An Indian Hardware Startup Story: Surviving the Jungle
a.k.a. Tips, tricks, and other common sense we’ve learnt building our electric motorcycle in Bangalore.
This is part 2 of a two-part series, focusing on running a hardware startup successfully in a predominantly software-driven, asset-light startup ecosystem. The first part can be found here.
Survival Guide to the Uncharted Forests!
Its been three years since we started Orxa Energies and we’ve seen the hardware space in India evolve. We see a lot more startups setting off on this adventure on their own. We wanted to share our “Startup Lessons” with other adventurous folks out there.
Managing your Cashflow
The single biggest problem while running a hardware startup is going to be cash flow.
That’s cash flow specifically. Not fundraising/investment and not revenues.
This is that long long period of time between when we pay our vendors & make our products and when we get the revenues.
“Your product can sink and drag the company with it to the bottom. That’s what happens when cash flow is an afterthought”
So, it’s very important to figure out who the vendors are. To talk to them and build a relationship of trust. Discuss how to work out favorable payment terms with them.
On the opposite end are your customers- would they be willing to give an advance or shorter payment terms. Although not mandatory, startups can be registered as MSME. There are several advantages, like a 45 day Payment Terms, 50% subsidy on patents, & collateral-free loans.
And always, keep an eye on the cash flow. Because the more successful a hardware startup becomes, the bigger the cash flow challenges will be.
Building the Right Team
Start-ups are successful only when the team coalesces around the company’s vision. They believe in the vision strongly enough to execute it. Such a team propels the company ahead. Such a team recovers together, and fast, from all the blows the company will certainly face. So pick this team well.
Finding and building such a team is tough. Don’t be afraid to look for people in non-traditional or non-related fields. And always be on the lookout for good people- you never know where you’ll meet that great vendor-management guy or that branding maven.
Designing for Manufacture
The 3rd prototype that we built of the Mantis had ALL the panels 3D-Printed in-house. We felt so cool!! We felt like we could do anything with the 3D printers in the office. We were seeing our design come to life, line-by-ABS line. Amazing feeling, right?
But we know the reality is still a little way off. Designing components and assemblies for manufacturing is as important a problem as cash-flow. Think about how to design the product for ease of manufacture. Can the absolutely stunning design the team has come up with, be actually manufactured? And if yes, at what cost?
Which brings us to the last point on this survival guide,
Building something that you will buy
All the cool tech that we put in our product is of no consequence if we have no consumer demand. If the product was out on the market- would we, ourselves, buy it? 42% of all startups fail because there is no market need.
So make something people want. Get feedback on the early prototypes. Work on pilots with early adopters. And get their feedback as well. Rinse, repeat.
Tying it all up!
In the previous article of this series, we spoke about the winds high above the startup ecosystem changing for the better. For hardware startups, however, on-ground, the road remains challenging. The skill-set of managing a hardware P&L and cash-flow is still a tough skill to learn. Trying to find good talent, managing vendor issues and gaining valuable customer feedback is still an obstacle-course.
Make something people want, get a good team together and don’t run out of money.
We started Orxa Energies just because we wanted to build an Electric Motorcycle that we wanted to ride. And this still is our ambition. We always say that our biggest problem is the next one. We love celebrating every achievement of the team and every good feedback from our customers. Because all that matters is unrelenting momentum.
We’d love to hear your thoughts on how you tackle these challenges, what are your “survival tips” for the future founders?
