An Indian Hardware Startup Story: the BEST things about creating the Mantis! (& the WORST!)
a.k.a Why is Orxa Energies building an Electric Motorcycle in India’s Silicon Valley?
This is part 1 of a two-part series on the joys & challenges on running a hardware startup in a predominantly asset-light, IT-talent driven startup ecosystem. Part 2 of this series can be found here.
When we started Orxa Energies, we just wanted an electric motorcycle that we wanted to ride. Looked around for electric bikes and found only Zero Motorcycles away in the US!
So we set off to build one for ourselves — I mean, what could possibly go wrong, right?
Wrong.
Fact 1: There were 11,129 startups recognized until July 2018. From 2013–18, around 7200–7700 tech startups were launched in India. Some 200+ startups were hardware.
In 2016, Startup India was launched as a flagship entrepreneurship programme. The funding for startups in India has shot up year-on-year from $1.6 billion in 2013 to around $13 billion in 2017.
Fact 2: In the same period, around 70% of them shut down. For the few hardware startups, the death rate was at 90%.
Hardware startups find that funding remains minimal. There are even reports that “the hardware ecosystem in India does not exist”
“Hardware” is a catch-all term for start-ups developing anything from wearables, drones, robotics, 3D Printing, electric vehicles, IoT and everything in between.
Despite this variety, all our problems seem to circle the same few issues.
Everyone says “Hardware is Hard” — But how hard?
We started Orxa Energies in 2015 — and in this roller-coaster of the last 3 years, we always say that our biggest problem is the next one. But here’s the top 4 on our list:
Running out of money
Every startup faces money issues. Per CB Insights research, 29% of all startups fail because they run out of cash. For a hardware start-up, these issues are compounded. The biggest of these issues is the huge upfront costs. For example, in an Electric Vehicle, the tooling costs for the molds, the electronics components, and the multiple prototypes required, all add up fast!
The long time between the concept & the product
Unlike software, the “build fast-fail fast” concept in hardware is quite different. While building products (especially an electric motorcycle that can go at >140kmph!) user safety is fundamental. Be it drones, consumer electronics or medical devices, there are safety certifications & regulations to adhere to. So just a good design just won’t be enough.
Vendor ecosystems that aren’t geared for startups
Many vendors insist on massive “minimum-order-quantities” running into tens of thousands. Since you are a startup still, they insist on 100% advance payment terms which could kill any early-stage start-up.
We understand their perspective as well. The Indian Automotive industry is to be the 3rd largest in the world growing to $300 billion by 2026. The well-established Indian Auto component industry is expected to grow to $104 billion in the same period. As they gear up for this level of growth & this market size, they wouldn’t give much thought for us poor little start-ups.
Finding a team as crazy as the founders
And by far, that one single issue that bugs most hardware start-up founders on a daily basis; the problem that keeps us all up at night and eats up most of the time of our workdays and weekends — is finding those rare pearls of talent. Even at an early stage, a hardware startup needs multitalented, multi-skilled Mechanical engineers, Electronics engineers, Designers, etc. who can all work together. (But this topic deserves an article of its own)
Hope in the Ecosystem
Despite all the “Doom and Gloom”, there is hope in the ecosystem for hardware startups. Startup India program allows for ease of filing of IP & 80% fees waiver. And as a direct consequence, young startups are already filing more patents.
In Jan 2019, the Kerala startup mission launched India’s largest electronic hardware incubator, the Maker Lab. Bengaluru has emerged as the favorite destination of hardware startups in India. With total funding of around $37 Million, we believe the sector is bound to grow!
Even in the EV space, there are positive changes in the ecosystem promoting MakeInIndia. In Jan 2019, the Indian Govt. reduced the import duties on parts and components for Electric Vehicles. The second phase of the Faster Adoption and Manufacturing of Electric vehicles Scheme (FAME II) is expected by March 2019.
On 1st February, while presenting the Union Budget, Finance Minister Piyush Goyal said: “India will lead the energy revolution in the world with the electric vehicles”
There are a number of challenges when starting and running a hardware startup. But the thrill of building an Electric Motorcycle that we want to ride gets us out of bed each day! Because it is the courage to continue that counts!
Do you run a hardware startup as well? What were some of the biggest issues you have faced? We’d love to hear how you overcame them.
