The lean-hardware-financing

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An overview of where is the money when it comes to building a hardware startup.

An overview of where is the money when it comes to building a hardware startup.

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  • 1. The Lean Hardware Startup FINANCING #LeanHW Cyril Ebersweiler Benjamin Joffe
  • 2. Cyril Ebersweiler / 希雷 / シリル Partner/ Founder Mentor / Speaker Investor - Software +50 Investor - Hardware +43
  • 3. 2014: year of hardware?
  • 4. 0 HW BACKERS 200,000 6 4.5 100,000 3 93,870 2.09 50,000 1.5 1.33 19,181 0 HW PROJECTS 2011 HW PROJECTS % 1.57 248 121 0.46 0.59 2012 2013 0 2 365 0 0 195,449 5.83 150,000 0 0 HW BACKERS % 1.5 1 0.5 0 365 Projects (1.5%) 195,000 backers (6%) >2x in 1 year!
  • 5. 2x Startups First half 2013> Total 2012 HW Funding TOTAL $M 500 446 375 250 209 125 94 52 0 2012 2013 (RR)
  • 6. Life of a Hardware startup 1. Concept 2. Minimum Functional prototype (MFP) 3. Complete Functional Prototype (CFP) 4. Design-for-Manufacture (DFM) 5. First factory run (FFR) 6. Retail
  • 7. How fast can you get to market? (every $$$$ matters)
  • 8. Lean Hardware Rules From Prototype to Production “No hardware plan survives contact with a factory” 1.Design with the right components 2.A prototype is ready when it can be manufactured 3.Your factory is your most important partner 4.Be memorable 5.Pick the right business model # "$$ "# ! #&% %
  • 9. Life of a Hardware Startup CONCEPT MFP CFP DFM FFR RETAIL
  • 10. Concept Targets • Become a master of the problem • Customer development (interviews, customer journey, core need identification, etc.) Financing •Bootstrapping (your money, grants, etc.) •Fundraising almost impossible (track record?) •Investors want to see something that works
  • 11. MFP Targets • “It works” • Off-the-shelf, 3d prints, handmade parts • BOM 10s of $ to thousands Financing • Bootstrapping, grants, FFF (50K) • People will think it’s the final product
  • 12. CFP Targets • “It looks real!” • Get ready to talk with suppliers Financing • Bootstrapping, Angel investors, Accelerators • VCs still unlikely
  • 13. DFM “No hardware plan survives contact with a factory” #1 rule of Lean hardware Targets • “Ready to roll” (& crowdfund) • Identify supplier, negotiate, reduce fees • Master your BOM... and your profits Financing • Bootstrapping, Angel investors, Accelerators • Crowd • VCs might listen (at least looking)
  • 14. Evolution of the Leap Motion Controller
  • 15. FFR Targets • “Make the things” Financing • Angels, Crowdfunding, Crowd- investing, Pre-sells • VCs (need $M pre-orders if you crowdfunded)
  • 16. Retail Targets • Sell online • “Get in the store!” Financing • VCs • Pre-orders • Bank credit lines • Factoring • Supplier • Revenue-based financing
  • 17. Life of a Hardware Startup • A category leader will require large amounts of capital • Pick your battle: single hit, portfolio, platform or ecosystem • Success isn’t binary with hardware
  • 18. The Lean Hardware Startup FINANCING #LeanHW www.haxlr8r.com/apply Cyril Ebersweiler Benjamin Joffe