Bootstrapping a hardware startup is very difficult, but possible

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This is a Discuss post, where we feature short but insightful opinions from the Asian tech community on startup, entrepreneurship, and tech topics. Got a topic or question to suggest? Drop us an email or leave a comment.

Many founders prefer bootstrapping, but it’s a different case for capital-intensive hardware startups. Is bootstrapping your way to profitability even possible? Where should you focus your resources?

Here are some thoughts from Hax general partner Benjamin Joffe and Brinc co-founder Bay McLaughlin, along with hardware founders Florian Simmendinger (Soundbrenner) and Dustin Onghanseng (uHoo).

Editor’s note: Answers have been edited for clarity.

Benjamin Joffe, general partner at Hax

The main resources of startups are time and money. It takes time to find money, and the more milestones you reach, the easier it is to get money. As a result, the key is to clear milestones as fast as possible.

Founders should think about where and how they can go faster. Our approach has been to leverage both the Shenzhen and Silicon Valley ecosystems to help startups become more effective. If you want to get into movies, you would go to Hollywood or Bollywood where the best people are. For fashion, that would be Paris, Milan, and New York. Being surrounded by like-minded hardware startups is an advantage to improve skills and find solutions faster.

It is possible to bootstrap to profitability but it’s quite rare. In our portfolio, Makeblock, which makes STEM robots, did it (thanks to their initial Kickstarter campaign). Wazer, the desktop water jet cutter, could have done it also on the strength of their Kickstarter campaign, but decided to raise some additional funding for speed and safety. Another company named Flair, which makes an automated solution for HVAC control, financed themselves mostly with pre-orders.

It is still a minority in our portfolio, and for larger robots or health tech devices, probably close to impossible. The contributing factors were:

• Product of limited hardware complexity
• Use of a Kickstarter campaign or pre-orders as funding from customers
• A team capable of covering all technical bases and willing to spend significant time to take care of manufacturing

Some startups, including those in health tech, might be able to finance themselves through grants or awards, but it’s less predictable.

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