The Lean Hardware StartupFINANCING

#LeanHW

Cyril EbersweilerBenjamin Joffe

Cyril Ebersweiler / 希雷 / シリル

+50

+43

Partner/ Founder

Mentor / Speaker

Investor - Software

Investor - Hardware

2014: year of hardware?

365 Projects (1.5%)195,000 backers (6%)>2x in 1 year!

0

100

200

300

400

2011 2012 20130

0.5

1

1.5

2

0.460.59

1.57

121

248

365

HW PROJECTS HW PROJECTS %

0

50,000

100,000

150,000

200,000

2011 2012 20130

1.5

3

4.5

6

1.33

2.09

5.83

19,181

93,870

195,449

HW BACKERS HW BACKERS %

2x Startups

First half 2013> Total 2012

0

125

250

375

500

2012 2013 (RR)

446

209

94

52

HW Funding TOTAL $M

1. Concept

2. Minimum Functional prototype (MFP)

3. Complete Functional Prototype (CFP)

4. Design-for-Manufacture (DFM)

5. First factory run (FFR)

6. Retail

Life of a Hardware startup

How fast can you get to market?

(every $$$$ matters)

Lean Hardware RulesFrom Prototype to Production

1.Design with the right components2.A prototype is ready when it can be manufactured3.Your factory is your most important partner4.Be memorable5.Pick the right business model

!"#"$$%

#&%#

“No hardware plan survives contact with a factory”

Life of a Hardware Startup

CONCEPT MFP CFP DFM FFR RETAIL

Targets• Become a master of the problem• Customer development (interviews, customer

journey, core need identification, etc.)

Financing•Bootstrapping (your money, grants, etc.)•Fundraising almost impossible (track record?)•Investors want to see something that works

Concept

Targets• “It works”• Off-the-shelf, 3d prints, handmade parts• BOM 10s of $ to thousands

Financing• Bootstrapping, grants, FFF (50K)• People will think it’s the final product

MFP

Targets• “It looks real!”• Get ready to talk with suppliers

Financing• Bootstrapping, Angel investors, Accelerators• VCs still unlikely

CFP

“No hardware plan survives contact with a factory”#1 rule of Lean hardware

Targets• “Ready to roll” (& crowdfund)• Identify supplier, negotiate, reduce fees• Master your BOM... and your profits

Financing• Bootstrapping, Angel investors, Accelerators• Crowd• VCs might listen (at least looking)

DFM

Evolution of the Leap Motion Controller

Targets• “Make the things”

Financing• Angels, Crowdfunding, Crowd- investing, Pre-sells• VCs (need $M pre-orders if you crowdfunded)

FFR

Targets• Sell online• “Get in the store!”

Financing• VCs• Pre-orders• Bank credit lines• Factoring• Supplier• Revenue-based financing

Retail

• A category leader will require large amounts of capital

• Pick your battle: single hit, portfolio, platform or ecosystem

• Success isn’t binary with hardware

Life of a Hardware Startup

The Lean Hardware StartupFINANCING

#LeanHW

Cyril EbersweilerBenjamin Joffewww.haxlr8r.com/apply