Common sense says – if you don’t know where to look, you will never find what you are searching for. If you’re a Hardware company thinking about manufacturing at scale, finding money is the only way to do so. But, where do you go to find it? Where are the Venture Capitalists?

Having a solid plan vetted by a trusted partner is a critical step in demonstrating to backers and investors that you understand your business and are well prepared to deploy their funding efficiently. Having gone through this experience numerous times with many customers (building complex products), we help companies understand how to put their best foot forward with investors and be prepared for their due diligence.

Today we want to share with you the state of hardware funding.

In the good old days, it used to be easy: Everybody knew each other. If you needed money (to buy a horse or to build a connected plow for your tractor), you only had to go to the banker in the town center. They knew you, your family and your habits, and without much paperwork nor delay, could give you an answer.

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Evolution of Hardware Scott Miller PDF

Closer to our times, you had to go to the capital of your country, or to a government agency. This is partly because the ambitions became bigger (you did not simply want to make a few connected plows for you and your friends, but you wanted to sell country-wide and you wanted to build a company) and therefore you needed more funds. But at the same time, something interesting happened: Not only did the people with the money not know you (therefore requiring a whole series of application forms), but because the objects were more complex, the people with the money did not understand what you were trying to make (the Parisien banker who never ventured in the suburbs most likely did not know what a plow was and had never heard of LoRa). So, it became more difficult to find money, especially for IoT hardware.

Funding-map-US-2019via CB Insights

Eventually, hubs developed where people with money understood hardware (or had friends, like Dragon) who could explain the process of manufacturing and provide due diligence. For teams in the United States, there was the Bay Area: Silicon Valley and San Francisco. But, is this still the case?

In 2019, you should add the Northeast, too. As the data suggests, the NYC area has caught up to Silicon Valley and getting closer to San Francisco these days. It's not all for Hardware, but it is all investment into expansive technology, which hardware can play a key role.

Europe overall is a little different, as there are a few main staples: Berlin, London and Stockholm, but with about $55 billion invested across 7,200+ equity deals since 2012, there is excitement for continued growth across multiple industries. There are numerous companies that are thriving, and they are not all in the hardware space, but when there’s investment opportunities in software, chances are that it comes around to hardware too. This can also be considered true given where the manufacturing space is going in Europe and a hardware revolution happening there.

top-funded-europe-tech-companies-04.2019-768x790 (1)via CB Insights

Asia is beginning to become a hot market for investment as well. Other countries besides China are starting to expand their capabilities in manufacturing, and their technology is expanding as well. With over $81 billion invested in Asia into VC-backed startups, there’s been a 12x increase in funding since 2013, which feels pretty significant.

From our experience with VCs, there is great risk involved in funding hardware companies because of the typical lack of experience, time and capital needed to get off the ground. If you’re going through this the first time there are numerous “unknown, unknowns”, that having a plan of action can help temper those concerns. Having critical knowledge of the manufacturability of your product and a quality plan in place can help show preparedness levels. This will also set your company up to select the appropriate manufacturing partner, and going through a robust RFQ process will set those expectations of capital needed up front. This information is crucial to understanding key business decisions and funding totals needed. If you know you don’t have the capacity to manage your production oversight in house, or have the capabilities to source the appropriate parts, these are good details to know going into the funding process, so you can plan accordingly.

Each company is different and each industry as well, but knowing what you’re getting into not only protects your company, but keeps you prepared for the tough questions from your potential investors. If you need suggestions, we’ve listed some of our favorite VC’s who fund HW companies here, and feel free to share your own experience with us by contacting us at

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