Team, Tech, Market and a bazooka for Defensibility

Four-Points Checklist to Invest in Hardware Startups

Every investor has its own pet peeves, or mission. At HAX we narrowed it down to a few points. It helps us discuss and compare startups with more clarity than “I like it”, “not bad” or “I don’t believe in it”.

1. Team

Teams fall into three main categories:

  • Industry veterans. Many years of experience, know their thing inside out. Generally spotted a solid opportunity and go for it. They know the tech, the people, the channels.
  • Indie inventors. Sometimes from the “Maker Movement”. They are often wilder cards than fresh grads, but closer to their customers.

2. Prototype

Ok you have a great team (or “formidable founders”, would say Paul Graham), but can they build? Prototype is proof.

3. Market

Ok you got something working. But how many people might want it? Do you have any proof? Have you talked to enough prospective customers? Do you really understand their problem(s) and why the current solutions are not enough?

  • Is it the right time? Sometimes it’s much too early.
  • Is it the right price? A quick estimate of your Bill of Material can tell us tons.

4. Defensibility

  • Patents are NOT the most common way, though they are quite frequent with medical devices.
  • These days it’s a lot about software, algorithms and AI.
  • Sometimes it can be a community of users or developers.
  • Increasingly there is a “hard science” element like medical / physics / materials or else. Even the conspicuously inconspicuous Voltera PCB printer has a nanotech scientist on staff (she also does hardcore crossfit).
  • Speed. Get to market first with a good enough product. People are unlikely to switch unless your competitors have significant advantages (or, sadly, much more marketing money).

Check our 12 “Wares” list

Some time last year, we wrote down in our Techcrunch “Lean Hardware” column a list of 12 “wares” to avoid. It’s still a pretty good guide. Check it out!

Partner @ SOSV — $700m VC fund for Deep Tech (biology, robotics, etc.) | Digital Naturalist | Keynote Speaker | Angel Investor

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