1. The hardware startup process.

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Idea

Prototype

Alpha/ User-study

Beta/ Crowdfund/ Pre-order/ Funding

Manufacture

Go-to-market

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2. What is an Accelerator?

 

An accelerator is an entity that takes an early stage company (idea/prototype) and match it with resources and guidance until the product reaches the market.

 

3. Why are hardware accelerators different from regular startup accelerators?

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The barrier to entry for hardware startups are much higher than software startups.

Development costs

Prototyping

Testing- getting user feedback and having enough prototypes to show testers

certification

Re-iterations

Manufacturing costs

Finding manufacturers

Redesigning the product for manufacturing 

Manufacturing of the product

Market scaling

manufacturing capabilities

higher barrier for user to use, no freemium model since hardware will always have a cost, so users will have to buy the product

Delivery and logistics

multi-country certification

 

Most hardware startups look for help during two stages

idea/ prototype

manufacturing

 

Most idea stage hardware startups are inexperienced teams that have an idea , but no idea how to develop the actual product. This occurs even with an engineering team since, mechanical and electrical engineers often specialize in specific fields and finding a team with such capabilities are often difficult. Even if the team has a prototype, they will ultimately lack the funds and connections to manufacture the product.

 

Design vs. Manufacturing

Manufacturing stage products can be divided into two groups. Products that are commercial successes (successful kickstarters) and prototype stage teams that rushed into manufacturing. A commercially successful product doesn't mean it can be easily manufactured, many kickstarters have been delayed significantly time and time again due to manufacturing hiccups.

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A good hardware design and prototype does not mean it can be mass manufactured affordably, and smarter teams often look for help when they reach this stage. Going at manufacturing alone is dangerous and more likely to fail than not.

 

This leads us to our next archetype. The money burning team that rushed into manufacturing too early. Manufacturers don't care if your product works or not, they just have to follow the specs in order to fulfill their obligations. They will take your money and say good luck. Teams that rush into manufacturing often times realize major flaws in their product when the first batch is delivered or when going through product certifications. These teams are out of money and often desperate to figure out a way to deliver their product, if they don't, they die.

 

4. What does my accelerator offer?

 

Ideally, five main services:

Design, User-study, Marketing, Manufacturing and Funding.

 

The design team will assist startups to develop desirable, user-friendly, and manufacturable product designs before helping teams build working prototypes for user-study.

 

Our accelerator will craft a team of expert designers, engineers, marketers, venture capitalists , and every day folk to test the products. They will provide feedback and serve as the initial test market before seeking out larger test samples to verify the market.

 

Our marketing team, which will be bilingual (English and Chinese) will work with startups to craft excellent pitches, marketing material, and web presence. In other words, they will help with writing, picture, videos, and ultimately, media exposure. They will also host events that will work to connect startups with various resources and potential customers. 

 

The manufacturing team will be tasked with making the products a reality. Once we believe products are ready for manufacturing, after several market verifications,  we will help design the manufacturing plans, and connect them with manufacturers. They will oversee the manufacturing process and accelerate the troubleshooting. 

 

Startups need money, everything has a cost. Once the startup has a working prototype and several market verifications, the funding team will package everything and start looking for investors in the projects. 

 

5. Why Taiwan?

 

As mentioned above, the hardest part of the startup process is manufacturing, so where better to go than the home of Foxconn and Pegatron? If you don't know these companies, it's fine, they just manufacture over 80% of Apple's products. 

 

Yes, China may be the factory of the world, but Taiwan has long been its factory manager. We have over time built a complex labor relationship with China that has most of the R&D and sales negotiation done in Taiwan while the actual manufacturing occurs in China. What that means is that we are the experts at sourcing and OEM/ODM design, while China does all of our labor, great deal isn't it. However, it's not to say that places like Shenzhen doesn't have its advantages, after all, it is the copying center of the world. Shenzhen has developed a system for rapid production and manufacturing, and its quite reliable, it's the main reason why many accelerators are based there. 

 

However, we're not stopping our startups from going to Shenzhen, in fact, once we determine that the designs are ready for prototyping and manufacturing, we will personally be organizing their trips over. We just believe a lot of the sourcing, market verification, and early prototyping can be done in Taiwan, after all, most of your premium grade components are developed by Taiwanese company, just take a look at TSMC.

 

Furthermore, for startups looking at the western world, Taiwan is the closest thing to the US or Europe on this side of the globe. We have a true democracy, freedoms enjoyed in developed nations, tolerant attitudes towards others, and a spirit of entrepreneurship. Oh, did I mention, unlike China we don't censor the internet, so you don't have to worry about not being able to log onto Gmail :smile: . Furthermore, Taiwan is affordable, our rental prices are lower than Shenzhen and Hong Kong, and our high quality labor pool is some of the lowest wages in the world, I'm trying to change that. For a Silicon Valley software developer, you may be paying 130K USD a year, but here in Taiwan? 120K NTD would be generous, 40K USD. Why not tap into the engineering genius of Taiwan? ​

 

6. Accelerator Process and how we determine our fees and equity

When we find a startup with potential. We will first understand their needs and calculate the cost for us, the accelerator, if we were to do everything for them. Suppose we believe that it will cost our teams a minimum of 20,000 USD to design the product and market the product; this does not include the costs for the prototypes, just merely the cost for our design and marketing team's time and services. We will then value our services at say, 60,000 USD. If the startup is willing to pay us 60,000 USD, then we will not take any equity in process. If they are unable to pay us that much, then we may charge them 20,000 USD + % in their company.

 

In our proposal, we will also provide a potential budget and work with the startup to estimate how much the startup or company may need to raise in order successfully get the product onto the market. If we deem the company to be of significant value, we may choose to also invest in them, and part of those fees could come back to us for our services. All costs that we may incur during the process outside of our team's time will have to be paid for by the startup, these may include prototyping costs, delivery costs, sample costs, outside expert, certification etc.  

 

Once they join our accelerator, we will work to develop a roadmap for their company, set milestones, and goals. We expect that all our participants must have a working prototype within 3 months of joining our accelerator and have either fundraised or hosted successful sales by the end of the 6 months.  

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