The Hardware Code - Why Hardware Startups Fail or Succeed

The

Hardware Code

Program-Based Hardware Fund

Pre-seed — $100k + Program Seed/A — Follow-on

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

$300MASSETS UNDER MANAGEMENT

600+STARTUP

INVESTMENTS

№1 EARLY STAGE INVESTOR (2017)

THE BIG FOUR

>150 STARTUPS / YEAR

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

HARD TECH VERTICAL PROGRAMS

MILESTONE-BASED INVESTMENT

№1 EARLY STAGE INVESTOR (2017)

(NEXT FUND: 1Q’18)

AI, energy, & life sciences are promising fields where you can

make a huge impact.

It's what I would do if starting out today.

STARTUPS238YEARS5

RAISED$430MKICKSTARTERS111BACKERS$50M

INDUSTRIAL

CONSUMERHEALTH

ENTERPRISE

10

20

30

40

2012 2013 2014 2015 2016 2017

B2B IS GROWING

Richard Branson,

CO-INVESTORS SAMPLE

Most Startups Fail

Why Hardware Startups Fail

1. Lack of consumer demand

2. High burn rate

3. Lack of interest after initial crowdfund

4. Product strategy mistakes

• https://www.cbinsights.com/research/report/hardware-startups-failure-success/

Why Why Why Why Why

Why startups fail

Lack of demand

High burn rate

Why startups fail

Lack of demand

High burn rate

Positioning Price Cash flow

Development

Sales

Visibility

Customer discovery

Distributionterms

Factoryterms

MarketingPR

Distribution Prototyping

Manufacturing

R&D Team

Why startups fail

Lack of demand

High burn rate

Positioning Price Cash flow

Development

Sales

Visibility

Customer discovery

Distributionterms

Factoryterms

MarketingPR

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 SoftwareExperience

Nice to have Must have

B2BB2C

Features

Science Fiction

Why startups fail

Lack of demand

High burn rate

Positioning

Customer discovery

10x Advantage

Science SoftwareExperience

Price

Distributionterms

Factoryterms

Cash flow

Nice to have Must have

B2BB2C

Features

Science Fiction

MarketingPR

Distribution

Visibility

Prototyping

Manufacturing

Development

R&D Team

Sales

HAX Startups

Results

Trajectory

Milestones• Lab prototype

• Work/Look-like

• DFM

• Product

• $1M, $3M, $5M, $10M…

• Profitable

Learning Curves

Learning Curves• Positioning

• Prototyping

• Manufacturing

• PR & Marketing

• Sales & Retail

• Financing

• Product, Team & Self-Management

SEED 4 MONTHS

GROWTH 6 WEEKS

O TO 1 1 TO NSHENZHEN

Prototype to LaunchSAN FRANCISCO

Product to Scale

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

4 Groups

4 Groups

• Failed

• Ventures

• Bootstrapped

• Recoveries

Failed

Failed

• Too niche (early programs)

• Founders split (1 in 20)

• Gave up early (< 2y)

• Too slow

Ventures

MAKEBLOCK

FLOW NEUROSCIENCE—DEPRESSION TREATMENT

POINT—FRIENDLY HOME SECURITY

AVIDBOTS—COMMERCIAL CLEANING

Canada

NURA—HEADPHONES TUNED TO YOU

low tones mid tones high tones

sens

itivi

ty

France

OCTOPUS

1 2 3 4

18 MONTHS FROM CONCEPT TO MARKET

R&D1

2

5

4

3PrototypingProductionInvestment

World-Class STARTUPS World-Class RESOURCES

Sales

R&D1

2

5

4

3PrototypingProductionInvestment

World-Class STARTUPS World-Class RESOURCES

Sales

Bootstrap

TRAINERBOT

VOLTERA

PINPRESS

ORENDA—HOME BARISTA

WAZER—WATERJET CUTTER

IN 3 MONTHS…

from “Does it work?” to… “How much?”

Recoveries

Pre-HAX

PARTICLE—IOT CONNECTIVITY & CLOUD SOLUTION

U.S.A.

SIMBE ROBOTICS—SUPERMARKET INVENTORY

Crowdfunding

BARTESIAN—COCKTAIL MACHINE

PETRONICS—SMART CAT TOY

Product 2

NTC—HACKABLE CAMERA

CHIP—$9 COMPUTER

VUE—SMART ACCESSORIES

Health

LIEF THERAPEUTICS—ANTI-STRESS PATCH

Customer Pivot

OPENTRONS—LAB ROBOT

Conclusion

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

THANKS!

ben@hax.co