HAX provides insights for hardware innovators on how to raise funding and navigate the design to manufacture journey.
Getting investment for hardware innovation is widely acknowledged to be more challenging than getting investment for software and service based innovation. Even when a good proposition is on the table, the scale of investment required to launch (scale up manufacturing, for example) is often significantly larger than for software products. Hardware is invariably slower to scale-up and realise returns. In addition to the intimidating scale of the investment raise needed, other challenges exist.
Changes with later stage development are harder to implement. Commitments to design decisions and investment in tooling, for example mean mistakes can be devastatingly costly and risks are higher.
The diversity of skills and experience required is vast – a collaborative, multi-partner approach is integral to success. Understanding the market, insights into design, manufacturing processes, materials and supply chains, a sensible approach to IP, an ability to manage costs and projects and to work collaboratively – these are just some of the knowledge hardware developers must excel at (in addition to having a good idea). A good idea on its own is never enough.
As investment trends show venture capitalists are wary of investing in hardware innovation. It’s not because they hate gadgets and machines, it’s that the cost to launch a hardware startup is much higher compared to a piece of software. Not only do you have to build it, you’ve got to find the shelf space (virtual or otherwise) to sell it. All that adds up to a risk most investors don’t want to touch. And very few venture capitalists have experience in manufacturing and selling hardware, since most started their careers in science or software.
However entering the hardware market is becoming easier. Thanks to rapid prototyping and cheaper high-powered computers that can run simulations on a prototype, getting a product ready for market is cheaper than ever. The overall cost of launching a hardware startup, whether you’re trying to sell a gadget or build a new robotic drone, is dropping.
One particular VC is storming ahead in this area. HAX who are part of SOSV global venture capital fund offer a unique venture funding and hands-on program to help startups enabled by hardware move at lightning speed.
Teams accepted into the program start in Shenzhen, where they’ll focus on rapid iteration of prototyping including physical models, technology iterations, user interaction studies, volumetric studies, marketing messaging, a scalable business plan and launch strategies.
Teams then head to San Francisco, where they work with them on business development, fundraising, and growth.This stage includes introductions to corporates, investors, partners and press and focuses on helping teams secure their first round of funding, as well as gain first-revenue and partnership traction.
With a $250,000 investment package, a 3-6 month intense support programme and 9 start dates per year, so far HAX has helped almost 250 hardware startups.