How Bluetooth LE And Crowdfunding Are Accelerating The Connected Hardware Boom

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TechCrunch  | By  Natasha Lomas | Posted Sep 15, 2013

crowdfunding hardwareIt’s one trend that’s been hard to miss, being mostly clipped and/or strapped in plain sight. To spell it out, hardware startups — and the devices they’re making — are having a moment, thanks in major part to crowdfunding websites providing the funding bridge between a promising prototype and the cost of manufacturing a shipping product.

Fuelled by crowdfunding, hardware startups are hard at work extending the capabilities of mobile devices – the phones and tablets that have otherwise become boringly alike – and building out the long anticipated Internet of Things in the process. In case you haven’t noticed, this network of connected objects is beginning to materialise around us, piece by Bluetooth-connected piece.

Startup accelerators are also increasingly getting in on the connected hardware action, with a number of dedicated hardware hothouses cropping up, such as recent entrant High Tech XL in the Netherlands (in the midst of accepting applications for its first cohort).

High-profile accelerators such as Y Combinator have also been taking more of an interest in the hard stuff – with the likes of Lockitron coming out of their program in recent years. Blogging about the rise of hardware last October YC’s Paul Graham suggested a confluence of factors are combining to make it easier to kick-start a hardware business:

There is no one single force driving this trend. Hardware does well on crowdfunding sites. The spread of tablets makes it possible to build new things controlled by and even incorporating them.Electric motors have improved. Wireless connectivity of various types can now be taken for granted. It’s getting more straightforward to get things manufactured. Arduinos, 3D printing, laser cutters, and more accessible CNC milling are making hardware easier to prototype. Retailers are less of a bottleneck as customers increasingly buy online.

One question I can answer is why hardware is suddenly cool. It always was cool. Physical things are great. They just haven’t been as great a way to start a rapidly growing business as software. But that rule may not be permanent. It’s not even that old; it only dates from about 1990. Maybe the advantage of software will turn out to have been temporary. Hackers love to build hardware, and customers love to buy it. So if the ease of shipping hardware even approached the ease of shipping software, we’d see a lot more hardware startups.

I would add that hardware can be much easier to conceptualise than software. Add in the tangibility of actually getting a physical thing in your hand in exchange for your hard-earned and convincing buyers to part with money isn’t such a hard sell as software can be (being still somewhat dogged by the notion that bits & bytes should be free).

The latest Silicon Valley accelerator to be bitten by the hardware bug is Tandem Capital.  One out of every three to four of its intake over the next 12 to 18 months will be a hardware startup, Tandem’s Doug Renert tells TechCrunch – injecting an additional strand of physicality to its ‘muscle capital’ approach. The latter involves six to 12 months of in-house mentoring before graduates head off to raise outside capital — and hopefully keep on growing.

“Our plan is, at least for the next year, we’ll basically do one out of three to four companies in the hardware space now. That are tackling what we feel is disruptive – or have a disruptive business in a very large market,” he says.

Tandem’s new dedicated hardware arm will sit alongside its software program, although it is bringing in some additional expertise to staff out the hardware side.  “We’ve brought in folks who can help on everything from the marketing, from the video to the [crowdfunding] campaign. All the way to the product design and the development, when it comes to the embedded software and the [connected] devices and so forth,” says Renert. “Six months ago we didn’t really have the capabilities.”

Tandem typically invests $200,000 apiece in six mobile startups at a time — and will soon be ramping up to six companies per quarter. Previously that effectively boiled down to app makers – graduates of past programs include PlayhavenBitRhymes, attassa and ZumoDrive – but up to a third of each intake going forward will be making some kind of device, in addition to building an app.

Bluetooth LE is allowing a new wave of physically minded startups to build devices that can fly for long enough to become disruptors.

Why is hardware hot right now? The hype around wearables and the quantified self/health tracking movement is certainly encouraging more device makers to get busy. But on an underlying technology level, it’s the next-gen low-power flavour of Bluetooth – Bluetooth Low Energy (or BLE) – that gets the credit as the enabler of this connected device boom.

BLE is allowing a new wave of physically minded startups to build devices that can fly for long enough to become disruptors. Older generations of Bluetooth were just too thirsty on the battery for that. BLE is a very different beast – one that allows makers to build interesting devices that can keep communicating for up to a year on a single charge (in some cases). And that’s a game changer. Add in ubiquitous smartphone ownership and it’s a perfect storm.

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