In the past few months I’ve noticed a trend in hardware startups. The trend goes something like this:

Hardware company raises small amount of angel / seed money

Hardware company launches crowdfunding campaign and presells around $1M of product

Hardware company raises a $8-15M series A

It started as an observation. Since the start of the year I have seen 3 such startups come through that fit the profile: one being Canary and the other two being unannounced hardware companies. But three examples does not a trend make. So I decided to take a look at the data.

The analysis here is imperfect due to the fact that I’m only able to rely on publicly available sources of information. This means companies that presold product on their own site but did not disclose sales figures, like Coin, are omitted from the list: it is limited to what I found on Kickstarter and IndieGoGo. It also means that companies that raised rounds seed and series-A rounds but did not disclose them have data omitted. I know at least 3 companies on the list that fit this profile. Also, for simplicity’s sake, I kept the bar at companies that had presold $800K or more. This results in losing a few companies who presold less but still raised post crowdfunding, like Seamless Toy Company. And I left out Healbe’s GoBe because it’s not real.

With those caveats, onto the data.

Of the Kickstarter and IndieGoGo projects that raised $800K or more, 9 went on to raise a disclosed round post campaign. Add to that the the 3 that have raised but not disclosed and you have 12 out of the 33 projects with a raise post crowdfunding, or 36%. Let’s focus on the red box: the companies with a disclosed post crowdfunding raise.

It seems that my observation is supported with a bit of data. The majority of the boxed companies raised seed money before launching their campaign, with four exceptions (including Misfit with their large $7.8M raise). The majority of companies also raised $10M or more in their post crowdfunding raise: the median amount is a pretty impressive $15M and the average is $11.7M among the group.

One interesting fact that didn’t strike me until this analysis is that the majority of companies waited 9-12 months before closing their next round of funding. Chalk some of that up to the fact that closing a larger round takes more time but also to the fact that, post successful campaign, there is lots to focus on besides just fundraising.

So what does this mean for the hardware entrepreneur? A few observations:

It’s pretty clear that a successful crowdfunding campaign can help catalyze a large financing. This may not be obvious on the above chart but odds of raising a round for any hardware company are much less than the 36% observed in this chart.

Budget 3-6 months post campaign to fundraise. Given that there will be around 3-6 months of legal work and press planning prior to announcement, I would guess that’s the average time it took the companies in the box to raise their rounds.

Smaller dollar raises post crowdfunding take less time: look at SmartThings and Buccaneer, both of whom set their financing targets lower and both took much less time to raise.

Raising money before your crowdfunding campaign increases your chance of getting funded post campaign. Six of the nine red box companies raised before launch. If you filter out EMOTIV and Occipital (two companies that were well established before launching their campaigns), only three companies that raised before launch and had a campaign north of $800K have yet to announce a new round of funding.

I don’t know how these rules hold up for people who hosted their own presales campaigns but I suspect they hold pretty true.

There’s more data here to work with. In my next post I’ll try to dissect why some of the companies in the list outside of the red box have not raised additional capital.