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Hardware Startups: Crowdfunding — The Power of ‘The Crowd’
As the popularity of crowdfunding has grown, hardware startup entrepreneurs in particular have found success tapping into ‘the crowd’ and moving their products from concept to shelves. A successful crowdfunding campaign begins with one key component: planning. Start planning and preparing for your campaign months in advance so that when it is time to go live, you have a well-polished campaign that highlights your brilliant product.
If you are ready to tap into the power of ‘the crowd’ below are four essential items that can’t be overlooked:
A functional prototype is necessary when you are trying to get people excited about a new product. While people can indeed envision a product from a great description, there is no substitute for the actual thing. This prototype not only shows potential investors what your product can do, it is also necessary for the marketing material on your crowdfunding page.
An Exciting Video
Our second point correlates directly with the previous one, you can’t have an exciting video unless you have a functional prototype. The video portion of your page is where you let your product shine. The more descriptive and creative your video is, the more people are going to get truly excited to contribute to your campaign.
Early Customer Connections
Don’t wait for your crowdfunding page to go live before you start connecting with your customer base—this is too late. Connect early-on with potential customers to help build anticipation for your product and campaign. This is the time where you tap into your connections to form key partnerships. Do you know any industry influencers? If so, connect with them and work on forming a partnership in which they will be willing to help share your campaign with their connections. Remember, crowdfunding is all about tapping into ‘the crowd’, so the more people that see your campaign the better your chances are for success.
Content Creation
Let your creativity run wild! This includes all videos, photos and text; make your content unique and memorable. Also don’t forget to include the “ask” in your pitch. This piece is often overlooked so the message gets lost. A clear and concise “ask”, coupled with a creative campaign means that you are on your way to crowdfunding success.
Setting up your crowdfunding campaign will take planning and hard work, but remember that it is also supposed to be fun. Show potential backers the fun side of your product and your team.
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
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Hardware Startups: Increase Chance for Success by Reducing Risk
Building a hardware startup is not for the faint of heart. In an ideal world, we would be able to eliminate all risk and guarantee ourselves success—since that isn’t possible, the next best thing is to find ways to reduce risk as you develop and bring your product to market. By reducing risk in a number of areas you are increasing your chances for success. Below are a few ideas on how to reduce risk for your hardware startup.
Developing and building a prototype proves that you can construct and deliver a finished product with the capabilities you want in your product, while staying on budget. A prototype is a baseline for your team and lets you work out any issues early in the design process. During prototype development you will also be able to assess if there are alternate and more efficient ways of building your product—thus, saving both time and money.
Along with prototype development, you want to start the DFM (design for manufacturability) process immediately. This means that you are developing your product to best fit manufacturers’ capabilities and requirements. It can be a costly mistake to build a product with the mindset that a manufacturer will just be able to deliver what you provide them—this is almost never the case. To avoid the (costly) risk of having to redesign your product, start the DFM process congruently with prototype development.
Gather Design Feedback
While you will have an engineering partner working on the development of your hardware product, it is always a good idea to get another set of eyes to review the design. Large corporations have multiple engineers review products to verify the design and provide valuable feedback, before manufacturing begins. A hardware startup doesn’t have the budget of a large corporation, but it can emulate this valuable business practice to reduce risk.
Connect with the Audience
Start building your audience and defining your target market early in the product development cycle. Your target market will be able to provide you with design feedback from a customer point-of-view and also help build interest in your brand. If you wait to connect with your audience until after you launch, you have done your startup a disservice by not building excitement early on and gaining market traction. When you build a rapport with your target market before your product launch, you will have customers ready to buy your product as soon as it’s available.
Building a hardware startup can be challenging; however, with some foresight you can greatly minimize risk while increasing your chance for success.
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
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Hardware Startups: Overcoming Failure to Find Success
“Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not a dead end. Failure is something we can avoid only by saying nothing, doing nothing, and being nothing.” – Denis Waitley
Unachieved Funding Goal
The fact is that hardware startups are costly. Between product development and manufacturing, costs can add up quickly. While some entrepreneurs are able to bootstrap and fund the business themselves, more often than not, hardware entrepreneurs need to seek outside funding to help launch their product. If you are having trouble with funding, here are a few points to consider:
Target Market Lacks Interest
The main reason your target market will lack interest is because the product is not meeting their needs. You need to first define what the target market wants out of your product and then structure the foundation of your product around these desires. If you begin to build your audience while your product is still being developed, you will have people ready and eager to buy your product when it is available for sale.
High Manufacturing Costs
As a hardware startup, manufacturing is going to be your single biggest expense. Keeping costs low while your product is new to the market will help you reduce your risks and stay out of the red.
Failure is not permanent and it does not have to be the end. While no one enjoys failing, it is a chance to learn, grow and refocus your energy.
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
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The Top 3 Challenges Between Launching & Scaling Your Hardware Startup
Each stage of launching a hardware startup comes with its own set of challenges. While the challenges are unique for each business and each industry, below are the top three universal challenges we have seen arise time and again.
As you read through the two lists, you will notice a theme developing between the stages. During the launch phase, the challenges tend to focus on the startup founder and business acumen. As the hardware startup scales though, the challenges tend to focus more on the manufacturing side of the business. This is why the importance of finding the right manufacturing partner for your startup from the get-go cannot be stressed enough.
Challenges when launching a hardware startup:
Challenges when scaling a hardware startup:
By now we have all heard the saying, “hardware is hard” — however, with proper planning and experts by your side, launching your hardware startup doesn’t have to be impossible.
Have questions about launching or scaling your startup? Send them our way, info@3d-innovations.
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
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Hardware Startups: Defining Your Niche Market
Launching hardware startups, or any type of business for that matter, is a gamble—but defining and finding your niche market doesn’t have to be. Knowing your niche market is one way for hardware startups to quickly get their product into the hands of consumers and find success.
What is a niche market?
Developing a product that specifically targets a segment of the market that is not having their needs met is a great way to scale a business quickly. The competition is low and the barriers to entry are minimal, which is an ideal landscape for launching a hardware startup.
Defining a Niche Market
Defining your niche market means that you need to have a deep understanding of both your product and the consumers you are marketing your product towards. Below are a few ideas on how to define a niche market for your hardware startup.
Once you have a clear understanding of the niche market you are aiming your product towards, take time to test this market and be ready to re-evaluate if necessary. In the end, having a firm understanding of your niche market will mean that your startup is taking a calculated risk, and not just a gamble.
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.
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The Upside & Downside of Crowdfunding for Hardware Startups
With the exponential growth of crowdfunding, hardware startups are finding it easier to raise funds and launch their product into the marketplace. For instance, on Kickstarter in 2015, the amount of money going to funded projects increased by 35%, or $160 Million more than in 2014. There were 54,831 projects funded on Kickstarter in 2015, which is an increase of over 10,000 from the previous year. In addition, the Design and Technology categories were among the fastest growing segments.* Crowdfunding continues to grow in popularity and has transformed into a viable funding option for hardware entrepreneurs. However, like any type of business funding, crowdfunding has its upside and downside, and before you setup your campaign there are a few things to consider.
Upside of Crowdfunding
Crowdfunding is often viewed as a way to raise funds and validate your product idea (both of which are true and terrific for startups). However, there is one aspect that many hardware entrepreneurs fail to consider, it is the community support of your early-adopters. The influence that these backers have on the success of your crowdfunding campaign should not be taken lightly.
Through your early-adopters you also gain exposure that you would not have been able to receive if you went solely with the traditional Venture Capital (“VC”) funding route. The more exposure your campaign receives and the more public interest it garnishes, will undoubtedly affect your product’s funding. Recently, VCs have started paying close attention to successful campaigns as a way to evaluate a startup before investing their own funds. Hardware investors understand that crowdfunding campaigns give an advantage to startups because they speed up the market feedback process—which in turn, helps minimize a VCs potential investment risk.
Downside of Crowdfunding
Failed campaigns, wasted time and underestimated product development costs are crowdfunding downsides experienced by startups. When you are an early-stage startup there is nothing worse than failure and wasted time. To prepare for these potential missteps it is crucial that you plan ahead.
While a failed campaign can be attributed to a number of things, the most common factor is the lack of an engaging story. Early-adopters need to be motivated to invest in your product, and one way to do this is through an interesting campaign with a backstory that grabs their attention. Your “story delivery” also demonstrates to early-adopters that you have a strong marketing strategy that will translate well from your crowdfunding campaign and into the marketplace.
Another pitfall to avoid is asking for the wrong amount of funding. Estimating your total development costs can be tricky, but this risk can be minimized with the input from experienced team members and outside consultants. Manufacturing and packaging is one area that is particularly challenging for hardware entrepreneurs, and getting a firm “estimate” can be even harder. (Our advice, research potential manufacturers and meet with a variety of them before settling on one.) If your dollar estimate is off, it can sink even the best crowdfunding campaign.
Without and engaging story or correct project cost estimates you risk crowdfunding failure. The time you spend crowdfunding will be wasted, which can be detrimental for early-stage hardware startups.
*ICO Partners Kickstarter in 2015—Review in numbers
Have additional questions regarding crowdfunding for your hardware startup? Send them our way, info@3d-innovations.com
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.
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Manufacturing Facts Hardware Entrepreneurs Need To Know
Developing a product is exhilarating, however when the time comes to start the manufacturing phase of the product development process, many entrepreneurs aren’t exactly sure where to begin. Below are some pieces of advice that every hardware startup should know about the manufacturing process.
Many startups are strapped for cash—especially during the early days—that is why understanding your company’s cash flow is crucial. Depending on your hardware product, you may be required to purchase certain components six months to a year before your launch. Work with your manufacturer to setup a realistic payment option that won’t leave your startup in the red.
Find an experienced manufacturer.
All manufacturers have experience, but your goal is to find a manufacturer that has experience building a product similar to yours. Chances are that if they have experience building a similar product, the number of challenges that arise will diminish. Also, ask to see product samples so that you can get a feel on the quality of work they produce.
If your goal is to manufacturer your product in the U.S., prepare to pay a little bit more. However, some entrepreneurs don’t mind paying more for the comfort of being able to visit the manufacturing facility on a regular basis. During the early production runs you are going to want to be on-site to talk with the engineers to make sure things are running smoothly.
Be prepared to compromise.
You might have visions of making your product from recycled materials, or certain sustainable materials, however, these may not be the best options for your product. Your product is going to need to meet certain thresholds and tolerances, which means that using the correct material is imperative. Be prepared to compromise on things such as materials, the manufacturing timeline and other variables that will undoubtedly arise.
Start with small production runs.
While you are putting final touches on the design and working out the “kinks”, it is a good idea to start with small production runs. The minimum (around 5,000 units) run will give you a chance to fix any issues that come up without experiencing potentially dire financial consequences.
If you are planning on running a crowdfunding campaign, a small production run might not be feasible if you have a wildly successful campaign. In that case, you can consider the option of running multiple manufacturing lines. While this can complicate the manufacturing process, it will help you stick to the timeline you laid out for customers. If you would rather stick with the small product run method, let your customers know that you plan on starting with small batches and scaling up gradually, which will mean a longer wait time—keep in mind that most customers are willing to wait when the startup is transparent about their timeline from the get-go.
Do you have additional questions about the manufacturing phase of the product development cycle? Let us help! Contact us by e-mail at info@3d-innovations.comor or by phone at 1-808-772-8667.
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.
Subscribe to the 3D Innovations newsletter on our Facebook page!
Connect with us on Twitter, Facebook & LinkedIn today
The True Cost of Bringing Your Hardware Product to Market
Below is a list of some of the major costs associated with launching a hardware product.
If your product has electronic components you are also going to want to factor in these additional costs.
Here is what our President & Chief 3D Officer, Collin Kobayashi, has to say about hardware development costs, “Costs fluctuate with the specifications and requirements of your individual product. For example, a product that connects via Bluetooth takes more engineering than a device that just displays LEDs. It is always best to consult with design and manufacturing experts to get a clear answer on what your specific development costs will be.”
These costs do add up and it is easy to see why so many startups have turned to crowdfunding for their inventions. While crowdfunding is a fantastic resource, you need to nail down all of the costs required to bring your product to market first. Too often entrepreneurs underestimate the costs of bringing their product to market, and even after a successful crowdfunding campaign, can’t deliver on their promise to customers.
The most obvious example of underestimating costs is the Coolest Cooler, which was wildly successful and raised more than $13 million on Kickstarter in 2014, but over a year later many backers still have not received their coolers. Only after the Kickstarter campaign ended and manufacturing began, did the founders realize they set the price tag too low for the coolers—this one mistake has quickly turned into a nightmare scenario for the startup and the customers that pre-ordered through Kickstarter.
While all of these costs can and will fluctuate based on your specific product needs. These estimates are provided to help give you an idea on how much each stage in the product development process will cost, so that you and your team can plan accordingly.
Have questions about bringing your product to market? Let’s chat! Send your questions our way, info@3d-inovations.com
If you are looking for assistance in launching a product, check out our manufacturing and commercialization accelerator, Startup Connector.
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.
Subscribe to the 3D Innovations newsletter on our Facebook page!
Connect with us on Twitter, Facebook & LinkedIn today
Showcase Your Latest Product Design
Have you been hard at work developing (an awesome) product, and are now ready to share it with the world? Great—that feeling of accomplishment is the best! Taking a moment to step back, look at the final design and think about how far you have come, really puts all the hard work and time spent into perspective.
Now onto the next stage, spreading the word about your product… We would love to share your recent design or product here on our blog! Whether you are getting ready to launch a crowdfunding campaign and would like a little help spreading the word, or you would like some design feedback from our trusted readers, we would be happy to help! We are always looking for ways to connect and share innovative products.
If you are interested in sharing your design or product on our blog, please e-mail us at info@3d-innovations.com so that we can chat.
“Success isn’t just about what you accomplish in your life, it’s about what you inspire others to do.” — Anonymous
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.
Subscribe to the 3D Innovations newsletter on our Facebook page!
Connect with us on Twitter, Facebook & LinkedIn today
Product Design & Development Questions
You have questions, we have answers.
While the internet is a great tool for finding answers to your questions, it can also lead to contradicting results and growing frustrations. It is often best to reach out to someone in the field to get the answers you need.
Let us help!
As a product development firm, we have experience working with entrepreneurs and startups from the initial concept phase through product launch. Whether you have a simple question and are looking for expert advice or you are interested in learning more about the entire product development process, our team is ready to help. Send us an e-mail (info@3d-innovations.com) or give us a call (+1.808.722.8667). We are always happy to help answer your questions and start you on the path to a successful product launch!
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3D Innovations is a Product Development Company – from the 3D Design to a fully functional 3D Prototype & Product.
Startup Connector is a Manufacturing Accelerator helping companies commercialize—turning ideas into products.
Subscribe to the 3D Innovations newsletter on our Facebook page!
Connect with us on Twitter, Facebook & LinkedIn today