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The Hardware Code - Why Hardware Startups Fail or Succeed

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Some lessons learned from our 200+ investments!

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The Hardware Code - Why Hardware Startups Fail or Succeed

  1. 1. The Hardware Code
  2. 2. Program-Based Hardware Fund Pre-seed — $100k + Program Seed/A — Follow-on
  3. 3. 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 HAX | HARDWARE TRENDS 2017 | PAGE 3 $300M ASSETS UNDER MANAGEMENT 600+ STARTUP
 INVESTMENTS №1 EARLY STAGE INVESTOR (2017)
  4. 4. THEBIGFOUR >150STARTUPS/YEAR
  5. 5. 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 776.65.8 576.65 HAX | HARDWARE TRENDS 2017 | PAGE 5 HARDTECH VERTICALPROGRAMS MILESTONE-BASEDINVESTMENT №1 EARLY STAGE INVESTOR (2017) (NEXTFUND:1Q’18)
  6. 6. AI, energy, &
 life sciences are promising fields where you can make a huge impact. It's what I would do if starting out today.
  7. 7. STARTUPS238 YEARS5 RAISED$430M KICKSTARTERS111 BACKERS$50M
  8. 8. INDUSTRIAL CONSUMER HEALTH ENTERPRISE 10 20 30 40 2012 2013 2014 2015 2016 2017 B2BISGROWING
  9. 9. Richard Branson, CO-INVESTORSSAMPLE
  10. 10. Most Startups Fail
  11. 11. Why Hardware Startups Fail 1. Lack of consumer demand 2. High burn rate 3. Lack of interest after initial crowdfund 4. Product strategy mistakes
  12. 12. Why Why Why Why Why
  13. 13. Why startups fail Lack of demand High burn rate
  14. 14. Why startups fail Lack of demand High burn rate Positioning Price Cash flow Development Sales Visibility
  15. 15. Customer discovery Distribution terms Factory terms Marketing PR Distribution Prototyping Manufacturing R&D Team Why startups fail Lack of demand High burn rate Positioning Price Cash flow Development Sales Visibility
  16. 16. Customer discovery Distribution terms Factory terms Marketing PR Distribution Prototyping Manufacturing R&D Team Why startups fail Lack of demand High burn rate Positioning Price Cash flow Development Sales Visibility 10x Advantage Science Software Experience Nice to have Must have B2B B2C Features Science Fiction
  17. 17. Why startups fail Lack of demand High burn rate Positioning Customer discovery 10x Advantage Science Software Experience Price Distribution terms Factory terms Cash flow Nice to have Must have B2B B2C Features Science Fiction Marketing PR Distribution Visibility Prototyping Manufacturing Development R&D Team Sales
  18. 18. HAX Startups
  19. 19. Results
  20. 20. Trajectory
  21. 21. Milestones • Lab prototype • Work/Look-like • DFM • Product • $1M, $3M, $5M, $10M… • Profitable
  22. 22. Learning Curves
  23. 23. Learning Curves • Positioning • Prototyping • Manufacturing • PR & Marketing • Sales & Retail • Financing • Product, Team & Self-Management
  24. 24. SEED4 MONTHS GROWTH6 WEEKS O TO 1 1 TO N SHENZHEN PrototypetoLaunch SANFRANCISCO ProducttoScale
  25. 25. Learning Curves • Positioning (HAX SZ) • Prototyping (HAX SZ) • Manufacturing (HAX SZ) • PR & Marketing (HAX SZ + HAX SF) • Sales & Retail (HAX SF) • Financing (Coming soon!) • Product, Team & Self-Management
  26. 26. 4 Groups
  27. 27. 4 Groups • Failed • Ventures • Bootstrapped • Recoveries
  28. 28. Failed
  29. 29. Failed • Too niche (early programs) • Founders split (1 in 20) • Gave up early (< 2y) • Too slow
  30. 30. Ventures
  31. 31. MAKEBLOCK
  32. 32. FLOWNEUROSCIENCE—DEPRESSIONTREATMENT
  33. 33. POINT—FRIENDLYHOMESECURITY
  34. 34. AVIDBOTS—COMMERCIALCLEANING
  35. 35. Canada
  36. 36. NURA—HEADPHONESTUNEDTOYOU
  37. 37. low tones mid tones high tones sensitivity
  38. 38. France OCTOPUS
  39. 39. 1 2 3 4 18MONTHSFROMCONCEPTTOMARKET
  40. 40. R&D1 2 5 4 3 Prototyping Production Investment World-ClassSTARTUPS World-ClassRESOURCES Sales
  41. 41. R&D1 2 5 4 3 Prototyping Production Investment World-ClassSTARTUPS World-ClassRESOURCES Sales
  42. 42. Bootstrap
  43. 43. TRAINERBOT
  44. 44. VOLTERA
  45. 45. PINPRESS
  46. 46. ORENDA—HOMEBARISTA
  47. 47. WAZER—WATERJETCUTTER
  48. 48. IN 3 MONTHS… from “Does it work?” to… “How much?”
  49. 49. Recoveries
  50. 50. Pre-HAX
  51. 51. PARTICLE—IOTCONNECTIVITY&CLOUDSOLUTION
  52. 52. U.S.A. SIMBEROBOTICS—SUPERMARKETINVENTORY
  53. 53. Crowdfunding
  54. 54. BARTESIAN—COCKTAILMACHINE
  55. 55. PETRONICS—SMARTCATTOY
  56. 56. Product 2
  57. 57. NTC—HACKABLECAMERA
  58. 58. CHIP—$9COMPUTER
  59. 59. VUE—SMARTACCESSORIES
  60. 60. Health
  61. 61. LIEFTHERAPEUTICS—ANTI-STRESSPATCH
  62. 62. Customer Pivot
  63. 63. OPENTRONS—LABROBOT
  64. 64. Conclusion
  65. 65. Best practices • It’s all SKILLS • It does ONE job • It targets a NEED • Your factory is your PARTNER, you BANK, your INVESTOR • It’s a NEW DISH • It’s a STORY • It must SELL • It takes YEARS
  66. 66. THANKS! ben@hax.co

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