Paul Graham talking about Prototype Day at Y Combinator (Credit: Kevin Hale)

Paul Graham talking about Prototype Day at Y Combinator (Credit: Kevin Hale)

Just a few years ago I was sitting in the audience of O’Reilly’s Where 2.0 conference listening to a panel on venture capital and startups, and a prominent VC stood up and said something along the lines of “…we don’t fund hardware.”

But things have changed rapidly, and while there might not yet be a queue of people waiting to give you money when you go to Sand Hill Road, they’ve at least started to take the meetings.

Although hardly the first, the arrival of PCH’s Highway1—a hardware startup accelerator located in San Francisco, headed up by Brady Forrest—was probably a fairly pivotal moment in that sea change, and seems to be setting the model for how VC money handles hardware startups. Highway1, and others like it, provide mentoring and assistance to hardware makers to build companies. It is, in other words, an incubator.

Incubators are there to take really early stage ideas and prove viability, and it seems that most people now seem to view incubators are a fairly vital stage in a hardware startup’s life. While you can take an idea, and a pitch deck, for a software startup to a major VC and expect a hearing, if you’re pitching hardware you really need a prototype—which is where a hardware incubator comes into its own.

One of the most famous incubator programs in the industry is Y Combinator, who today announced a program of added support for the growing number of hardware startups they fund.

“As YC has grown, we’ve funded more and more hardware companies.  Hardware companies have very different needs from pure software companies…” — Sam Altman, President, Y Combinator

As part of today’s announcement to help the incubator better cater to hardware startups, they have a partnered with Bolt, and Autodesk’s Pier 9 lab. Bolt’s partners and engineering staff will offer advice on product development and manufacturing, and the incubator’s  startups will be able to work with Bolt’s staff at Autodesk’s Pier 9 Workshop facility at no cost.

Autodesk's Pier 9 Lab (Credit: Autodesk)

Autodesk’s Pier 9 Lab (Credit: Autodesk)

As well as providing access to the extensive Pier 9 lab, they have committed to building a smaller in-house electronics prototyping shop in the Mountain View offices.

Finally, they’ve announced a number of other discounts on services—ranging from 3D printing and injection moulding, PCB fabrication and assembly, all the way to product photography—and said they’re looking for more deals to help out their hardware companies.

“…we’re happy to see all sorts of hardware companies, but we especially like the ones that are fundamentally new ideas that Kickstarter might not support.” — Sam Altman, President, Y Combinator

This announcement by Y Combinator is newsworthy, not so much because of the content, but the context behind it. That such a prominent incubator is taking such notice of hardware startups—is actively going out to look for them—means that there has been a real change in the way that venture capital sees hardware, and that’s important.

There’s never been a better time to become a maker of things, and become part of the next industrial revolution. You just have to pick up your tools and get started.

Alasdair Allan

Alasdair Allan

Alasdair Allan is a scientist, author, hacker and tinkerer, who is spending a lot of his time thinking about the Internet of Things. In the past he has mesh networked the Moscone Center, caused a U.S. Senate hearing, and contributed to the detection of what was—at the time—the most distant object yet discovered.


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  • Sean OSullivan

    Hey, I’m a partner at SOSventures. We started the hardware accelerator boom back in 2011 with Haxlr8r (http://haxlr8r.com), which will this spring will graduate our 65th hardware company, which is about 50 more than any other program. While it’s still very early, our companies have received valuations of hundreds of millions of dollars shipping hundreds of thousands of units across a range of industries. And yes, almost half of Haxlr8r projects are featured and successfully funded on kickstarter (http://kickstarter.com/haxlr8r). But whatever Sam was trying to imply, in the quote above, that all Hax projects are kickstarter projects, is just ridiculous.

    Most of them, including nearly all B2B products and many of the specialized robotics projects, never even launch a kickstarter. Duh!

    Most hardware accelerators, such as Bolt and others, stopped actually running accelerators and became incubators or VCs investing in hardware. But Haxlr8r is still helping companies produce and scale great companies shipping thousands, tens of thousands and hundreds of thousands of units. We have, as part of our accelerator, a full-time staff of 10+ engineering experts in electrical engineering, mechatronics, mechanical design, industrial design, sourcing and logistics, distribution, etc. All stuff that software people don’t need to know anything about. Got a viral social marketing app and you need $10 million in funding to get it to scale? No place better than YC. Want to build robots, consumer electronics, medical products, products designed to change the physical world? It’s a different animal.

    I agree with you, Alastair, the real news here is that the space continues heating up for hardware. It’s a great sign for all Makers… all the people who love to build and imagine the future of devices for improving the human experience. VCs are seeing this space and figuring out how they can participate and ignite it.

    We welcome YC’s foray into hardware. Hardware is hard, and specialized, and it’s conceivable YC will develop a capability to help companies get their products designed for manufacturing, into production, and into distribution channels etc. It’s not the same thing as software. If you software guys at YC need to partner with people who know how to do that stuff, just give us a call. We can definitely help you! :-)

    Focus is what wins in life. Haxlr8r, like Make, is focussed on makers… hardware makers of real-world products.

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