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Hardtech Innovation On The Rise

Essentials for startup success.
Lonnie Garris
Contributing CIO
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The journey of many successful software companies has come to define the pathway to forming a successful startup company. Software startups have enabled new ways for interpersonal communication and have developed enterprise software to enhance the customer experience. Software innovation is expected to remain a bankable asset for investors.

However, hardtech startups are gaining traction with traditional venture capital firms and corporate venture capital (CVC) units. CVC units look to invest in startups aligned with corporate environmental, social, and governance (ESG) goals and those with unique technology to solve climate change challenges.

What is Hardtech?

Hardtech refers to technology that involves tangible, physical products, particularly hardware-based ones, requiring significant research and development in STEM fields. Hardtech ventures often have high entry costs, requiring large outlays of startup capital to facilitate prototyping and testing.

These ventures may also face stringent and lengthy regulatory requirements. This contrasts with the lower costs for entry into the software sector, where a minimally viable product (MVP) can often be developed and iterated with a relatively modest initial investment.

Despite these challenges, hardtech addresses pressing societal needs, such as integrating renewable energy into the existing grid and novel ways to capture and remove carbon from the environment.

Workforce and Geographical Keys

A skilled and seasoned workforce is necessary to navigate the technology challenges hardtech can present. As such, startup technology leaders are expected to have an extensive background in the physical sciences, such as electrical and chemical engineering. Furthermore, seasoned professionals can help navigate the intricacies of MVP development and pilot demonstrations and bring along their networks and connections, which can be crucial for collaboration, partnerships, and funding.

Besides team member composition, company location can be crucial to the success of hardtech startups. Several factors make geography an essential consideration. For instance, regions with a high concentration of engineering and research-focused universities are fertile ground for hardtech startups. Some of the more notable institutions include:

  • California Polytechnic State University (CalPoly), San Luis Obispo, CA
  • Rensselaer Polytechnic Institue (RPI)- Troy, NY
  • Massachusetts Institute of Technology (MIT), Cambridge, MA
  • Georgia Institute of Technology (Georgia Tech), Atlanta, GA
  • Virginia Tech, Blacksburg, VA
  • Worcester Polytechnic Institute (WPI), Worcester, MA

These areas naturally attract highly skilled professionals, offering a richer talent pool for recruitment. In addition, locations with a robust defense industrial base workforce can also provide startups with a skilled and proven workforce that has developed hardtech solutions for vexing national security problems. Startups near these hubs can access an ecosystem of suppliers, collaborators, and potential customers.

Hardtech Challenges

Hardtech startups face significant challenges in testing their ideas and innovations due to the high cost of equipment and analytical tools and their specialized nature. Startup Chief Technology Officers (CTOs) must have the technical acumen and the soft skills to facilitate collaborations with universities and industry.

CTOs can take multiple paths to help mitigate the high entry barrier– some include:

  • University Collaborations: Partnerships can provide access to testing equipment and opportunities to work with leading researchers and students.
  • Industry Partnerships: Partnering with established companies gives hardtech startups access to production facilities, proprietary technologies, and expert guidance.
  • Maker Spaces and Incubators: Specialized maker spaces and incubators focusing on hardware can offer shared access to expensive machinery and tools.
  • Venture Builder Programs: Accelerators focusing on hardtech provide funding and strategic resources, including lab space and professional networking.

The Wrap

Hardtech startups drive the nation to tackle climate change challenges. For several strategic and financial reasons, corporate venture capital units might consider acquiring a hardtech startup. Having a team with the right mix of skill and experience is crucial for success, and choosing the right geographic location can significantly impact the ability to attract and retain such talent.

Startup founders who can leverage their networks and secure collaborations with universities and established industry partners will increase their chances of success.

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