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
- IoT is not the future. It’s the present.
- IoT is not a trend. It is a technological shift.
- The opportunity in enterprise is monumental compared to consumer.
- Hardware is hard. People that suggest otherwise are doing a disservice to entrepreneurs.
- 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.
- 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
- Consider crowdfunding as a tool for marketing campaigns more than as a sole funding source.
- Explain how your business could scale (subscriptions, product extensions, etc.).
- 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.