Challenges and Strategies in manoeuvring the financial arena for Hardware Startups

Abstract: Startups, which are an important driver of innovation, has a very important role in the growth of an economy. They are contributing through the growth in employment by generating new jobs and through the development of new sectors. Thorough innovation, startups enable the achievement of increased productivity without necessarily changing the input. Despite such significant contributions, the probability of survival is very low among them. Most often the challenges they face are linked to scarcity in resources which they inherit due to their newness and smallness. Challenges associated with the funding of the startup is very common among startups and has significant influence on the survival of the startup. This is especially true for HW startups as due to their characteristics such as being more dependent on resources and thus more capital intensive. Development of a prototype is very costly and scaling up is a both costly and complex process. The purpose of this research is to investigate and outline the financing implications for HW startups associated with the characteristics of HW startups and how these startups could improve to improve their financing circumstances. The method for collecting data is mainly qualitative semi-structured interviews. This is then combined with theoretical research to fulfil the purpose of the study. Based on the RBV model and comparison to SW startups, it was found that HW startup are unique in ways such as requiring a diverse set of human capital, being more dependent on physical resources and from an organizational perspective being more rigid and dependent on external actors. Furthermore, these characteristics are then linked to the financial implications that HW startups face, and finally a set of improving measures are introduced.