Why Hardware Startups are the Future
Curtis MacDonald
@curtismacdonal
www.htgf.de
www.startupde.com
c.macdonald@htgf.de
Last 15 Years…
Hardware Startups – historically not loved by VCs
Historically Hardware Startup Challenges
Development Manufacturing Distribution
1. Prototyping expensive
2. Lots of time p...
Historically Hardware Startup Challenges
Development Manufacturing Distribution
1. Ramp Up Time
2. Electronics
3. Housing
...
Historically Hardware Startup Challenges
Development Manufacturing Distribution
1. Fulfillment
2. Direct / indirect sales
...
Happening Now…
Hardware Startups – present and future
Development – Electronics and Housing
Local – Expensive per Unit
• Low volume runs plastics and
housing parts, not too expensive
overall
• Low volume runs for e...
Distribution
• Continued growth of
eCommerce shows online
purchasing continuing to
become more mainstream
• Online store f...
Trends
• The traditional reasons against HW startups are falling away for
investors.
• Enabling technologies, new wave of ...
• 2000‘s: Software Barriers to entry lowered
• 2010‘s: Hardware Barriers to entry lowered
Trends
• Multiple products leveraging core competencies
• If „Hit Business“, show the hit
• Nest, Jawbone
Product
Portfolio
• Pro...
Why Hardware Startups are the Future
Curtis MacDonald
@curtismacdonal
www.htgf.de
www.startupde.com
c.macdonald@htgf.de
HT...
HTGF Overview
• HTGF Overview
• Two Seed Funds totaling ~550 Mio.€
• 338 portfolio companies
• 500T€ + 2Mio.€ <- primarily...
• Wired.com „Here’s How to Make Hardware Startups More Than Just a Fad”
• esg.-global.com “Open Source Hardware May Have R...
• Crowdsourcing.org
• Dstevenwhite.com / US Census data
• Dshen.com, David Shen
• Adafruit, „Building Retail Distribution“...
• Venturebeat, “Don’t be Furby: What investors look for in hardware startups”
• Skip Fleshman, “Why VCs should love hardwa...
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Pioneers festival 2013 curtis mac donald - hardware startups

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Pioneers festival 2013 curtis mac donald - hardware startups

  1. 1. Why Hardware Startups are the Future Curtis MacDonald @curtismacdonal www.htgf.de www.startupde.com c.macdonald@htgf.de
  2. 2. Last 15 Years… Hardware Startups – historically not loved by VCs
  3. 3. Historically Hardware Startup Challenges Development Manufacturing Distribution 1. Prototyping expensive 2. Lots of time per iteration 3. Materials and Components 4. Avg 2 years time
  4. 4. Historically Hardware Startup Challenges Development Manufacturing Distribution 1. Ramp Up Time 2. Electronics 3. Housing 4. Assembly
  5. 5. Historically Hardware Startup Challenges Development Manufacturing Distribution 1. Fulfillment 2. Direct / indirect sales 3. Retail squeeze
  6. 6. Happening Now… Hardware Startups – present and future
  7. 7. Development – Electronics and Housing
  8. 8. Local – Expensive per Unit • Low volume runs plastics and housing parts, not too expensive overall • Low volume runs for electronics -> “print to volume” • Electronics still expensive if using dedicated runs, but using service bureaus can alleviate a lot of this problem. • Fast, weeks or days China, etc. – Cheap per Unit • Higher NREs for both Electronics and Plastics • Partnering with an OEM for the electronics can save tremendous time and NRE cost, at the expensive of higher unit costs • Slow, expect months for ramp-up and for each production run Manufacturing Do after volume demand
  9. 9. Distribution • Continued growth of eCommerce shows online purchasing continuing to become more mainstream • Online store for own direct sales is easy, cheap, and fast to setup • Fulfillment can be outsourced easily Crowd-funding can also be initial distribution channel
  10. 10. Trends • The traditional reasons against HW startups are falling away for investors. • Enabling technologies, new wave of potential • Better user experiences, connected to smartphones and each other 0 5 10 15 20 25 0 100 200 300 400 2011 2012 2013 - 1st Half Investmentsin€m Volume Volume Investment Total Hardware Kickstarter Projects 0 2 4 6 8 10 12 14 16 2010 2011 2012 HTGF Hardware Investments ~30% Portfolio
  11. 11. • 2000‘s: Software Barriers to entry lowered • 2010‘s: Hardware Barriers to entry lowered Trends
  12. 12. • Multiple products leveraging core competencies • If „Hit Business“, show the hit • Nest, Jawbone Product Portfolio • Product leading a high growth market • Arduino, Makerbot Enabling • Gateway technologies • Leap Motion, Eyefactive Platform / Ecosystem What Investors are looking for
  13. 13. Why Hardware Startups are the Future Curtis MacDonald @curtismacdonal www.htgf.de www.startupde.com c.macdonald@htgf.de HTGF Overview • 500T€- 2Mio.€ in German Seed Stage • 338 portfolio companies
  14. 14. HTGF Overview • HTGF Overview • Two Seed Funds totaling ~550 Mio.€ • 338 portfolio companies • 500T€ + 2Mio.€ <- primarily German Seed Stage • Experienced team of 24 VCs covering Software, Hardware, and Bio/Medical • 429 Follow-on Financing from other VCs Totalling 600 Mio. €+
  15. 15. • Wired.com „Here’s How to Make Hardware Startups More Than Just a Fad” • esg.-global.com “Open Source Hardware May Have Real Impact” • Wired Magazine, “Build It. Share It. Profit. Can Open Source Hardware Work?” • Oshwa.org, “Brief History of Open Source Hardware Organizations and Definitions ” • Open Electronics, “The Truth About Open Source Hardware Business Models” • Cnet News, “Five trends driving the hardware boom” • CNBC, “Software Out, Hardware Start-Ups In” • PEHUB, “VCJ Report: Hardware is Sexy Again! “ • Wired, “Hardware, the Ugly Stepchild of Venture Capital, Is Having a Glamour Moment” Sources
  16. 16. • Crowdsourcing.org • Dstevenwhite.com / US Census data • Dshen.com, David Shen • Adafruit, „Building Retail Distribution“ • Forbes.com, „Manufacturing in the States“ • http://blog.noupsi.de, Renee DiResta‘s excellent article „Hardware, by the numbers“. • Flickr/ Alan Levine • Flickr/Eileen M. Kane • Flickr/John Biehler • Flickr/ Lima Pix Sources
  17. 17. • Venturebeat, “Don’t be Furby: What investors look for in hardware startups” • Skip Fleshman, “Why VCs should love hardware startups” • Flickr/ UmHealthSystem Sources

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