HAX for Credit Suisse

LATESTTRENDSIN
HARDWARESTARTUPS
 
A.I.&MACHINE-LEARNING—ENABLED
ANDWHATITMEANSFORCHINA

“NEVER AGAIN!”
— PR2
PRICE:
$400,000

“NEVER AGAIN!”
— PR2
$400,000

EVERYTHINGTHAT’SRIGHT
ANDWRONG
ABOUTSILICONVALLEY

BENJAMINJOFFE
PARTNER
HAX/SOSV
BEN@HAX.CO

Analyst / IP Licensing
Founder/Consultant
1999
Partner
2013
ENGINEER
IP/STRATEGY
CEO/CONSULTANT
PARTNER
2004

Analyst / IP Licensing
Founder/Consultant
Partner
RESEARCHER
(1M+VIEWS)
SPEAKER
(200+EVENTS)
WRITER
ANGELINVESTOR

FRANCE
JAPAN
SOUTHKOREA
SILICONVALLEY
CHINA
SINGAPORE
HONGKONG
MALAYSIA
BENJAMINJOFFE
PARTNER
HAX/SOSV
@benjaminjoffe

MYPLAN
1. WHYHARDWAREISAMAZING
2. WHYSCI-FIIS(MOSTLY)WRONG
3. WHYTRUEINNOVATIONISHARDTONOTICE
4. WHYCHINAMATTERSMORETHANYOUTHINK
5. WHYWESHOULDTALKMORE;)

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HAX | HARDWARE TRENDS 2017 | PAGE 15
$300M
ASSETS UNDER
MANAGEMENT
600+
STARTUP 
INVESTMENTS
№1 EARLY STAGE INVESTOR (2017)

THE“BIGFOUR”(>150STARTUPS/YEAR)

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HARDTECH
VERTICALPROGRAMS
MILESTONE-BASEDINVESTMENT
№1 EARLY STAGE INVESTOR (2017)
(NEXTFUND:1Q’18)

HARDWARE LIFE SCIENCES
SOCIAL/MOBILE
FOOD
DEEPTECHVERTICALS

WHY HARDWARE & LIFE SCIENCES?
DEEP IMPACT ON THE
PHYSICAL WORLD
AND
HUMAN BODY

AI, energy, & 
life sciences are
promising ﬁelds
where you can
make a huge impact.
It's what I would do
if starting out today.

“When it started raining,
I thought ‘fantastic’”

STARTUPS238
YEARS5
RAISED$430M
KICKSTARTERS111
BACKERS$50M

Richard
Branson,
CO-INVESTORSSAMPLE

CHINA: 10%
US+CAN: 50%
EMEA: 25%
OTHER: 15%
90%
10%
GLOBALINVESTMENTS

INDUSTRIAL
CONSUMER
HEALTH
ENTERPRISE
10
20
30
40
2012 2013 2014 2015 2016 2017
B2B SHARE IS GROWING

INNOVATORS
EARLY
ADOPTERS
EARLY
MAJORITY
LATE
MAJORITY
LAGGARDS
ADOPTION
CURVE

0
50
100
150
1 2 3 4 5 6 7 8 9 10
YEARS
1R&D
INCUMBENT
STARTUP
2
64
128
100

INNOVATION
ISEVERYWHERE
BUT
RESOURCES
ARENOT

SEED4 MONTHS + $75K FEE + $100K CASH
GROWTH6 WEEKS
O TO 1 1 TO N
SHENZHEN
PrototypetoLaunch
SANFRANCISCO
ProducttoScale

OURVALUE-ADD
70%
30%
COMMUNITY
PROGRAM

SCI-FIHASARRIVEDSCI-FI 
HASARRIVED01/

First R&D (Japan)
(not for sale)
1986
Segway (USA)
$5,000
2001
Ninebot (China)
$330
2016
30YEARSFROMLABTOMASSMARKET

CHINA: 14
USA: 12
THE28HARDWAREUNICORNS
EU: 2

1. MINDMAZE
2. SIGFOX
1. BITMAIN
2. DJI
3. HUAMI
4. MEIZU
5. MOBIKE
6. NINEBOT
7. NIO
8. OFO
9. ROYOLE
10. SMARTMI
11. UBTECH
12. XIAOMI
13. ZHANGYUE(IPO)
14. ZMI
1. BLOOMENERGY
2. ESSENTIAL
3. GOGORO
4. MAGICLEAP
5. PLENTY
6. PELOTON
7. PROTEUSHEALTH
8. RAZER(IPOSOON)
9. ROCKETLAB
10. SPACE-X
11. VIEW
12. ZOOX
THE28HARDWAREUNICORNS
USA EUROPE CHINA
7%
43%
50%

BUILDPROTOTYPE(R&D)
CHALLENGES

POSITIONPRODUCT(STRATEGY)
BUILDPROTOTYPE(R&D)
ITERATE(DEVELOPMENT)
FINANCE(FUNDING)
PRODUCTIZE (PRODUCTION)
LAUNCH(PR&MARKETING)
SCALE(DISTRIBUTION&SALES)
CHALLENGES

ANEWWAY
TOBUILD
HARDWARE
STARTUPS
CHEAPER  
COMPONENTS
ONBOARD 
CPU
RETAILERS 
FOR HIGH-TECH
SMALL BATCH 
MANUFACTURING  
MICRO-CAPS, 
REG A+…
CLOUD CROWDFUNDING 
& PRE-SALES
SOCIAL MEDIA 
TO TEST DEMAND
SMARTPHONES
NEW & BETTER 
PROTOTYPING 
TOOLS

MOSTIMPORTANTTREND
=FUNDAMENTALCHANGE
INTHEWAYSTARTUPSAREBUILT

RE-INVENTION  
WITH 
HARD TECH
CONNECTED 
PERSONALIZED 
SPECIALIZED 
AUTONOMOUS

02/
FASTER

ROVENSO makes heavy-duty agile robotic rovers
for rough terrains and remote intervention.
Switzerland

R&D1
2
5
4
3
Prototyping
Production
Investment
World-ClassSTARTUPS
World-ClassRESOURCES
Sales

CHEAPER03/

2011
GENERALROBOT
ONBOARDCOMPUTING

2017
SPECIALIZEDROBOT
CLOUDCOMPUTING

04/
PERSONAL

low tones mid tones high tones
sensitivity

05/
SPECIALIZED

AMAZON: WAREHOUSE ROBOTS
ACQUIRED KIVA FOR US$775M IN 2012
45,000 ROBOTS BY JAN. 2017

DELIVERIES
AMAZON PRIME AIR
JD.COM
TEAM ROADRUNNER
DRONE ‘BEEHIVE’ 
CONCEPT PATENT 
BY AMAZON

06/
SMARTER

A.I.&MACHINELEARNING
EVERYWHERE

NEST 
THERMOSTAT
PHILIPS HUE 
LIGHT
ECOBEE 
SWITCH
BELKIN 
OUTLET
KEEN 
VENT
SAMSUNG 
HUB
AUGUST 
LOCK
RING 
VIDEO DOOR BELL
FITBIT 
FITNESS TRACKER
DROPCAM 
CAMERA
HYDRAO 
SHOWER HEAD
SAMSUNG 
ROBOTIC VACUUM

LENOVO 
ALEXA ASSISTANT
LINGLONG 
DINGDONG ASSISTANT 
JV OF JD.COM (CHINA’S ‘AMAZON’) 
& IFLYTEK (VOICE EXPERT, 
MARKET CAP: $8.2B)
BAIDU & INEMO 
LITTLE FISH 
TENCENT 
QROBOT 
(2ND GENERATION) 
USES TENCENT’S 
XIAOWEI CLOUD
ASUS 
ZENBO SMART
COMPANION
ROKID 
MELODY 
RAISED $50M
SERIES B
INCHINA
TOO MOBVOI 
TIC WATCH 
RAISED $252M
ALIBABA 
TMALL GENIE
XIAOMI 
MI BUNNY 
DESIGNED FOR KIDS 

MOTIVATIONS
PREVENTION 
AVOID DAMAGES
PRECISION 
TAILOR TO NEEDS
PROOF 
VERIFY CLAIM
CONNECTED 
DEVICES 
ATTRACT 
INSURERS

BUSINESS MODELS
CONNECTED 
DEVICES 
ATTRACT 
INSURERS
DISCOUNTS 
 
RENTAL 
 
USAGE-BASED 
 
GIVEAWAYS

MINUT: CAMERA-FREE HOME SECURITY

USAGE-
BASED 
INSURANCE 
 
OBD SYSTEM
FREE
SMOKE ALARM 
 
NEST PROTECT 
-5% POLICY FEE
HOME SECURITY 
DISCOUNT
$30 OFF RING 
+ POLICY REBATES
FREE
SMART
TOOTHBRUSH 
+ USAGE-
BASED
REBATES
BEAM DENTAL
FREE
TRACKER
FOR CUSTOMERS
TO STAY HEALTHY
CONNECTEDDEVICES 
ATTRACTINSURERS

2015
SMART TOOTHBRUSH
2016
. INSURANCE PLANS 
. FLOSS, TOOTHPASTE  
SUBSCRIPTION
. FIND & RATE
DENTISTS
NEXT: PURE 
IOT-POWERED 
INSURERS?
IOT: 
TROJANHORSE 
FORINSURANCE 
ANDMORE
(Not a HAX company)

MAR 2017 - SMART BEAR
LEAKED KIDS VOICE & INFO
OF 1,000’S OF CUSTOMERS.
SEP 2016 - MIRAI BOTNET
DVRS & WEBCAMS TURN
INTO ZOMBIES 
2015 - CHRYSLER HACK 
RECALL OF 1.4M CARS
JUN 2016 - INSULIN
PUMP WARNING 
OF 114,000 PATIENTS
THREATTO: 
CARS,HOMES… 
ANDINSULINPUMPS

07/
HEALTH 
TECHNOLOGIES

FROMHEALTHTRACKING
TODIGITALTHERAPIES

MOONA
(Smart) Pillow
Thermostat
Movement
Machine Learning

SANA
(Smart) Mask
Light
Sound
HRV
Machine Learning

KOKOON
(Smart) Headphones
Comfort
Brainwaves
Machine Learning

FLOW
NEUROSCIENCE
Depression
Treatment

DIGITAL THERAPIES
=
THE NEW PHARMA
?

“Donating
your data 
might help
more than
an organ”
DUNCAN TURNER, HAX
DATAISTHE NEWBLOOD

P4 MEDICINE
PREVENT
PREDICT
PERSONALIZE
PARTICIPATE

FROMDIGITALTHERAPIES
TOAUGMENTEDHUMANS

08/
INDUSTRY-
CHANGING

1.SMARTROBOTS
LOWCOST+COMPUTERVISION

3.DIGITALFABRICATION
&DESKTOPMACHINES

PYCNO
SECROP
 
FIELDSENSORS
EDYN

LETTUCE
WEEDING
ROBOT
ACQ.FOR
$305M

DATAIS
THENEWOIL
ADOPTION WILL
DECIDE THE
FUTURE OF
ENTERPRISES
HARDWARE-
ENABLED
SOFTWARE
INSIGHTS
BRING 
NEW REVENUE
INDUSTRIAL IOT
GROWS FASTER
THAN CONSUMER

09/
CHINA

WORLDLEADER
INPATENTS
SOON? 
2016 NUMBER OF APPLICATIONS BY COUNTRY (‘000)
SOURCE: WORLD INTELLECTUAL PROPERTY ORGANIZATION
WORLD’S #1 & #2 
IN PUBLISHED APPLICATIONS  
TOP 10: 7 FROM ASIA, 3 FROM U.S.
4,123 PATENTS 3,692 PATENTS
USA
Japan
China
Germany
South Korea
France
UK
Netherlands
Switzerland
Sweden
0 15,000 30,000 45,000 60,000
-1%
+3%
+40% IN 2017?+45%

USA 
$14.5B
CHINA 
$10.6B
EUROPE 
$3B1Q2017
3%
35%
4%
10%
48%
USA
Europe
India
China
RoW
SOURCE: DOW JONES VC EDGE 1Q 2017
CHINA
=
WORLD’S#2
INVCINVESTMENT

THE SILICON VALLEY
OF HARDWARE

MANUFACTURING SUPPLYCHAIN
COMPONENTMANUFACTURERS
TECHNICALWORKFORCE
ASSEMBLYSUPPLIERS
SHENZHEN&GUANGDONG

SHENZHENSUPERPOWERS
SKILLS
ANY SCALE
SPEED
SAVINGS

‘AWEEKINSHENZHEN
ISWORTHAMONTH’
‘SHENZHENTURNS
ATEAMOF2INTO
ATEAMOF20’

ROBOT
MAKERS
100,000
200,000
300,000
400,000
500,000
Fanuc
Yaskawa
ABB
Kawasaki
Nachi
Kuka
Denso
Epson
Adept
25,000
45,000
80,00080,000
100,000110,000
250,000
300,000
400,000
SOURCE: ROBOTICS & AUTOMATION NEWS, 2016

ROBOTS 
PURCHASED BY COUNTRY 
(SOURCE: IFR, 2015)
CHINA
BUYS
ROBOTS
20,000
40,000
60,000
80,000
China
SouthKorea
Japan
USA
Mexico
Canada
2,7004,700
27,000
35,00038,000
69,000
SALES 2015: 248,000 (+12%YOY)
+20%YOY

DJI
NINEBOT
MAKEBLOCK
UBTECH
NEXT INNOVATORS

DJI
NINEBOT
MAKEBLOCK
UBTECH
NEXT INNOVATORS
>$10B
>$1B
>$1B

MAKEBLOCK($200Mval.)-BORNGLOBAL

For innovation,  
China Today
is like Japan
in the 80’s”
SEAN O’SULLIVAN,
FOUNDER, SOSV/HAX
“

0
5
10
15
20
25
1Q17 2Q07
2.81.8
3.4
5.7
3.7
3
11.79.5
Others
Xiaomi
Fitbit
Apple
XIAOMI=#1WEARABLE
SOURCE: STRATEGY ANALYTICS, 2017

BIKESHARING
2016:28M—2017:>200M

MOBIKE
START: 2015
BIKES: 5M
USERS: 100M
INVEST: $1B
(Not a HAX company)

YOUON
START: 2010
IPO: $87M 
CAP: $1B
REV (’16): $116M
NET: $17M

RENTALSTARTUPS
FRENZY
BIKES
>$2B
CHARGERS
$127M
UMBRELLAS
$45M
BASKETBALLS 
$1.4M 

BUYING 
INNOVATION
CHINESE APPLIANCE MAKER MIDEA 
BOUGHT GERMANY’S KUKA FOR US$4B

BUYING 
DESIGN
PHILIPPE STARCK  
DESIGNED THE MI MAX

10/
FOURCONCLUSIONS

Hardware is transforming industries
01/

Most of it doesn’t look like old Sci-Fi
02/

The key is software / A.I. / M.L.
03/

China invents, invests, and enables
04/

THANKS!
Questions / Next fund:
ben @ hax.co
Wechat: benjamin2301
“Teach how to fish
…and give a fishing rod”
www.slideshare.com/haxco

HAX for Credit Suisse

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