Parents want to get their newborn out of the incubator as quickly as possible, but Internet entrepreneurs can't seem to stop jumping in. Gambling-machine operator

Jackpot Enterprises

(J)

sent its shares soaring 49% Wednesday simply by announcing it is becoming an Internet incubator.

On Thursday, a high-powered group led by ex-

Microsoft

(MSFT) - Get Report

executive Brad Silverberg will unveil the formation of

Ignition

, a new-company incubator focused exclusively on wireless Internet applications and services that will launch with an initial funding of $140 million.

The new incubator -- the term of the moment for firms that invest in and then nurture to maturity a portfolio of companies -- is modeling its capital structure directly on

Internet Capital Group

(ICGE)

. ICG, in turn, followed in the footsteps of Net holding giant

CMGI

(CMGI)

in developing a new twist on venture investing -- launching a publicly traded investment company, rather than relying on money from a few big institutions as VCs usually do.

In its pre-IPO stage, Ignition will have an all-star lineup of backers. Wireless platform technology juggernaut

Qualcomm

(QCOM) - Get Report

is an investor, and its consumer products division president, Paul Jacobs, is joining the board.

Another investor is

Softbank Technology Ventures

, the U.S. venture arm of the Japanese company that was an early investor in

Yahoo!

(YHOO)

and scores of other Internet successes, which will give Ignition a ready-made distribution network for its portfolio companies' products.

Madrona Venture Group

, an early investor in

Amazon.com

(AMZN) - Get Report

, also is a founding investor in Ignition.

So-called incubators are all the rage of late, largely due to the success of ICG, which has focused on business-to-business e-commerce, and CMGI, an older firm that leveraged a presence in the college-oriented direct-marketing business into early consumer-oriented Internet successes.

Beyond their capital structures, however, there isn't a huge difference between incubators and venture capital firms -- despite claims of superior company nurturing by incubator execs. VC firms and incubators both make early stage investments in a team of entrepreneurs with a hot idea.

Incubators, the newer life form, emphasize the holistic approach of providing for all the needs of a young company under one roof, including executive recruiting, legal, financial and design services.

Idealab!,

an incubator started by entrepreneur Bill Gross, is perhaps the best pure example of this business model. Its progeny include toy retailer

eToys

(ETYS)

, online vendor and information site

Tickemaster Online-CitySearch

(TMCS)

and free Internet access provider

Netzero

(NZRO)

.

There is one key difference. VC firms typically are partnerships. General partners take a management fee and percentage of the profits and distribute investment gains to limited partners. Newfangled incubators, on the other hand, typically are constituting themselves as corporations that can go public and reap huge stock-market gains.

Ignition arguably has chosen the hottest combination in the markets today -- the incubator structure and a focus on wireless Internet technology. According to Gary Rieschel, Softbank's executive managing partner, who will join the Ignition board, the new company will aim to invest in private companies that could evolve into highfliers such as

Phone.com

(PHCM)

or

Puma Technology

(PUMA)

. Both are providers of wireless technology that provide new services to users of cell phones and other wireless devices.

"We'll be investing in and partnering with companies that will make the wireless Internet a reality," said Jonathan Roberts, a former protege of Silverberg's at Microsoft and an Ignition managing director.

Silverberg, who will be chairman and CEO, is one of Microsoft's most respected alumni. He headed the group that developed Windows 95, as well as the Internet Explorer team, which did so well against

Netscape Communications

in the browser wars that it triggered the

Justice Department

antitrust suit.

Other Microsoft refugees at Ignition include John Ludwig, an expert in network connectivity; Richard Tong, a past vice president of applications product management; and former Microsoft developer-relations chief Cameron Myhrvold (brother of dinosaur-hunting Microsoft brainiac Nathan Myhrvold).

The start-up also has ties to the wireless empire of Craig McCaw. Steven Hooper, a vice chairman of telephone-service provider

Nextlink Communications

(NXLK)

and a former CEO of

McCaw Cellular

, is a founding investor and board member of Ignition.

It all adds up to a new Internet baby that's a born heavyweight.