Hardware Numbers

By The

@BoltVC

Ben Einstein | GENERAL PARTNER | Bolt@BenEinstein

Venture CapitalDesigned for Hardware

www.bolt.io

@BoltVCwww.bolt.io

OUTLINE

• Team

• Prototyping

• Financing

• Manufacturing

• Logistics

• Marketing

• Retail

• Exits

@BoltVCwww.bolt.io

DISCLAIMER

@BoltVCwww.bolt.io

BLOG.BOLT.IOAll content is already online

Don’t take notes!

TITLETEXTTitle Text

TEAM

8Employees to scale (ME+EE+FW+ID/UX)

(FE + BE)

(Marketing/Sales + Ops)

2%-5% First Hire

2-5%Equity for first hire(10:10, 20:5, 50:5)

3-10%Equity for strategic “must have” hire

7-10%Equity hired CEO post-A

4 yearsTypical vesting period for EVERYONE

83(b)File it!

10% Option Pool

10%Option pool (minimum)

PrototypingTitle Text

Prototyping

6 MonthsProduct development cycle after core tech

1Prototype per week

>30Customers until validation

70Magic NPS number

$500KTop-tier firm

>$100K Mid-Tier Design Shop

$100KMid-tier firm

$10-50kConsultant

0%Amount you can trust what people “will buy” from a survey

Value of McMaster-Carr during prototyping∞

$35kCost of issued utility patent

>3Years to issue patent

TITLETEXTTitle Text

Financing

$100MAnnual revenue within 5 years

20%Target ownership of lead VC

$0Number of dollars you’ll

raise by putting your startup on AngelList without any prior

investment

18 MonthsTarget length of runway with first institutional raise

3-6 Months To Raise it

3-6 MonthsTo raise it

TITLETEXTTitle Text

Manufacturing

1,000:1Savings of design vs production

5k UnitsTypical MOQ in China ($1M/yr value)

10-12CMs to investigate

5CMs to RFQ

3+CMs to negotiate with

(you’re not negotiating if you aren’t willing to walk away)

3 MonthsFor RFQ/signed MSA

9 MonthsFrom MSA to FOB (6 months if you’re really good)

50%Payment up front

(30:30:Bal)

3 - 4Components drive BOM cost (8-10 if screen)

$6.5kInjection mold tool (straight pull, single shot, textured) in China

$15kInjection mold tool (straight pull, single shot, textured) in US

5% Scrap Rate

5%Scrap rate

(max, 0.5% target)

$15kFCC mark + more for others

$0.501 color cardboard gift box

$5-154/6 color + 2 side + foil/UV + inserts for gift box

$1-5Master carton cost

LogisticsTitle Text

Logistics

4 WeeksSea freight, FOB China to US

$2.1KOne can across the Pacific

10xAir freight/unit

But 2 days vs 4 weeks

~5%Ex-CM duty/customs

2-5%For 3PL + FF

Returns 2% - 10%

Reverse Logistics

2-10%Return rates (2% is good)

$1KMove pallet from Longbeach to NYC

Marketing

$12kPR/Ad agency fee/month

(do it yourself)

10Units/week giveaway

$20k+CES booth cost + more (just walk)

$3kProduct photography session

$7kCrowdfunding video production

2%Conversion rate online

$3-?It’s all about CAC

TITLETEXTTitle Text

Retail

>2.5xBOM:MSRP, but don’t price this way!

Pricing psychology

12-20%Margins, depending on category/supplier/product

30-35%Margins for CE, high volume typ

40-60%Margins AND low volume (but great for brand)

50-85% Sell-through (vs sell-in)

20-100%Backstock required by most retailers

$1k-5kPer store display cost

18 MonthsTypical EOL cycle

175 ColumnsAmazon SKU template for new products

90 DaysPayment terms from most retailers

150 DaysWhen you actually get paid

(whatcha gunna do)

$10-30k$5M product liability insurance policy

0%100%

Factory, 3PL,Distributor, Retailer risk

Your risk

TITLETEXTTitle Text

EXITS

2-5%Royalty rate

5x+Revenue markup with recurring

vs

10Number of years

for overnight success

This feeling is really fucking cool

Hardware Numbers

By The

@BoltVC

Ben Einstein | General Partner | Bolt@BenEinstein