From prototype to production on Kickstarter: $ 100,000 is not enough

Computer Apple I in the Smithsonian Museum, USA. Photo: Ed Uthman, Apple I Computer

On Kickstarter and Indiegogo crowdfunding platforms, more and more projects in the field of electronics appear: in every quarter, dozens of campaigns collect at least $ 100,000. Reaching a mark of 100 thousand. Often assessed as success. Many believe that now the founders will be able to transfer this money to the factory and get the finished product. The fact that 4 out of 5 zhelezyachnyh campaigns do not cope with the timely delivery of their product, says that most teams still underestimate the requirements of manufacturability (DFM, Design For Manufacturing). And this is connected with the following difficulties ...

Arduino is too expensive

Companies such as Arduino , Sparkfun and SeeedStudio have developed excellent electronic modules that are easy to combine and program; It is now much easier to quickly assemble a prototype and place it on Indiegogo or Kickstarter. These modules have a good price for prototyping, but with mass production you will not be able to reach an acceptable market price.

For inexpensive components, time is needed.

There are more affordable Bluetooth and GPRS modules, especially in China, but even before buying, you need to order samples by contacting different suppliers who are not always fluent in English. Then you test the samples. It is very likely that the best option in terms of price and performance will be the most popular. The result is an unexpected shortage and delay in delivery for up to 12 weeks. Only one missing component will completely stop your production.
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Many components are sold in special reels for automated assembly machines. As a rule, one such reel contains from 2 thousand to 5 thousand components - it is likely that you will have to order more than is needed to produce the first batch. A startup without a credit history will be asked to make a full prepayment - it may be necessary to pay the order 12 weeks before the start of production ...

Of course, in Shenzhen there is a market where you can buy any components individually, but this is a risky way: they could be soldered in the old mobile phone (this is, of course, a commendable attempt to reuse, but without any guarantees for the buyer). In addition, you can simply sell a non-working fake. But when debugging a prototype, random errors should be as small as possible, not more.

Need to design for production (DFM)

Replacing key components, such as Bluethooth or a processor, almost always involves redesigning a printed circuit board (PCB) and firmware. Electronics development requires experience. For example, you need to know how to design iron without parasitic radio emission. New development needs to be prototyped and tested. It is very likely that you will need to make edits and re-fabricate your PCB by soldering the miniature components to it again. With the proper level of skills (and good luck!), You will be tested for FCC and CE certificates.

Molds - our everything ...

3D printing and more and more simple and convenient 3D CAD programs are very useful for quick changes in design - you can make at least three versions a day. But when you need to make 6 thousand sets of plastic parts, you quickly realize that this process is still too slow and laborious. This means that we will have to make molds for casting, and as soon as the steel molds are ready, any changes will take a lot of money and time (unlike a 3D printer). Depending on the size of the product, it will take from 10 thousand to 200 thousand dollars and 2 months of work to manufacture a set of molds ... if everything goes well.

A technologically advanced approach (DFM) is required not only for the development of electronics, but also for the housing. This means that you are waiting for negotiations with Chinese tooling manufacturers: you will need to find out how to optimize the plastic components of the body so that they can be accurately cast in the molds. And, among other things, you need to optimize the assembly of the device. After all, a complex assembly not only takes more time, but also increases the percentage of defective devices that do not pass quality control. Manufacturers of the FuelBand fitness bracelet used 42 molds (for all sizes of wrists!), While, according to rumors, they did not manage to increase the percentage of usable products: even after several years of debugging the production process, the marriage was 25%. No wonder they went out of business.


Bracelet Nike FuelBand. Photo: Peter Parkes, Nike FuelBand

Do not forget about testing

Many people forget that after the development of the technological design of the device, it is very important to conduct a comprehensive testing of the pilot batch in the field, and only then start the actual mass production. Murphy's law definitely affects product development, and doubly in China.

Recalling faulty devices can kill a company, so leading brands recruit entire offices of engineers whose only task is to test new developments for several months. A startup does not have such budgets, so it risks, but also to lose less. The minimum task: send 20 devices to beta testers around the world to get a score for several weeks of use.

Manufacturability (DFM) is not a sauce, they cannot pour a prototype on top, often this approach requires a complete rethinking of the product. You do not need to be ashamed of it, because while developing in Europe or America, it is very difficult to take into account all the production details of a factory in China. Even the products of such star teams as Pebble and Nest demanded a complete redesign in a Taiwanese ODM company before they were ready for production.


Pebble Smart Watch. Photo: Pebble Company Blog

But, as mentioned earlier, in many cases it is impossible to limit the transfer of a prototype based on the Arduino to a factory in China. Large ODM companies have no reason to allocate 25 of their best engineers to your order with a volume of 2 thousand pieces. Only small factories remain that can give a chance to your development, but the cooperation of a not very qualified third-rank manufacturer with an inexperienced customer will hardly give a quick result.

Is it too easy?

100 thousand dollars. Once this amount is in your bank account, it may seem like quite a lot. But in most cases this amount is not enough to cover the cost of the product AND REDIZAYNA, including prototyping and manufacturing of molds.

It seems that there is a lack of crowdfunding platforms: it’s too easy to get on with a video of your prototype, it’s easier to get support, but after reaching this goal only a few understand how they are not ready for what will happen next - and especially for the public disappointment of their supporters.

The requirement to publish only those products “that are ready for mass production” is not an option, since participants will have to spend significantly more time and other resources on development, and this kills the core idea of ​​crowdfunding: quickly test your idea in market conditions, and release your product, even without your own money.

The existing model of crowdfunding is a great blessing for product development: a whole sea of ​​excellent ideas was embodied in reality, other ideas received much-needed testing in practice, retaining the years of work of inventors who would have worked in vain on an idea whose time would never come.

Get additional funding

Here is the main advice to the founders: as soon as you get closer to achieving your goal, immediately receive additional investments. 100 thousand dollars on crowdfunding is a good result, now we can confidently say that people are ready to buy your product. With this result, it is much easier to find investors, for example, at https://angel.co/

Time does not stand still

As soon as your project starts to go on a relatively direct route on the Internet, you can be sure that factories in China are already working on a cheaper alternative. And this means that each month of delay significantly reduces your chance to become the leader of your own market segment. And in the next quarter, hundreds of new advanced devices will appear on crowdfunding platforms ...

Ideally, manufacturability (DFM) should be ensured before launching the campaign. Only a few smart startups enlisted the support of investors, who provided them with funds for thorough engineering study and testing, long before reaching crowdfunding, so they have enough reasons to name a specific delivery date for the finished product.

But for such participants, crowdfunding is rather a marketing campaign, not a main source of funding.