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.
10. Every hardware entrepreneur should visit SXSW at least once.

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.