Lowered entry barriers make it appealing for engineers without hardware background to start up. What does it take to build a successful hardware startup and why many products never make it to the manufacturing. Aleksander Tõnnisson: Co-founder, CEO at Buildit

1. ENTRY BARRIERS FOR
HARDWARE STARTUPS
Aleksander Tõnnisson

2. D2D sales
corporate R&D
founder & CEO
mentor / speaker / moderator
investor in 20+ HW StartUps
ABOUT ME

3. http://blog.upverter.com/

6. The Hardware Revolution
hardware components commoditized and cheaper
improved software and connectivity systems
easier prototyping and manufacturing
smartphones and tablets widespread
kickstarter de-risks the product launch
INTERNET OF THINGS

9. 10.000

10. 374 489 033 381

11. MVP & FAST ITERATIONS
Software as a Service
sketching
MVP
iterating
scaling
-2 launch
http://www.alesspetic.si/

12. NO ITERANTIONS POSSIBLE
Hardware
sketching
prototyping
manufacturing
scaling
-12 launch
production
http://www.alesspetic.si/
-6

13. founders
fit
market
timing
sourcing
prototyping
design
to
manufacture
tooling
assembly
financing
fundraising
branding
marketing
GREAT
IDEA MVP FABRICATION REVENUE
software
firmware
BOM
GERBER
certifications
regulations
logistics
china
effect
payment
customer
service
distribution
PR
http://www.haxlr8r.com/
Typical Startup Lifecycle
HARDWARE STARTUP

14. founders
fit
market
timing
prototyping
financing
fundraising
branding
marketing
GREAT
IDEA MVP FABRICATION REVENUE
software
certifications
regulations
payment
customer
service
PR
http://www.haxlr8r.com/
Typical Startup Lifecycle
SOFTWARE STARTUP

15. GETTING STEEP VERY QUICKLY
Phases of Hardware Startup
CP
DFM
retail
-12 launch
MFP
3PL
FFR

16. WHERE THE MONEY GOES
Software Startups Cost Structure
60%
10%
30%
R&D
Logistics
Margin

17. WHY IS CASH IMPORTANT
Hardware is a cash flow business
60%
10%
30%
Logistics
20%
R&D
10%
Margin
25%
10% BOM
Retail
25% Wholesale

18. MVP DFM SCALING
how much < 100K < 500K >1M
for what
components
design costs
moulds
test benches
marketing
working capital
from where
FFF
savings
pre-orders
angel & seed
venture capital
bank loan
WHY IS CASH IMPORTANT
Hardware is a cash flow business

19. NEAR EAST VS MEXICO
Manufacutring Wages
05 15

20. SOFT
LTD
1MM
users,
4%
conversion
@
$10/year
$400K
/
YEAR
HARD
LTD
1 500 000
1 000 000
500 000
250 000
12.000
units/year,
@
$100,
30%
margin
$400K
IN
MARGIN
2 500
1 500
2 000
6 000
http://www.alesspetic.si/
Which is better?
USER BASE vs PAYING CUSTOMERS

22. Aleksander Tõnnisson, CEO, Founder
aleksander@buildit.ee
APPLY AT WWW.BUILDIT.EE