Panel discussion on hardware investing

April 20, 2017

The other day Yohei Sawayama (500 Startups) and I gave a panel discussion on hardware investing at the DMM.Make hardware incubator in Tokyo. Some people requested a recap of our points, so here are some of the key takeaways. I’ll post the video when I get it.

Thoughts for hardware entrepreneurs

  1. IoT is not the future. It’s the present.
  2. IoT is not a trend. It is a technological shift.
  3. The opportunity in enterprise is monumental compared to consumer.
  4. Hardware is hard. People that suggest otherwise are doing a disservice to entrepreneurs.
  5. Large firms have an advantage in hardware innovation. It’s no coincidence that few genuine VCs invest in hardware startups. VCs prefer hardware-enabled software, which is different.
  6. It’s cheaper than ever to start a hardware business, but:
    – contract manufacturer selection, quality control
    – distribution costs
    – slotting fees
    – channel management
    – inventory holding fees
    – working capital challenges
    – maintenance / support costs
    –> this is why large companies are generally better at bringing hardware products to market
  7. Consider crowdfunding as a tool for marketing campaigns more than as a sole funding source.
  8. Explain how your business could scale (subscriptions, product extensions, etc.).
  9. Find the right positioning and partner with a deep-pocketed VC to have staying power.

General closing advice

  • don’t be afraid to try. to experiment. to be wrong.
  • don’t be afraid to engage with people outside your comfort zone. there’s value in diverse perspectives.
  • don’t be afraid to ask for help. assemble a diverse collection of advisors and solicit their advice.

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posted in venture capital by mark bivens

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  • Hashimoto Noriyuki

    Thank you Mark! Your discourse was very interesting and helpful.

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