Founding a hardtech startup is, well, hard. It is expensive, it requires talent, and it often seems to fall in the zone of impossibility. But the hardest phase of hardtech isn’t phase 1 or 2, where you begin to commercialize your product.
It’s phase 0.
Oftentimes, it’s extremely difficult to start without initial capital. Many hardtech founders, myself included, face the “chicken and the egg problem,” where investors want to see a working MVP before investing, whereas you need the initial capital to develop a $20,000 MVP that works.
So typically, hardtech founders have the mindset of raising first before building, but that is extremely difficult to do. Rather, you should aim to achieve a small scale Proof-of-Concept (PoC) model, generally within 3 months, and sign Letters of Intent (LOIs) quickly after. This is a sign to investors that you have not only de-risked the technology but also de-risked the commercial interest.
Fundraising should be a breeze after that if those two are achieved.
One important aspect to consider is that many successful hardtech companies share a common denominator of accelerating past the status quo.
- Cruise’s PoC was a retrofitted Audi, done in 3 months. It validated that self-driving was feasible to build and allowed them to sign LOIs to continue development.
- Astranis built their initial satellite prototype in 3 months. This is a great example of accelerating past the status quo, as traditional satellites take years to build.
- SpaceX is perhaps the best example. A rather successful company these days, they started out by building an entire rocket in less than 4 years. Even though it blew up, the Falcon 1’s launch demonstrated the cost-effectiveness of SpaceX’s rockets, and subsequently led to millions of dollars in future launching orders.
Finally, a common theme among these startups is the focus on innovating on a few core technologies. They don’t try to reinvent the wheel wherever possible, and they usually buy off-the-shelf components wherever possible.
Following this framework, Phase 0 of most hardtech company should follow this rough timeline:
- Month 1: Secure initial capital (usually from family & friends) to begin.
- Month 2-3: Prototype the tech, innovating on just a few core aspects.
- Month 4: Demonstrate the MVP and a path to commercialization through LOIs.
- Months 5-6: Begin fundraising your seed round for the development of V2.