The lean-hardware-financing
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The Lean Hardware StartupFINANCING
#LeanHW
Cyril EbersweilerBenjamin Joffe
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Cyril Ebersweiler / 希雷 / シリル
+50
+43
Partner/ Founder
Mentor / Speaker
Investor - Software
Investor - Hardware
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2014: year of hardware?
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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 %
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2x Startups
First half 2013> Total 2012
0
125
250
375
500
2012 2013 (RR)
446
209
94
52
HW Funding TOTAL $M
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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
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How fast can you get to market?
(every $$$$ matters)
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Lean Hardware RulesFrom Prototype to Production
1.Design with the right components2.A prototype is ready when it can be manufactured3.Your factory is your most important partner4.Be memorable5.Pick the right business model
!"#"$$%
#&%#
“No hardware plan survives contact with a factory”
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Life of a Hardware Startup
CONCEPT MFP CFP DFM FFR RETAIL
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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
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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
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Targets• “It looks real!”• Get ready to talk with suppliers
Financing• Bootstrapping, Angel investors, Accelerators• VCs still unlikely
CFP
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“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
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Evolution of the Leap Motion Controller
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Targets• “Make the things”
Financing• Angels, Crowdfunding, Crowd- investing, Pre-sells• VCs (need $M pre-orders if you crowdfunded)
FFR
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Targets• Sell online• “Get in the store!”
Financing• VCs• Pre-orders• Bank credit lines• Factoring• Supplier• Revenue-based financing
Retail
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• 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
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The Lean Hardware StartupFINANCING
#LeanHW
Cyril EbersweilerBenjamin Joffewww.haxlr8r.com/apply