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Have you looked at more conventional forms of funding? If you already have meaningful revenues, why not just get a small business loan from a commercial bank? I

Have you looked at more conventional forms of funding? If you already have meaningful revenues, why not just get a small business loan from a commercial bank? I've never done it, but I expect the interest rates are laughably low at the moment if you have decent credit and some assets (hardware, so yes) to back the loan. Plus, you wouldn't have to give up any equity.

bsder 11y ago
> Have you looked at more conventional forms of funding? We have, but hardware doesn't lend itself to small amounts of money. And there are different trajectories depending upon whether you can get 500 thousand, 2 million, or 5 million. The folks I work with are religious about maintaining a low burn rate. Hardware has a LOT of NRE, and you can get in deep trouble very quickly. We actually had to be very hard-nosed with customer which we expected to be profitable with about 100K volume (actually kind of the Valley of Death in electronics volume--100K has all the NRE of huge volume without the profitability) because we simply couldn't take the risk with cash we had in reserve. If the customer didn't follow through, the NRE would have killed the company. This is a very different discussion if you have 5 million in the bank. In addition, while I can't prove it, I suspect that we lost some funding because we're religious about burn rate management. VC's want "Go big or go home" and someone who is managing burn rate well is anathema to this.
- kokey 11y ago
  I can see how hardware would benefit from someone taking a risk with investment. It's better to sell hardware at the price point it would be at if you are doing it large scale to test the market, even if you are selling it at a loss. However, it sounds like you are almost beyond that point and know there is a demand and at what price, but it was probably hard to compete for investment (and talent) when investors were willing to throw money at zany schemes with hopes of unicorns. I hope for you, once investors become more careful again, that a business with something more proven and where the cash was managed sensibly will be exactly the type of company that most investors will be keen on. This was roughly the situation after the dotcom boom, except investors were poorer and less confident (well, I hope). I also think investors will have to increase their appetite for hardware, because IoT and autonomous vehicles are showing a lot of promise. I also think money that would normally go to unconventional oil and gas projects would be seeking something new. Good luck!

bsder 11y ago

> Have you looked at more conventional forms of funding? We have, but hardware doesn't lend itself to small amounts of money. And there are different trajectories depending upon whether you can get 500 thousand, 2 million, or 5 million. The folks I work with are religious about maintaining a low burn rate. Hardware has a LOT of NRE, and you can get in deep trouble very quickly. We actually had to be very hard-nosed with customer which we expected to be profitable with about 100K volume (actually kind of the Valley of Death in electronics volume--100K has all the NRE of huge volume without the profitability) because we simply couldn't take the risk with cash we had in reserve. If the customer didn't follow through, the NRE would have killed the company. This is a very different discussion if you have 5 million in the bank. In addition, while I can't prove it, I suspect that we lost some funding because we're religious about burn rate management. VC's want "Go big or go home" and someone who is managing burn rate well is anathema to this.

kokey 11y ago
I can see how hardware would benefit from someone taking a risk with investment. It's better to sell hardware at the price point it would be at if you are doing it large scale to test the market, even if you are selling it at a loss. However, it sounds like you are almost beyond that point and know there is a demand and at what price, but it was probably hard to compete for investment (and talent) when investors were willing to throw money at zany schemes with hopes of unicorns. I hope for you, once investors become more careful again, that a business with something more proven and where the cash was managed sensibly will be exactly the type of company that most investors will be keen on. This was roughly the situation after the dotcom boom, except investors were poorer and less confident (well, I hope). I also think investors will have to increase their appetite for hardware, because IoT and autonomous vehicles are showing a lot of promise. I also think money that would normally go to unconventional oil and gas projects would be seeking something new. Good luck!