Launching a hardware startup can feel like scaling Mount Everest.

In flip-flops.

You've got the vision, the passion, but the resources?

Hard Tech startups are almost always very resource intensive. It takes capital to build and iterate a hardware product. To get to market, you need to raise capital and validate your product and market- but which comes first?

You can;t build the product without the capital, but you can't raise capital without market validation.

In this article, we'll see ways to solve this eternal hardware startup chicken-and-egg problem.

1. Visual Representation

The leanest way to get a hardware product in front of customers is by creating a visual representation.

This can come in various forms:

• Concept Video:

  A company developing a smart irrigation system could create a video with timelapse footage of a flourishing garden watered by their device, contrasting it with a withered landscape using traditional methods.

• Landing Page:

  Featuring high-resolution 3D renders of a sleek new VR headset with immersive, interactive scenes showcasing the potential gaming and educational experiences.

• CAD Drawings of Concepts:

  Sharing technical schematics of a modular furniture system on their website, allowing potential customers to visualize different configurations and customize their space.

This allows you to get some form of validation, without sinking in the capital to actually build the physical device. This is the lowest risk method of all- but it obviously has some limitations.

For example, customers may think the concepts are great, but it may not be enough to convince them that you can actually build the final product. Hence, it can often be tough to close a contract. Investors will be vary of investing in just a sketch or mockup video, for the same reason.

To improve your chances, there are other methods. One of them is actually getting a letter of intent

2. Letters of Intent

A letter of intent (LOI) is a (usually non-binding) document that outlines an agreement between two or more parties before a legal agreement is finalized. This indicates interest of the buyer in purchasing a specific productm for a specific use case, if the seller is able to meet certain specifications.

This is a great way of getting validation for your hard tech idea, again, because you can validate it without a product, or at most a low cost prototype.

Here are some examples of situations where LOIs would be a good option.

• A manufacturer of lightweight exoskeletons could gather LOIs from construction companies, highlighting the increased worker productivity and reduced injury risk their product offers.

• A startup developing a portable water purification device could secure LOIs from disaster relief organizations, specifying the quantities and features they require.

• A company creating AI-powered farming robots could obtain LOIs from large agricultural businesses, outlining the desired functionalities and potential cost savings.

The key point with LOIs is to make it as specific as possible- so that it acts almost like a product roadmap for the company.

This shows your investors that the problem is real and that you have conducted thorough interviews to validate it.

3. Strong Advisory Board or Initial Investors

A strong advisory board can signal to investors and customers you have credibility. I;m going to give an extreme example here- Theranos.

Theranos had a super star board of advisors inlcuding Henry Kissinger (former United States Secretary of State), Jim Mattis (retired Marine Corps four-star general), George Shultz (former United States Secretary of State) and more.

They also first raised money with a $500,000 seed round led by Tim Draper, a famous investor in Silicon Valley. This vote of confidence from people that are trusted, passes on the trust to the company.

It's great optics. It creates FOMO.

We've seen this work for other companies too, like WeWork and FTX.

Now, I gave examples of companies who pretty much misused it- but it's only to highlight the potential power of the optics it creates.

Ideally, when you sign advisors, they should be:

1. Highly compenent in your field

2. Provide a great network or funding source

3. Help with "distribution" or closing sales

4. Be a brand ambassador or a product evangelist

• A team developing a revolutionary prosthetic limb could include a renowned prosthetist and a Paralympic athlete on their advisory board, lending expertise and generating media interest.

• A startup building a next-generation electric vehicle could enlist an experienced battery technologist and a prominent environmental activist as advisors, showcasing their commitment to sustainability and technological innovation.

• A company creating a cloud-based platform for managing smart home devices could involve a leading cybersecurity expert and a venture capitalist specializing in IoT technology on their board, bolstering trust and investor confidence.

4. Scaled Down V1:

Now we are getting into actually building products. If possible, these are the best ways of validating any a hardware idea- but they are more time and resource intensive.

This is specifically applicable to extremely high CAPEX startups- biotech, deeptech hardware, chemical engineering and similar companies. These companies often require large plants, which would be impossible to build without millions of dollars in capital. And millions of dollars are pretty hard to raise without actual proof the technology works- hence the need of building a small pilot project or mini plant.

Other examples of where scaled down versions may be useful is in consumer hardware such as:

• Instead of launching a feature-packed smart speaker initially, focus on a basic version with voice-activated music playback and simple home automation control. Gather user feedback on desired features and prioritize development based on real-world needs.

• Develop a minimalist fitness tracker that focuses on essential features like step counting and sleep tracking, offering a budget-friendly alternative before introducing advanced health monitoring features in later iterations.

• Create a modular kitchen robot with core functionalities like chopping and mixing, allowing for future expansion through add-on modules for grilling, baking, or specific dietary needs.

A scaled down V1 is a great way to demonstrate a working technology and get feedback on an MVP for future development.

5. Things That Don't Scale:

If you have seen enough YCombinator content, I am sure you've come across this term.

Things That Don't Scale usually means resorting to methods that are required due to your resource constraints, but will not scale as your startup scales.

For example, Pebble, the early smartwatch company, assembled their first 1500 units by hand- hardly scalable in the long run!

• A 3D printing startup could offer personalized phone cases and custom-designed figurines, creating a unique and engaging customer experience before scaling up to larger-scale manufacturing.

• A company developing an educational VR experience could partner with local schools for pilot programs, gathering valuable feedback and refining their product before wider distribution.

• A team building a collaborative music creation platform could host exclusive beta testing sessions with professional musicians, gaining valuable insights and building pre-launch buzz.

6. Raise Funding Using a POC:

• A company developing a satellite-based internet solution could build a small-scale demonstration network in a remote community, showcasing the viability and impact of their technology to attract investors for wider deployment.

• A startup creating a self-driving delivery vehicle could partner with a local restaurant for real-world testing, showcasing the efficiency and safety of their system to secure funding for further development and expansion.

• A team developing a new type of solar panel could build a pilot rooftop installation on a public building, demonstrating the increased energy generation and cost savings to secure funding for larger-scale projects.

7. (Scalable) Side-Business:

• A company specializing in 3D-printed prosthetics could offer custom-printed orthotics or medical assistive devices as a scalable side-business, generating additional revenue and expanding their product portfolio.

• A startup developing a platform for analyzing medical data could offer genetic testing services or personalized health reports as a side-business, leveraging their core technology and data expertise.

• A team building a smart agriculture sensor system could offer data consulting services to farmers, analyzing their crop yields and providing recommendations for optimized water and fertilizer usage.

8. Sell it Before You Make it:

• Launch a Kickstarter campaign for a portable solar charger, offering early-bird discounts and pre-orders to gauge market demand and secure funding for production.

• Create a landing page accepting pre-orders for a limited-edition version of your new wireless headphones, generating excitement and buzz while collecting valuable customer data.

• Partner with a popular online retailer to offer pre-sale tickets for a new fitness tracker, leveraging their audience reach and securing initial sales before production begins.

These are just a few examples.

The key is to tailor these strategies to your specific product and market, using your creativity and resourcefulness to overcome the challenges of the cold start and launch your hardware startup to success.
Sometimes detours like small projects can help build up your tech stack, IP portfolio, team and reputation and may be worth it to get your hardware startup off the ground.