Over 300 investors and corporate development personnel turned out to hear pitches from the 10 latest graduates of two-year old Dallas-based b2b startup accelerator Tech Wildcatters on Wednesday.
Home to the largest concentration of corporations in the world, Dallas serves as home base to Tech Wildcatters, recently named one of the top 10 incubators/accelerators in the U.S.
But while the pitches were polished and the teams managed to raise a combined $2.5 million in follow up funding, the dearth of hardware pitches meant it was a graduating class of software startups that again reigned supreme.
“Software works well for accelerators because it's both capital efficient and scalable, thanks to open source and the proliferation of frameworks. Hardware is where software was about 10 years ago in terms of capital intensity.” said Gabriella Draney, co-founder and managing partner of Tech Wildcatters.
The way an accelerator works, explained Draney, is that the initial idea or company concept has to be both capital efficient and scalable, something hardware startups still seem to be grappling with.
In frustration, many budding hardware makers have abandoned the traditional funding path and turned to crowd-sourced funding models like KickStarter to get their projects off the ground, although that model too has its pitfalls, requiring a high emphasis on marketing and follow up, skills mostly lacking in small startups.
EE Times recently interviewed an independent engineer Bob Baddely about a portable scoreboard project he had launched on Kickstarter.
“I had to cancel my Kickstarter project after a week. I was counting on a lot more coverage from HXLR8R demo day and without it, my campaign was dead in the water. It was a great lesson in the importance of having good marketing material,” he said adding, “being on Kickstarter alone isn’t enough.”
Draney agreed with that assessment, but said there was no reason hardware startups couldn’t start to fit into accelerators. Indeed, Tech Wildcatters’ current mentorship program includes supercomputing on demand startup, Nimbix, which combines FPGAs, GPUs and x86 platforms in the cloud for those wanting to rent a dose of big dollop computing on a case-by case basis.
"We are very interested in companies that work in the space between hardware and software. Apple and others have proven that you can do both well. We just need to see some creativity in the capital efficiency of development and go to market plans," said Draney.
Going through the mentorship program, pulling together a coherent pitch and making the grade may not be the ultimate key to startup success, but the model certainly helps.
Draney said previous graduates of her program, an illustrious group of 26 thus far, have raised over $19 million in funding, generate over $4M in revenue, and employ hundreds across the country.
"Our biggest competition is with the status quo, something that we're proud to say we are changing, for both Dallas and the customers that our portfolio companies serve," she added.
Last week’s pitch day saw companies get funding for ideas ranging from corporate wellness management software, to meta-filtering algorithms for picky restaurant eaters, right down to apps that notify people if they’ve won the lottery. Not rocket science perhaps, but proof that a well-crafted business plan and a bit of investor guidance goes a long way.
And if software can bring in the big bucks with relatively ‘soft’ pitches, how much more valuable would an actual physical platform be, providing it took economies of scale into account?
Can hardware startups hack their way into the modern investor’s hearts and minds? What do you think?