Suddenly, the business world is clamoring for hardware startups.
Venture capitalists—last seen stumbling over each other to bankroll high-margin software companies—are publicly singing the praises of building physical products.
Notable manufacturers are busily building bridges to the startup world, hoping to tap into the next wave of innovative companies.
Meanwhile, in Boston, a group of tinkerers and builders is settling in for a six-month stay at Bolt, a new accelerator program that helps hardware entrepreneurs build, tweak, and grow hardware businesses. As interest in hardware startups gets revved up in the San Francisco Bay Area, Bolt partner Ben Einstein is happy to be getting to work helping young companies grow.
“Have fun fighting out there,” he says. “We’re going to stay here in Boston, and do it right.”
Bolt began to emerge earlier this year, raising $3.5 million to fund its early stage startup support and investment program. The program’s other partners are former Atlas Venture investor Axel Bichara and Dragon Innovation CEO Scott Miller, who was an early iRobot executive.
The general outlines are comparable to other startup accelerator programs—a competitive selection process, equity investment in the startups, and a “boot camp” style program aimed at boosting fledgling businesses with working space and mentorship. Bolt also adds some extras, including a full-time staff to assist the startups and a $100,000 line of credit to help pay for electronics.
Over the past few months, Bolt has been busy selecting its first class of startups and—just as important—filling out its 9,000 square-foot office on the edge of Boston’s Chinatown, stocking the space’s daylight basement with tools, lathes, 3D printers, table saws, laser engravers, and plenty more.
“When people tinker, more great companies and great things are built,” Einstein says. “Which is why, right below us, we have $1 million in prototyping equipment.”
Today, Bolt is revealing the seven companies that are settling in to those digs. They were selected from more than 850 applicants, representing several different sectors and stages of growth.
“Literally, there’s a guy that has an idea,” Einstein says. “And there’s people that are going to do $1 million of sales this year. So the gamut is huge.”
It makes a lot of sense for a hardware startup program to be built in Boston. With a long heritage of mechanical and electrical engineering expertise from MIT, along with alumni of pioneering companies like iRobot, the region certainly has the scientific and entrepreneurial chops to become a leading center of innovation for the next wave of hardware startups.
And that wave certainly appears to be rising.
Online crowdfunding sites like Kickstarter and Indiegogo have captured consumer interest, allowing people to vote with their wallets for would-be products that previously may have struggled to attract venture capital.
At the same time, the technology that goes into making a high-tech gadget has continued getting cheaper, more powerful, and easier to use. Just five years ago, an engineer may have spent buckets of cash building just a single Bluetooth radio for their product, Einstein says. Now, that same component is pre-fabricated, commoditized, and ready to use.
Couple those trends with affordable, high-quality manufacturing-for-hire—especially in China—and you’ve got an opportunity to greatly speed up the time it takes for a new electronic product to hit the market.
But hardware has its own difficulties, not typically shared by the software-focused companies drawing so much interest from the new generation of entrepreneurs.
The choice of components and suppliers, for instance, cast a much longer “shadow” in hardware companies, Einstein says—meaning that early decisions can be very costly if they turn out to be off the mark later.
“You make one mistake on your build materials and it could ruin the whole company, cost you millions of dollars,” Einstein says. “You don’t have that margin for error in the hardware world.”
Bolt’s leaders looked at the quality of the teams behind these startups first, Einstein says, looking for technical skills, compatibility, and any hints that they’ll be able to execute on their vision. They were also interested in the quality and scope of the ideas, preferring things that could be a substantial business—something you don’t always hear in the software startup world.
“If they just want to build one little product for Kickstarter, I don’t really care because it’s not interesting,” Einstein says. “Knowing the difference between a feature, a product, and a business is very important. I think a lot of people make that mistake. I see a ton of `companies’ in accelerator programs that are maybe products—usually features.”
