Doing a startup is like cooking - you can adapt along the way. Crowdfunding is like baking - you get one shot in the oven, and you kind of have to get it right. - Vivek Mano, Wigl
The stakes are high for creators that want to build a hardware or Internet of Things startup. Manufacturing and selling physical products comes with greater overhead costs and associated risks, which makes it a greater challenge to raise venture capital out the gate. As a result, crowdfunding has become by far the most popular route for bringing new products to market - but it’s not without its risks, either. Running a campaign still requires some capital to execute well, but not before building a functioning, high-quality prototype at the very least.
On May 19th, during Portland’s first annual ThingWeekPDX, we hosted fund the things! to help answer some of the questions surrounding the hardware financing ecosystem today. We invited a group of investors, hardware startup founders and experienced crowdfunders to share their experiences on both sides of product financing.
Check out the videos for a ton of great advice on funding a hardware startup through venture capital and/or crowdfunding. A few takeaways are highlighted below.
Funding Hardware with Venture CapitalPanelists: Sce Pike, Iotas; Matthew Bertram, Filament Networks (formerly pinnocc.io); Lou Doctor, Horizon Ventures; Jim Huston, Portland Seed Fund
Moderator: Klint Finely, Wired
- Investors don’t want to invest in science experiments or in building inventory.
- Monetize IoT indirectly by adding value to the security industry, building management, analytics, and the collected data that will generate the biggest value for investors.
- IoT offers the opportunity to add an aspect of software into your hardware product that will increase its value, longevity and future revenue.
- A successful crowdfunding campaign can be a good way to demonstrate to investors that a viable market exists
Crowdfunding for Hardware Startups and Physical GoodsPanelists: Josh Lifton, Crowd Supply; Lynn Le, Society Nine; Vivek Mano, Wigl
Moderator: Klint Finley, Wired
- Pre-work is crucial. The months leading up to launching a crowdfunding campaign are just as important as the campaign itself. The months after, even more so.
- Reward early supporters. They are your Superfans, and they’re more excited than anyone will ever be. Let them come along for the ride.
- Stretch goals. Add a feature to the product if you reach certain goals along the way.
- Be transparent and communicate often and openly with backers.
- Work with manufacturers who know your industry, allow buffer lead times, maintain an emphasis on fulfillment, and solidify your reputation as a reliable company.
- Find your community and connect with them - it’s more important than getting the press on board Don’t be afraid to learn and iterate on your product from the results of the campaign.