1. 8 THINGS ABOUT
WE LEARNED FROM
LEAN HARDWARE SERIES
2. HI ! WE’RE HAX
• Startup accelerator for hardware
– Most Prolific Investor in Hardware Crowdfunding
– The “Lean Hardware” and “12 Wares” guys
• We researched and practiced crowdfunding
– 20 successful campaigns run by HAX startups
– Studied many others
– Found false positives, false negatives
– Discovered warning signs, broken hearts
– And some glorious successes
4. 8 THINGS ABOUT CROWDFUNDING
THE BETTER MOUSETRAP MYTH
CAMPAIGNS ARE NOT CREATED EQUAL
CAMPAIGNS DON’T RUN THEMSELVES
IT MIGHT NOT SHIP
FUNDED != PROFITS
PROJECTS ARE NOT ALL ORIGINAL
FUNDED DOES NOT MEAN STARTUP
A FAILED FUNDING IS NOT THE END
5. THE BETTER MOUSETRAP MYTH
• The world won’t beat a path to your door…
• Be MUCH better (10x) or DIFFERENT
• Might work for highly fragmented markets
• Don’t forget your margins!
The problem with mousetraps
• 4,400 patents since 1879
• 400 new applicants per year
• “most frequently invented
device in U.S. history”
6. SLIM WALLETS
Niche, but margins make
sense, and products are
more likely to ship.
Slimmest, minimalist, elegant, intuitive,
colorful, RFID-compliant, RFDI-resistant,
expandable, eco-friendly, machined,
Made in USA, Italian leather, laser-cut
wood, carbon-fiber, aluminum, with
Pick your story!
7. HOW ABOUT TECH PRODUCTS?
– Smartwatches, 3D printers, drones… the first generation
is probably over. Are those commodities already?
– Many creators underestimate costs and delays and
47 companies launched 3D printers
and raised $100K+ or more in crowdfunding
Source: Flybridge Capital Partners, 2014.6
8. CAMPAIGNS ARE NOT CREATED EQUAL
• Most figure it out manufacturability late
– This is the riskiest approach!
– Might cost lots, be unfeasible or lead to manufacturing issues
• Some have funding
– Can spend on video, ads, social media
– They still need to make their products
• Some have experience in manufacturing
– A small minority
• Some have experienced support
– HAX offers support and investment
– Agents charge you for support
– Corporate partners have their own targets
9. KICKSTARTER STATISTICS
• Technology & Design are the “Hardware” categories
• They represent 30% of backers dollars ($350M)
• Reaching $1m is (very) rare (0.7%)
TECHNOLOGY & DESIGN
5,368 funded projects
731 funded projects (13%)
16 projects over $100k
37 funded projects (0.7%)
10. $13.3M $10.3M $8.6M $6.2M $3.4M
Failed its first
Sold 10,000 units
of another watch
and raised $375k
$3.4M $2.9M $2.8M $2.4M $2.4M
DASH FORM 1
11. $2.3M $2.2M $2M $2M $1.7M
$1.5M $1.4M $1.3M $1.3M $1.3M
Feasibility in question
GEEK WAVE AIR TAME TRACKR
12. CAMPAIGNS DON’T RUN THEMSELVES
• Preparation is key
– Line up backers
– Line up media
• Post-launch, build momentum
– It can be a full time job!
13. SOME CAMPAIGN TIPS
inertia and capture
Stretch goals are important
but pitch a complete product.
Core features in stretch goals
might turn off backers
Plan your pledges carefully and
pick the right providers to automate
what you can.
MIT PhD, Hardware Hacker (first Xbox hacker)
Creator of Novena open source laptop ($700k on CrowdSupply)
14. IT MIGHT NOT SHIP
• Did creators figure out manufacturing?
– Many have zero experience
– “We will select our manufacturing partners
as soon as we receive the funds”
might not work
– “Parachute manufacturing” often fails
(like a week in Shenzhen)
• Late… or never
– Some projects can’t be made
– Some might disappoint
– Some are downright scams
Where are the goods?
16. THE RISE AND FALL OF KREYOS
2013.8 Raises $1.5 million on Indiegogo
2013.11 Planned delivery. Multiple delays.
2014.8 Poor product shipped. Complains.
2014.9 Post by founder reveals Kreyos a naïve
marketing front for a Chinese ODM
17. CAVEAT BACKERS
Do creators fully
they signed up for?
Backers should research
the backgrounds of
creators and their teams
There is a stark difference between
industry veterans and fresh grads.
The latter are rarely capable of due diligence
Doctor of Engineering, Startup Geek
18. FUNDED != PROFITS
• Not if they sell at cost (LOSSware)
– Know your costs (incl. certification, molds, etc.)
– Charge 3-4x if pricing bottom-up
“You will be
at cost price.”
19. ANATOMY OF A $100K PROJECT
- $30k BOM (1/3 of Sales)
- $20k tooling
= $50k for a team for a year
How much ramen
can you eat?
20. PROJECTS ARE NOT ALL ORIGINAL
• It used to be
• But some found Alibaba.com
– We call those “ALIware”
21. FUNDED DOES NOT MEAN STARTUP
• Can it cross the chasm?
– Backers are “Innovators” and “early adopters”
– Product might not have mass market appeal
– It might also be NICHEware or FUTUREware
• Are there barriers to entry?
– Investors prefer those
– EASYware can be copied
– Software, algorithms, community can be strong IP
– Crowdfunding can kickstart your community!
22. FROM CROWDFUNDED TO FREE
Qihoo gave away 1m smart buttons to college students since mid-August 2014
It uses the smart button to acquire users for its services Source: TechInAsia, 2014.9.4
23. STARTUP OR NOT STARTUP?
Even a massive crowdfunding success does
not mean a company is a fit for venture funding.
General Partner, Flybridge
buying a product.
buying a vision.
Some products may
generate tons of demand
(like Coolest Cooler) but
may not be great venture
24. STARTUP OR NOT STARTUP?
Most campaigns are products, not startups.
Most companies that launch a
crowdfunding campaign don’t
have a plan to go from a single
product to a huge empire, and
that keeps them from being VC
If you make a kitchen
scale, it can be
a viable business
but it’s not clear
how that becomes
a $1B empire.
Founder & CEO, Spark (HAX 2)
25. A FAILED FUNDING IS NOT THE END
• COOLEST COOLER failed the first time
FAILED $100k Dec. 2013
FUNDED $11M Aug. 2014
• Why it succeeded later?
– Maybe more advanced project, timing
(Summer vs. Winter), “restart boost”, other?
26. FROM OUR FILES: SPARK
FAILED $125k Dec. 2012 (pre-HAX)
FUNDED $567k Jun. 2013 (post-HAX)
– Repositioning of both problem & solution with HAX
– Went on to raised $4.9M with VCs a year later
Spark Core: Wi-Fi for
Spark: Upgrade your lights
with Wi-Fi and apps
27. LIKE THE LEGEND OF THE PHOENIX
• Some failed campaigns are run by strong teams
who built significant technology
• Campaigns might fail because
– You’re building the wrong solution
– You’re working on the wrong problem
– You are bad at marketing or with bad timing
– Your customers are not backers
• With “pivot” or “repositioning”
they might come back as
28. ABOUT HAX
Because ATOMS are not like BITS
and creators learn with their TOOLS
we are in the ‘SILICON VALLEY for HARDWARE’ for
Prototyping & sourcing
Tools & factories
to help create your LEAN HARDWARE STARTUP
Build the right thing
Build things right
29. BUILD THE FUTURE WITH US