As the Internet expands its reach into our lives, more physical processes are being looped into the virtual world.

That transition can be tricky when innovative thinkers with new ideas run into an American manufacturing sector that slowly has been changing but still is resistant to large-scale change.

“The technology used for manufacturing today is still by and large rooted in the 1970s and '80s,” Sight Machine founder and chief product architect Nathan Oostendorp said. “Moving to network-based technology is the new thing and is catching on slowly.”

Sight Machine, a company founded in Ann Arbor with an office in San Francisco, has assembled a team that can reach out to both venture capitalists and factory foremen in an effort to bridge the gap between the Internet and the assembly line.

“We have those rare people who work well with computer science and Internet engineers and can also go out and walk the plant floor,” CEO Jon Sobel said. “That’s really the DNA of our company… We think of ourselves as being both West Coast and Midwestern.”

Sobel graduate from the University of Michigan Law School in 1990 and made a name for himself in Silicon Valley, holding senior positions at Yahoo! and Tesla Motors. His background with Internet companies and proven track record have helped attract the attention of venture capital firms, and Sight Machine recently closed a $5 million Series A funding round.

Having lived in both worlds, Sobel is able to identify one reason West Coast entrepreneurs have had trouble bringing their ideas to major manufacturers.

“In Silicon Valley, failure is common,” he said. “There is a higher degree of comfort with risk and there’s less recognition of how hard it is to make things reliably good. In the Midwest there’s a really nice way of doing business that is intentionally practical and straightforward but is not as receptive to disruptive change.”

Sight Machine aims to bring a new connectivity to factories that will not disrupt what already is happening but will allow different parts of the process to talk to one another.

“It used to be that all a camera sensor would do is spit out a ‘pass’ or ‘fail’ rating,” Oostendorp said.

“With our system it still does that, but in addition we have a database system that is archiving what is failing or passing along with other information collected in a single program that gives company usable data.”

Sight Machine uses SimpleCV, an open source software developed by the company to help integrate cameras and other sensors. Oostendorp said connecting the system to the Internet makes it easier for all of the components of a system to share information with each other.

“That way, a company can track where they are having issues and whether any problems along a line are related to each other,” he said.

The Internet connection also allows both cameras and the software system to be updated from a central off-site source instead of manually. This streamlining can save precious hours and minutes that otherwise would take a factory offline and hamper production.

The software still is under development and Sobel said the company continues to learn and develop the software as it talks to customers at factories across the Midwest.

“We were careful not to rush to market but to take time listening and figuring out how our product can be useful,” he said.

Madison Heights auto parts manufacturer Shannon Precision Fasteners was the first company to buy into Sight Machine’s system.

“Shannon has been a great first customer,” Oostendorp said. “They have really worked with us to make sure that we are delivering them the best product we can and have also been extremely evangelical and helped us spread our message.”

Since working with Shannon, Sight Machine has begun pilot tests in five other factories including one owned by a “Big Three” automaker.

Sobel said the company plans to use the new influx of capital to hire more technology and coding experts who mostly will work in Ann Arbor. The company was started in Maker Works, but moved into its own space around the corner in January.

“In Ann Arbor you have enormous amounts of relatively cheap commercial real estate, a ton of talent, and proximity to the Midwestern factories we want to work with,” Oostendorp said.

“To keep manufacturing here in America and here in the Midwest it needs to be a technological industry,” Oostendorp said. “It can’t just be the same old status quo."

Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2.