Hardware is Hard

HARD TRUTH Hardware cos form a small proportion of India’s startup ecosystem, and those that exist are rarely given consideration by investors & venture capital firms
Sai Srinivas Kiran knew starting a hardware company would be difficult, but he had no way of expecting the hurdles that were to come.It all started for Teewe’s founder when a local manufacturer pulled out a week before his first product launch, costing him a bulk of his launch, costing him a bulk of his precious seed capital. With little left in the company bank account and dwindling investor faith, Kiran and his team turned to China, hopeful to solve this manufacturing glitch. It took three and a half months for the devices to be manufactured, which sold out in India within three days.

“There is no ecosystem for hardware here. The transition from prototyping to mass manufacturing is one of the hardest things for an entre preneur in this space,“ said Kiran, whose company has raised funding from Sequoia Capital and Investor Quotient.

Despite the rallying cry of `Make in India’, the country’s startup hardware ecosystem is yet to be jumpstarted. Hardware companies make up a paltry proportion of India’s startup ecosystem, and those that exist are rarely given consideration by venture capital firms eager for scale and returns using software technology . ware technology.

Yet some remain optimistic. “Whatever software went through, hardware is now going through,“ said Karthee Madasamy , managing director of Qualcomm Ventures, which is actively looking at investing in a hardware startup. “There is momentum because in five to ten years, we will continue to move into consumer electronics in India as con sumer demand grows, probably more than even fuel. So, the need for an eco system to manufacture electronics here is becoming important as well.“

“It ultimately comes down to whether the product will solve the need or want of the consumer. If that is the case, the rest of the process–scaling up, funding, etc–will definitely happen,“ said K Chandrasekhar, chief executive officer of Bengaluru-based Forus Health, an ophthalmic medical de vice maker and technology solu tions provider.

According to a recent report by Venture Intelligence, manufactur ing startups in India received less than $40 million in funding over the past year, with zero deals in the second quarter of 2015. But a complete hardware ecosystem does not necessarily mean the entire supply chain has to be based here, said Vishal Gaur, associate dean at Cornell’s Johnson School of Management.

“These days it’s easy for companies to be spread out. Hardware doesn’t all have to be domestic, the technology need not have come from India either. But companies in the space should have the exposure of working with different kinds of technology , so they can identify different applications,“ he said. For example, Silicon Valley has long outsourced its manufacturing capabilities to Shenzhen, an industrial town in southern China that is home to the world’s largest elect r o n i c s c o m p o n e n t m a rke t .Benjamin Joffe, general partner of HAX, China’s largest-hardware accelerator, said, “The formula we use now is research and development in the home country , advanced proto typing and manufacturing in Shenzhen, then sales in the US, home market, or globally.“ Instead, “what matters most is getting to a first ters most is getting to a first work-like prototype at the very early start,“ he added.This is rapidly improving, with the creation of `makerspaces’ in major metros such as Bengaluru-based Workbench Projects and Maker’s Asylum in Delhi and Mumbai. Moreover, industrial components and products are now much easier to procure, thanks to a handful of ecommerce companies that have popped up in the in dustry, including Tolexo, Industry-buying, and Paytm.“We need to make heroes of these companies, whether they succeed or fail. VC funding will come in this area because India is a large consumer market and the numbers are there,“ Infosys co-founder Kris Gopalakrishnan said at an ET panel discussion last week. Gopalakrishnan added that he was looking to create a finishing school for hardware designers and engineers, as well as a lab for prototypes to be made and tested, which will in turn attract venture capital and mentors.

Source: The Economic Times
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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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