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The Investors Who Want to Hear About your Open Hardware Startup

Some are talking about a Hardware Renaissance, but not everyone agrees that it’s already here. Venture capitalists are still very shy with hardware companies: they know it requires money and a deep knowledge of the manufacturing and distribution process to make it work. Risks are still higher than with software.

 “Investors have a deep-seated bias against hardware.” Paul Graham, Y Combinator.

However, the gap between software and hardware is not as wide as it used to be. Prototyping and manufacturing costs are dropping. Entrepreneurs finally have access to facilities and tools that are affordable and convenient. A new kind of hardware startup is rising, playing with mobile, sensors and computer-human interaction.

I gathered this list of investors who are hardware specialists or have expressed their interest for hardware startups. Most of them are consumer oriented. Be warned that their position regarding open source hardware might still be unclear. Gather your best convincing skills, and rock on!

Hardware Incubators

Lemnos Labs

Based in: San Francisco (a few blocks away from Techshop)

Product stage: idea to prototype/proof of concept

Investments: between $50k-100k in exchange for a 2-10% equity stake

Incubation time: between 6 and 9 months in average

Application process: on a rolling basis, apply now

Portfolio: Blossom Coffee, LocalMotion, Bia, Momentum Machines, NanoSatisfi, ParqPlace, Revolve Robotics, Unmanned, Unplugged Instruments

Services: mentorship, space, access to prototyping facilities, legal services, introduction to suppliers, design & business reviews.

Open source hardware friendly ? No open hardware companies yet

Bolt

Based in: Boston

Product stage: prototype to manufacturing, manufacturing to market

Investments: seed capital

Incubation time: 6 months

Application process: only 13 days left for 2013, apply now

Portfolio: between 10 and 15 startups will be accepted for the first batch

Services: mentorship, in-house prototyping shop (metalworking, electronics, model-making), access and discount with suppliers, access to lines of credit

Open source hardware friendly ? N/A

Hardware Accelerators

HAXLR8R

Based in: Shenzen, China and San Francisco

Product stage: prototype to manufacturing

Investments: seed funding

Incubation time: 111 days

Application process: apply now for the Summer 2013 class

Portfolio: Kindara, Nomiku, Bilibot, Melon, Makeblock, PortableScores, Sassor, Shaka, Loccie

Services: mentorship, advising for manufacturing, supply chain management and distribution, launch day (Hax8lr Day)

Open source hardware friendly ? YES

PCH International Accelerator

Based in: San Francisco and Shenzen, China

Product stage: prototype to manufacturing, manufacturing to market

Investments: no seed funding. occasional in-kind investments. equity percentage decided on a case by case basis.

Incubation time: between less than a year and 2 years

Application process: on a rolling basis, apply now

Portfolio: LittleBits, Autom, Contour, MetaWatch, Lark

Services: mentorship, advising for manufacturing, supply chain management and distribution, discounts

Open source hardware friendly ? YES

AlphaLab Gear

Based in: Pittsburgh

Product stage: prototype to manufacturing

Investments: $25k (5% equity stake) or $50k (9% equity stake)

Incubation time: 8 months (October-May). Ends with AlphaLab Demo Day

Application process: applications open on May 15th

Portfolio: SolePower

Services: mentorship, access to prototyping facilities, introduction to suppliers, design & business reviews.

Open source hardware friendly ? N/A

Investment Funds

O’Reilly Alphatech ventures (OATV)

Based in: San Francisco

Product stage: prototype to market

Investments: Seed stage ($250k to $2M)

Contact information: plans@oatv.com

Portfolio: 3D Robotics, Chumby, Instructables, LittleBits, Misfit Wearables, BetaBrand

Themes: big data, mobile, internet of things, sustainability, quantified self, makers

Open source hardware friendly ? YES

Andreessen Horowitz

Based in: Menlo Park

Product stage: prototype to market

Investments: seed to Series A-D funding (from $50k to tens of millions)

Contact information: businessplans@a16z.com

Portfolio: Shapeways, Quirky, Fab, Lytro, Jawbone

Open source hardware friendly ? No open hardware companies yet

Foundry Group

Based in: Boulder, CO

Product stage: prototype to market

Investments: seed funding ($250k to $500k), Series A funding

Contact information: contact the team members here

Portfolio: Makerbot, Fitbit, Sifteo, Modular Robotics, Revolv, Orbotix

Open source hardware friendly ? Not yet (Makerbot went from fully open source to partially open)

Y Combinator

Based in: Mountain View

Product stage: idea to prototype

Investments: seed funding: $11k + $3k per founder in exchange for 2-10% of equity stake.

Program time: 3 months (January-March and June-August). Each session ends with Demo Day.

Contact information: Application form here.

Portfolio:

Services: boot camp, mentorship

Open source hardware friendly ? No open hardware companies yet, announced its recent interest for hardware (not a specialist)

Khosla Ventures

Based in: Menlo Park

Product stage: prototype to market

Investments: seed funding, Series A funding

Contact information: kv@khoslaventures.com

Themes: semiconductors, sustainability

Open source hardware friendly ? N/A

Plug and Play Tech Center

Based in: San Francisco

Product stage: idea to market

Investments: seed funding ($25k with the Plug and Play Startup Camp program) to Series A-D funding ($100k – $50M with Amidzad Partners)

Application process: apply here

Portfolio: Evil Mad Science

Services: access to venture capitalists, space

Open source hardware friendly ? YES, but still very rare

Union Square Ventures

Based in: New York

Product stage: prototype to market

Investments: $250k to $25M

Incubation time:

Contact information: info@unionsquareventures.com

Portfolio: Shapeways, Buglabs

Open source hardware friendly ? YES

Index Ventures

Based in: San Francisco (US), London (UK), Geneva (Switzerland)

Product stage: market-ready companies

Investments: seed, early and growth stages

Contact information: List of contacts here

Portfolio: Acutus, Imbera Electronics, Innovative Silicon, Shapeways

Open source hardware friendly ? Maybe (supporting B-to-B companies)

Lux Capital

Based in: New York and Palo Alto

Product stage: manufacturing

Investments: $100k to $15M

Contact information: info@luxcapital.com

Portfolio: Shapeways, Matterport

Themes: specializes in the physical and health science

Open source hardware friendly ? No open hardware companies yet

Your customers

If you can’t find any business angels nor VCs wanting to support your hardware project, consider going to a crowdfunding platform. In fact, you should consider it from the beginning. You have much more chance to get funded if your product has been validated by its customers. A crowdfunding success can be the first step towards bigger funding.

Choosing VC funding can be tricky for many different reasons. I’ll address them in an other article. Stay tuned.

 

Bonus Resource:

AngelList is an excellent place to get in touch with investors and business angels. They actually use it. To date, almost 3000 investors are listed as hardware investors. Check AngelList hardware investors list.

 

Cheers,

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