Hardware Startup Questions: Beginning to Realize Your Electronics Dreams
Maybe you want to be a visionary engineer and witness your designs and ideas change the world. Maybe you just want a more reliable Bluetooth device on your home network. Regardless, if you’ve ever been frantically sketching out your idea on the back of an envelope or keeping notes and ideas in your pocket journal for the device you’re dreaming of, you probably have some nagging questions that must be answered before making your dream reality.
Let’s be honest, it is not like it is called ‘easyware.’ Building a real company around your piece of hardware is hard. If you are just starting to dip your toes in the startup community, the deck is largely stacked against you and bringing your great idea to market can be an uphill battle. As a first-time entrepreneur, you probably have several questions. Here is how you can begin making your hardware startup dreams a reality.
Step 1: Raising Funding for Your Hardware
No matter the idea behind your hardware startup, the first question will always be about funding. There are, typically, two funding models available to hardware startups. These models are crowdfunding and private investors. These funding models aren’t mutually exclusive. Many hardware startups that obtain VC funding also raise capital through crowdfunding.
Crowdfunding gives companies an advantage in that it does not require the company to give up equity. Crowdfunding is also a great way to build enthusiasm around consumer-level hardware. The amount of capital raised by crowdfunding can be dwarfed by institutional funding, but the money comes without strings attached and is a great way to gauge the potential popularity of your new product.
Your first hardware startup will be fraught with perils
2017 was a record year for investor funding of hardware startups and the value of funding deals in 2018 is currently on track to meet the funding levels in 2017. The majority of these funding deals went to companies in the VR, smart electronics, and robotics spaces. Despite the track record of failure for hardware startups, investors continue to pour money into these ventures, especially in consumer hardware.
Step 2: Sourcing Electronic Components
Many early-stage hardware startups consider sourcing for prototyping different from the “real” manufacturing stage. Some electronics startups will source the parts for their prototypes and their final products from different vendors. You will want to order a small number of boards on your prototyping run and use these boards for testing.
You might be able to get your test models built quickly by using a specific supplier that only specializes in rapid prototyping. But when it comes time for mass production, you may be forced to switch out some components for a different manufacturer. You can avoid these component swaps and any redesigns if you find the right manufacturer early. It is best to develop a partnership that can deliver rapid prototypes and provide high volume manufacturing.
Step 3: Alpha and Beta Testing
These terms refer to two testing stages that must occur before you move to full-scale production. Both terms are used in the software industry, but they apply equally well to hardware development. In alpha testing of hardware, the goal is to get to a prototype that has the functionality you need. Your alpha test product doesn’t need to look pretty, but it does need to work.
Alpha hardware testing is carried out in a lab or other controlled environment and the testers are usually internal company employees. The goal is to identify all possible defects in your product within a controlled environment. This will be your first opportunity to watch your ideas start to come to life and see your prototype in action.
Alpha and beta testing can reveal design flaws
By this stage, you should have worked out some of the functional issues in your alpha test. Once you have worked out the kinks in your initial design, you’re ready for beta testing. Your beta users are the same as your target customers and should be testing your product in its intended environment. Most of the issues or feedback collected from beta testing will be implemented in future versions of the product.
Step 4: Meet the Demand to Manufacture in Higher Volume
Getting your finalized PCB manufactured without redesigns and having it work correctly the first time is a huge feat. A portion of funding should be set aside for the manufacturing step and will be required to move from prototype to full-scale production. The holy grail for any hardware startup is to seamlessly move your great idea into full-scale manufacturing and, eventually, into the hands of customers.
If you developed a relationship with your manufacturer and worked out parts sourcing early, you will be ready to move to manufacturing as soon as testing is completed. Your electronics will live on a PCB, and you will need to take your PCB layout to a manufacturer. Preparing a great bill of materials and Gerber files ahead of time will help keep this process headache-free.
A great piece of PCB layout software like Altium Designer makes it easy to design your PCB with manufacturing in mind. The ActiveBOM tool quickly generates your bill of materials and helps you move to the critical manufacturing stage.