,” Chance said. “One of the biggest challenges we had was understanding the venture capitalists’ checklist. You have to understand what they are looking for and when they need that information.”
   As the company enters the auto industry, it will have to decide how to handle being a small fish in such a huge market. One option they are keeping open is partnering with larger companies.
   “The fact is we are taking the audacious position of competing in such a huge market and we aren’t so na��ve to think we won’t need to tap into the resources larger companies can offer,” Chance said. “We are interested in working with established players because we want to take our time getting this product into the marketplace.”


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