SANTA CLARA, CA — As part of the rising wave of interest in the Internet of Things (IoT), programs have appeared to help development teams creating IoT products. These “startup accelerator” programs can offer equipment, mentoring, workspace, and even funding to entrepreneurs working to move their product idea or prototype to market. A panel representing three such accelerators — Scott Miller of Dragon Innovation, Brady Forrest of Highway 1, and Zach Supalla, founder of Particle (formerly Spark) and representing the HAX Accelerator (formerly HAXLR8R) — spoke in the session “Inside the IoT Startup Accelerators” at the Embedded Systems Conference, Silicon Valley, offering advice on such things as setting appropriate goals, when not to use Kickstarter, and dealing effectively with China.
Startup accelerators arose, said Scott Miller, as a result of a hole in the market. “It's easier than ever to go from idea to prototype,” Miller noted, “but it's hard to go from prototype to marketable product.” Accelerators help startups navigate that step. Working with venture capital fund Bolt, for instance, startup accelerator Dragon Innovation offers entrepreneurs its expertise in manufacturing, market fit, and the like as well as funding to begin production. “We look for companies that have a path to $100 million in revenue within five years,” Miller said.
The panel offered would-be entrepreneurs advice in many aspects of product development. In terms of markets that are underserved, for instance, Miller recommended pursuing a product design that would result in recurring revenue. “Look for something like the 'Keurig for X,' where your hardware serves a need but you are selling more than just the hardware.” He gave the example of an IoT pet food dispenser that also ordered more food as needed.
Brady Forrest of Highway 1 suggested that developers seek ways to serve customers who are not yet on the Internet. “I've been looking at consumer medical devices,' Forrest noted, “Something that can help the consumer take control of their health.”
Zach Supalla noted that there are better markets than consumers for IoT. “The IoT too often gets confused with home automation, which is something lots of companies are going after,” Supalla said. “But for the most part consumers are slow to adopt new technology. Industrial applications of the IoT, especially those that don't seem very exciting, are actually a good area. The customers there can have deep pockets and have a high willingness to pay when there is a good business benefit.”
When asked about Kickstarter and its kind, the panelists were upbeat but cautionary. “Virtually every hardware startup is looking into crowdfunding,” said Forrest. “But you have to ask if your product is right for the Kickstarter crowd. Your product needs to be an impulse buy, not a 'need it now' type of thing.” People who have an active need for something don't want to take the risk or wait for delivery, he explained.
Forrest also cautioned entrepreneurs not to be too conservative on their Kickstarter goal. “Not setting a large enough goal can leave you short,” Forrest said. “You have to plan on acquiring tools and such as well as shouldering the cost of initial production.” For those concerned about not meeting a higher goal, Supalla added “Failing to meet your goal isn't all that bad. You might have gotten trapped into delivering on a promise without having enough capital to finish.” Forrest agreed, saying “Not meeting a realistic goal can set you on the track of a new business model that will be more successful.”
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