What we’ve learned about hardware startups
From ASME’s four years of hosting the global ISHOW, several common themes stand out.
Our team of experts and staff have reviewed more than 500 applications and supported more than 100 innovators. Here’s what we’ve learned.
- IMPACT HARDWARE ISN’T SECTOR-AGNOSTIC.
Some sectors are more predisposed to hardware innovation than others — sectors where physical products play a critical role in the delivery of services, like healthcare, energy, water and sanitation (WASH), and agriculture. Of ISHOW’s finalists*, 39% are health-focused ventures. Agriculture ventures represent 24% of all finalists, and energy and WASH represent 11% and 8.5% respectively.
What’s more, geographically, hardware entrepreneurs vary. The ISHOW attracts a large number of health-focused hardware entrepreneurs in the U.S. and India. Of the 29 finalists from India, 18 are health ventures. In the U.S., it’s 17 of 31. Two particular areas of focus are maternal and infant care, and non-communicable diseases (NCDs).
In Kenya meanwhile, nine of the 30 finalists are agriculture-focused. The entrepreneurs developing new health innovations largely hail from Uganda. (More below.)
Even with a small dataset, this sector segmentation isn’t surprising. Healthcare, particularly rising incidence rates of NCDs, put significant economic pressure on both the U.S. and India, both at the household and national levels. In Africa, as much as 40% of GDP, 70% of livelihoods, and 80% of food stem from small-scale farming.
Other geography-specific data: the U.S. competition is a draw for IoT ventures; four of the ISHOW’s five education-focused finalists come from India, and improving utility services is a theme unique to the Kenya ISHOW.
2. UNIVERSITIES PLAY A CRITICAL ROLE IN HARDWARE INNOVATION.
Above we mentioned the prevalence of health startups from Uganda. There’s one source: Makerere University in Kampala. Often dubbed the “MIT of Africa,” Makerere University hosts a strong biotechnology program. ISHOW finalists from the university tell the same story: Makerere offers an innovation lifeline — often well after entrepreneurs have graduated — in a market where startup resources are scarce.
It’s clear that any organization wanting to encourage more impact-focused hardware to market must cultivate partnerships with universities.
Universities are hubs of knowledge, networks, and resources that are valuable to any budding entrepreneur. This is particularly true in the hardware sector, where product development timelines are long and costly, and facilities for prototyping and testing are otherwise very expensive. Sanivation and CalWave have leaned on networks at U.C. Berkeley. PlenOptika and Leuko were both launched out of the M+Vision fellowship program — a partnership between MIT and the government of Madrid. The ISHOW has also hosted entrepreneurs from Carnegie Mellon, Johns Hopkins and Penn State universities in the U.S.; the University of Toronto in Canada; the University of Cambridge in the U.K., and the Stanford-India Biodesign program — a partnership between Stanford University and India’s Ministry of Science and Technology — to name a few.
The ISHOW hasn’t deliberately cultivated partnerships with any of these institutions… yet. But it’s clear that any organization wanting to encourage more impact-focused hardware to market must.
3. HARDWARE INNOVATORS THIRST FOR ENGINEERING EXPERTISE… AND MONEY.
Anyone who’s been working with impact startups long enough is aware of the “competition circuit”: startups rotate through business competitions, delivering pitches and, if they’re lucky, collecting prize money that helps take their idea one step further.
A few of the ISHOW finalists have run the circuit. But most don’t apply to the ISHOW looking for business advice. In the U.S., 37% of finalists report seeking engineering and product design advice foremost. Another 27% aim to build industry networks. Only 9% want business advice — possibly a reflection of the availability of other competitions, startup hubs, and incubators offering this as a primary service.
Globally, these ratios are tighter, with 26% of finalists seeking engineering and design advice, 17% seeking business advice, and 13% seeking networks. This could suggest that innovators need more robust entrepreneurial resources across the board in their home markets. In either case, the search for engineering and design advice implies that there is a need in the impact startup space for these services.
Finally, money. Startups commonly complain about a lack of available capital. Hardware startups, however, need more than most. Of U.S. ISHOW finalists, 27% came to the competition looking for funding; 44% did overall. The disparity points to a more acute capital gap for startups in emerging markets.
Written by Paul Scott, James Creel and Jessica Pothering of ASME’s Engineering for Global Development group
*This section’s data includes 82 ventures: nine 2015 winners and 71 2016-to-2018 finalists.