Инвестиции в hardware проекты

1. Investing in hardware

2. What is hardware?
Techno trends
Investing in hardware
Unicorns in HW
Venture model & business model
Role of crowdfunding

3. Hardware startup

4. What is consumer hardware product?
Hardware product is a connected device with a
set of features. Hardware is a platform.
Software does not exist without hardware.
PCB + Industrial Design + Algorithm + Cloud

5. Hardware device components
Sensors Connectivity Brains
blood, air, etc. ZigBee, Bluetooth,
WiFi
Microcontrollers
Microprocessors

6. New hardware startups on Angelist
3500 - 6000
HW startups
globally
200-400
HW startups
in Russia

7. Drivers of growth - IoT, Moore’s Law & beyond
3D printing &
prototyping
technology
open
hardware
connectivity of
devices - IoT,
sensors
Nanotechnology
Cheap sensors, Cheap bandwidth, Cheap processing

8. Semiconductors’ price falling
100x times decrease
Components
price
decrease

9. 100x times decrease
2015 vs. 2012

10. Microcontrollers' market growth
CAGR 11%

11. Drivers of growth - IoT, Moore’s Law & beyond
crowdfunding
10,000,000 backers
1.5 billion
smartphones as
controllers
(IDC)
Pipes &
apps

12. Techno trends

13. Internet of Things: Technology Roadmap
2000 2010 2020 Time
RFID tags (routing,
inventorying, loss
prevention)
Surveillance, security,
healthcare, transport ,
document management
Locating people &
everyday objects
Teleoperation &
Telepresence
Advanced sensor
fusion
Miniaturisation,
power-efficient
electronics
Indoor communication
Technologyreach
we are here

14. CES trends 2016
CES, also known as the Consumer
Electronics Show, is an internationally
renowned electronics and technology
trade show, attracting major companies
and industry professionals worldwide.
Inaugurated in 1967, it hosts 140 000
attendees & nearly 1000 companies.
New products & technologies are often
debuted on CES.

15. CES Innovation Awards (large companies)
Diet sensor based on SCIO Smart fish finder Vehicle intelligence by Ford
360 degree camera
Ricoh Theta S
OURA - Smart ring with biosignal
tracking
Video headphones
Lily drone Musical seaboard RIDE Robotic bartender

16. Gartner: Which technologies will get adopted at
scale?
Smart robots
Human augmentation
Connected home
Autonomous vehicles
Smart workplace
Quantified self
IoT
Wearables
3D printing
3D printing innovation -
new materials, incl.
advanced nickel alloys,
carbon fiber, glass,
conductive ink,
electronics,
pharmaceuticals and
biological materials
Connected things -
Digital Mesh
AI: autonomous
learning (DNN) &
agents

17. User need & demand
USER NEEDTechnology Push Market Pull
push through R&D,
production & sales
function
response to an
identified market
need
x
AR Smart watches
need to test market & user needs
can be validated via
crowdfunding

18. Investing in Hardware - Facts

19. Investment in HW rocketed in 2012-2013
Hardware startups by the year of funding
Source: O’Reilly «Hardware by the numbers» (2015)

20. Hardware is booming
Chances to find/build unicorn hardware startup is 2x times higher than
pure software startup.
There are still few: 6000 hardware startups - 11+ unicorns
investment
hardware
startups is
booming
Source: TechCrunch, Bolt
$3.5 bln

21. IoT investments soar

22. Share of HW investment in total investment?
US data
$48 billion
$3.5 billion
4,356 deals
200+ deals
$19.8 billion 1,799 deals
100%
4.6%
41%
100%
7.3%
41%
Global VC funding vs. HW VC funding
Total VC
HW VC
Soft VC
Source: PWC MoneyTree (2015), bolt.io (2015)

23. Hardware ecosystem growth
Community Accelerators Fablabs
over 1000
hackerspaces
worldwide

24. Physical things are great. They
just haven't been as great a way
to start a rapidly growing
business as software.
Paul Graham

26. Most funded hardware startups & exits

28. Features of hardware unicorns
• Software is a key: there is (almost) no hardware without software
• Exit: mostly M&A, only 1 IPO
• Most companies are B2C. Robotics are mostly B2B
• Wearables and smartwatches are a smaller percentage
• Crowdfunding is becoming a platform for top hardware startups
• Hardware unicorns are growing faster
• Unicorns ship products
Source: http://techcrunch.com/2014/11/17/lean-hardware-breeding-hardware-unicorns/

29. Business Model in Hardware

30. Other business models - unlock Venture Model &
stable cash flows
Jawbone
Portfolio model
Pebble
Hardware-as-a-Platform
Kindle Dropcam
Hardware-enabled services
Software
$46 m$818 m $48 m
HES
HaaP

31. Other business models - unlock Venture Model &
stable cash flows
CreoPop Petnet
Consumables Ecosystem
Makerbot
$4m $10m

32. Economies of scale in HWBOMmark-upprice
1
1,25
1,5
1,75
2
1 10 100 1000 1000000
Units
depends on product
demand

33. 2015 2020
7,1
2,7
IoT Market Challenge: «Things» is a small slice…
Internet of Things Total Market
(in USD billion)
Hardware vs. Software IoT Sales in
B2B by 2020
Hardware
10 %
Software
90 %
Source: IDC, 2014 Source: Business Insider (BI), 2014
• 23 billion active IoT devices is
expected by the year 2019,
which is expected to push
down device pricing.
• Most of the spending will go
to software & services, while
hardware sales will account
for a very small slice.
• Barriers to entry are high cost
& time associated with setting
up IoT systems.
Software is key!

34. Crowdfunding:
funding or validation?

35. Top hardware startups & crowdfunding
Source: http://techcrunch.com/2014/11/17/lean-hardware-breeding-hardware-unicorns/

36. Top hardware startups & crowdfunding
Source: http://techcrunch.com/2014/11/17/lean-hardware-breeding-hardware-unicorns/
- top crowdfunded
Crowdfunding is
becoming a
systematic
validation method
for hardware
startups

37. VC funding or Crowdfunding first?
Crowdfunding
campaigns are
launched after
the VC round

38. Case-study: Canary
http://www.fastcolabs.com/3035852/how-vcs-use-crowdfunding-to-make-sure-their-hardware-startups-pay-out
The all-in-one home
security system you
control from your
phone. It’s built to
learn and sends
intelligent alerts
with HD video and
audio directly to
your phone.
2013 $1.2 million seed
2013 $2 million on
Indiegogo with a
goal of $100,000
2014 $10 million from Khosla
2015 $30 million from Walden

39. Crowdfunding - Unlocking Venture Model
0
4
8
12
16
Pre-seed Seed Pre-Round A Round A
Company value
growth 4-10x after
crowdfunding
Product validation
Marketing
Valuation growth
1
2
3

40. Crowdfunding - findings by CB Insights
• $321 million – Total VC financing to-date to crowdfunded hardware projects
• 9.5% – The percentage of crowdfunded hardware campaigns that have gone
onto raise VC
• 2013 – The momentum has been building as might be expected and 2013 was a
big year for funding. 2014, if the current run-rate continues, we will see a new
deal high for crowdfunded hardware campaigns.
• Misfit, Formlabs and SmartThings – The top 3 most well-funded crowdfunded
hardware startups (un-exited)
• Unrelated – Surprisingly, there doesn’t appear to be a relationship between the
amount a campaign raises on a crowdfunding platform and the amount it raises
from VCs.

41. Unrelated crowdfunding vs. VC funding size

43. Key takeaways
• Crowdfunding is a model of validation & value growth
• Hardware unicorns - software+hardware monetization model
• Crowdfunding is launched after seed funding
• Hardware startups & investment boomed after 2012
• Key hardware market drivers - cheap components, technology
shifts, crowdfunding, smartphones

44. Alexa Zotova
az@ruvento.com

45. Checklist of a successful hardware startup
• Business model - recurring revenue
• CEO is proven leader
• Domain expertise
• Speed of execution
• Product ecosystem change for roadmap of future products
• Product economics
• Market & dynamics
• Innovation