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Hardware Revolution + VC

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Launching a hardware company frequently requires significant capital for R&D, prototyping, tooling, inventory, testing and marketing. Using our journey from iRobot to Dragon and Bolt, we share lessons learned along the way, and provide an overview of how Venture Capital works and a advice on how to raise money.

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Hardware Revolution + VC

  1. 1. @dragoninnovate /dragoninnovation Hardware Revolution + VC Brandeis University Prof. Nandy Scott N. Miller Dragon Innovation, CEO Bolt, Partner Waltham, MA www.dragoninnovation.com March 31, 2016
  2. 2. Agenda • Quick Survey • Journey from Graduation to VC • Getting Started in VC • Q&A
  3. 3. Quick Survey
  4. 4. Part 1: Journey to Dragon and Bolt
  5. 5. RoboTuna
  6. 6. 6
  7. 7. Robotic Corvette Powered Dino
  8. 8. 8
  9. 9. Initial iRobot Expertise 9
  10. 10. Journey from $100,000 to $100 Price 1 0
  11. 11. My Real Baby ~ 100k 1 1 Velociraptor ~100k +
  12. 12. 1 2 Roomba and Scooba
  13. 13. Pre-HW Revolution The “Bake-Off”
  14. 14. •  2008 Layoffs -> Fearless and Connected Entrepreneurs •  Falling Cost of Components, esp. Sensors, Processors, and Radios •  Proliferation of Smart Phones •  New Reoccurring Revenue Business Models •  Ability to Reach Millions of New Users in Record Time Through Social Media •  Available Capital (VC, Strategic and Angels) Adapted from KPCB / Mary Meeker report in Dec 2012 Dawn of the HW Revolution (Phase 1) Changes Become Enablers
  15. 15. Democratization of Phase 1: Idea to Prototype Catalyst: Tools, Building Blocks, Platforms and Knowledge Crowdfunding ME Parts EE Parts Collaboration Education Accelerator Makerspace
  16. 16. 1 6
  17. 17. Problem We’re Solving: Phase 2
  18. 18. 18
  19. 19. 1 9 Dragon Innovation has helped launch and scale over 200 companies since 2009
  20. 20. Dragon Funding Timeline • Consulting (Bootstrapped) • Identified Crowdfunding Need • Seed Round -> Venture Backed • Product Team -> Dragon Crowdfunding • Pivot to Platform • Acceleration
  21. 21. 2 1
  22. 22. Bolt Timeline • Founding Team & Vision • Fund 1 • 12 Investments • Fund 2 • Expand Team + Offices
  23. 23. Part 2: VC
  24. 24. Many Ways to Finance a Business • Part of a Larger Company • Bootstrap (1 yr) • Friends & Family • Angels • VC • PE • Debt • Profit! Each has their own pros and cons – Pick what’s right for you.
  25. 25. VC 101 • Structure • LP / GP / Associates • Carry + Management Fee • Segments & Stages • 1 in 20 Grand Slam • Power Law • Long Game and Exits
  26. 26. Typical Seed Process • Intro • Build relationship / Get Feedback • Build Deck • Iterate • Friend Outside of the Firm • Partner Meeting • Monday Morning Meeting • Term Sheet • Other VC’s (competitive or additive) • Wire Instructions
  27. 27. Deck Format •  Team •  Company Purpose •  Problem •  Solution •  Why Now •  Market Size •  Business Model •  Competition •  Customer Acquisition Funnel •  Traction •  Financials •  Appendix Source: Matrix
  28. 28. What HW Seed VC’s Look For •  Working prototype •  Traction in the market •  Strong technical and business team. Typically 2 – 3 co-Founders. •  Understanding of the market size and economics. •  Reoccurring revenue with path to $100M revenue in 5 years. •  Warm intro.
  29. 29. Resources Venture Deals: Be Smarter Than Your Lawyer and VC. Brad Feld, Foundry. Brad’s Blog: Feld Thoughts Mattermark Fred Wilson’s Blog
  30. 30. Questions
  31. 31. @dragoninnovate /dragoninnovationDragonInnovation.com Scott@DragonInnovation.com

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