1. A win for evidence-based policy, and California kids

    Governor Brown signed SB277 - the vaccine bill - into law on Tuesday morning! This is incredibly significant - California is now the 3rd state in the country to eliminate both the personal and religious exemptions that previously allowed parents to simply opt their children out of required vaccines. (in the map below, VT should actually be light green; they killed their philosophical exemption in May!)

    image

    I have a lot that I want to write over the next few weeks about what we did and how, from the standpoint of a technologist interested in how online platforms have reshaped the strategies needed to run a successful issue campaign. My experience working on this bill and writing about these strategies unfortunately led to doxxing and harassment, which also got me thinking about the unintended consequences of zero-cost publishing, and the tension between free speech and community standards.

    But for now, I want to reflect on the fact that a group of extremely dedicated California parents worked alongside three passionate, articulate legislators deeply committed to public health and evidence-based policy, to accomplish something truly significant. Senators Richard Pan and Ben Allen, and Assemblywoman Lorena Gonzalez, worked tirelessly to craft the best possible legislation with input from a phenomenal coalition of health & education advocacy groups as well as individuals.

    The takeaway for me was that it actually is possible for individuals to make a difference in shaping policy. That may sound very idealistic and cheesy. But it’s true. I saw legislators polling their constituents to accurately gauge support for this bill. I saw the opposition turning out en masse to oppose it at committee hearings - they were also deeply committed; many were parents just like me, working hard on the other side of the issue.

    I personally got involved with the bill after uncovering some disturbing trends during a data analysis of vaccination rates in local kindergartens that I did independently last November (data viz here!). In January, during the measles outbreak, I reached out to Sen. Mark Leno’s office to see if he would sponsor legislation to eliminate the Personal Belief Exemption loophole. At the time, I knew nothing about the legislative process in California. Sen. Leno’s staff directed me to Sen. Richard Pan’s office, where a bill was in the works, and through Facebook I got connected to the newly-formed Vaccinate California. I volunteered…not realizing that I was committing to five solid months of work. :)

    So if there is a problem that keeps you up at night, or a cause that matters to you -climate change, the drought, the economy, education policy- it actually is possible, even as an individual, to call a legislator’s office and get looped into the policy-making process. It really can make a difference.

     

  2. Personal Exemptions from Reason

    So, back in November I blogged about California’s abysmal PBE rates and how this lax state-level vaccination policy is terrible for California kids. Well, since that time we’ve had measles and pertussis outbreaks here, and legislators have really stepped up.

    Dr. Richard Pan introduced SB-277, which aims to eliminate the “Personal Belief” exemption. I got involved as a volunteer with Vaccinate California, a group of parents working to support the legislation through grassroots efforts. I’ve spoken in favor of it at city council meetings in Berkeley and the Democratic Party committee meeting in SF. My first taste of local politics. ;) The response from antivax crackpots online was swift and nasty, but that’s a story for another time.

    This week I wrote an article for Slate on the fight to get the legislation passed, and on the demographics of California’s antivax movement. It has interactives! It looks at both wealth and political party affiliation. You should check it out. And then you should head over to Vaccinate California’s super-fast form for contacting your reps to register your support.

    Antivaxxers bussed in 500 people from across California for the Health Committee meeting on 4/8, for a rally with Truther RFK Jr and loathsome slug Bob Sears (read the Slate article to see why I call him that). They aren’t messing around. California has an amazing opportunity here: antivaxxers have killed bills before committee in three other states this year. The fact that we got SB-277 through the first committee is a huge success. It has 2 more to go, and we’re really counting on people like you to help CA take a stand against this kind of craziness. So please share that form with your CA friends - or visit the Facebook page here.

    Thanks so much for the help. :)

     

  3. GIGO

    I’ve watched the rise of “Bloomberg for Startups” companies with great interest. And I want to start by saying they’re dealing with some really difficult data problems. Crunchbase and AngelList, the two best sources for raw data on early-stage companies, do their best to be accurate. But Crunchbase is partially crowd-sourced, so there’s a lot of subjectivity in the classifications, and AngelList is limited to the companies that are on AngelList…while that’s an ever-increasing percentage, there are still gaps.

    The lack of a widely-accepted taxonomy compounds the problem. For example, I like to research hardware. Since cleantech, solar, and medical device companies often have a hardware component, I could choose to include them. Usually I don’t, because in the VC ecosystem, those three sectors tend to sit apart…different groups of investors, different conferences. But really, this is a personal call and I’m never entirely sure that it’s the right one. Particularly with the health-monitoring wearables vs medical devices, the line is sometimes very fine. So I try to be really clear about what I’m including.

    It’s often hard to do an analysis even within a single sector. For a project on robotics, a friend and I pulled down a few data sets from several different providers. Happened to notice that Boston Dynamics was missing…went on Crunchbase, and there it was, tagged only as a Software company. We edited it for the next person (or scraper), but the point is, even keeping a very limited scope doesn’t preclude dirty-data problems. There are plenty of companies that weren’t top-of-mind that we wouldn’t have caught.

    This brings us to the 2014 “VC Trend Reports” that have been popping up lately. One post claimed that the “number of seed rounds raised in 2014 down by 30%” and attributed the drop to macro indicators. The other proclaimed that “2014 saw the highest number of seed VC deals since 2009 with 976 financings.” The third said that “seed rounds have declined by count over the past seven quarters…though an increase in convertible note usage might help explain the recent decrease.” These reports rely on many of the same data sources. And those data sources themselves are largely dependent on seed companies choosing to announce their rounds, or raising priced equity rounds.

    The reports are primarily content marketing for the companies, which charge hundreds to thousands of dollars per month for a license. That by itself is fine - customers can pay or not pay depending on the value they derive. People who take the time to clean or validate the data are entitled to charge for their value-adds.

    That said, because the pieces are content marketing, the data sets upon which they’re based are deliberately kept opaque. We have investor “rankings” based on god knows what - pay to find out! We see articles on funding trends that are largely dependent on the biases of the person or company behind them - is a $50 MM first round something that belongs in an article on Series A funding trends? If not, where should that cap be? $10MM? $8MM? Do we use the SV average to set it, or the national average?

    Analysis involves making tough calls. I’m sure none of these companies want a subjective classification decision to result in an inaccurate picture. One solution would be to make the data sets underlying the report public. That way, it would be possible to uncover classification discrepancies and possibly arrive at a standardized taxonomy. Because as it stands, these companies are far more Gartner than Bloomberg.

    And the industry would really benefit from a Bloomberg.

     

  4. New year, new gig!

    This was a very busy, exciting, and challenging year.

    It was year that brought a new facet to my identity: mom, and working mom at that. I want to tell that story as part of a longer post with data viz, though, so for now I’ll simply state that it is both wonderful and very hard. And that my baby still hasn’t slept through the night.

    I was fortunate to have spent 2014 as part of two great teams. First, my team of two: Justin is my better half in too many ways to list. This year he became a dad, and we muddled through twelve months of learning how to Xander whilst sustaining a two-career household.

    Second, the OATV and O’Reilly Radar folks: truly, some of the most brilliant, perceptive, and thoughtful people I’ve ever had the pleasure of working with. For three and a half years they’ve inspired me, introducing me to new ideas and challenging me to think about a wide variety of concepts both at scale and in fine detail.

    It was a great year.

    For 2015, I’m going to change things up a bit.

    First, I decided to leave full-time VC for the time being. It’s been a great run, I’m very proud of the teams that I’ve been fortunate enough to back and work with. I’m planning to stay in touch and add value where I can. But as I thought long and hard about what I wanted to do next, while the pull of venture was strong, the pull of drilling into one particular problem ultimately won out.

    For a few years now, I’ve been an avid reader of stories about shipping. I’m a logistics geek…no doubt drawn to the space because of some deep-rooted ENTJish obsession with efficiency. In February, while on maternity leave, a friend on Facebook posted an article about container shipping that I’d read and loved. I pinged him, found out it was something of an obsession of his as well. We chatted frequently, bought textbooks, shared insights and discoveries. Tossed around a few ideas for what a startup in the space might offer. I worked on connecting with people in the industry for market research, setting up calls with ocean freight executives in Denmark and China at night when the baby was sleeping. Eventually my friend decided that a container shipping caper wasn’t for him, but connected me with two other logistics geeks with a similar vision and the drive and brilliance to make it happen.

    A round began to take shape with some truly top-notch angels and VCs - including OATV! And I decided that I was really excited about this…too much to only participate in a support role as an investor. So, that’s where I am now. Haven. We’ve been heads’ down working for a few months, and I’m really excited to share what we’ve got on the way. I also get to say that I’m working on disrupting ninety percent of everything, which is pretty damn awesome.

    In the next couple of weeks, I’ll connect the dots around how this relates to hardware - my main area of focus as an investor. I’m still going to be investing in hardware, with a particular focus on connected devices. Except now it’ll be as an angel, and as part of the Internet of Things Syndicate on AngelList. My fellow IoT Syndicate-rs include the brilliant Helen Boniske and Jeremy Conrad of Lemnos Labs, and the indomitable Gil Penchina, who’s boldly rethinking what it means to be an early investor in startups. (I’ll be writing a bit more about the abundance of potential and exciting opportunities for AngelList Syndicates later this week.)

    So, I’m starting 2015 with a book that’s almost complete (finally!), a new gig, and a new paradigm as an investor. I’m truly lucky and very excited.

     

  5. How California’s Terrible Vaccination Policy Puts Kids At Risk

    Recently we’ve been looking at preschools, and I’ve been increasingly disturbed by the lax attitude and bizarre public policy around immunization here in California.

    Despite the fact that vaccinations are indisputably important to public health, and that fears that they cause autism have repeatedly been shown to be unfounded, California persists in offering the Personal Beliefs Exemption (PBE). To be clear, this is not an exemption given for medical reasons (that’s the PME).

    The PBE is an enabler that allows herd-immunity freeloaders to enroll their children in school despite the risk posed to public health. This includes public schools.

    School and county-level data is available to the public, so I pulled down the last ten years of CA Department of Public health immunization data.

    Let’s dive right in with California’s county-level vaccination trends over the past 10 years. This chart shows the increasing prevalence of using the Personal Belief Exemption to avoid vaccination.

    This chart shows the rates of kindergartners entering school with exemptions rather than shots

    Here it is in map form.

    All states, with the exeption of Mississippi and West Virginia, offer religious exemptions. 18 states additionally offer “beliefs” exemptions, with varying degrees of ease to obtain one. States with the “easy” freeloader pass have non-medical exemption rates more than twice as high as those in states with more arduous requirements - arduous, as in having to consult with a doctor before the PBE is granted.

    California has been an “easy” PBE state for decades - the antivaxxer simply signed an affidavit stating that vaccines are counter to his or her “beliefs.” The fact that this process elevates beliefs above a) the facts, and b) the well-being of the community, is what makes the PBE so absurd.

    Statewide, we’re seeing vaccination rates hovering at 92.3% for MMR and 92.2% for Pertussis. That isn’t something to be proud of. Bizarrely, the CA Department of Public Health publishes an annual fact sheet proudly proclaiming CA’s >= 92% status without mentioning that immunization rates have been declining for the past 10 years, while PBE instances have risen.

    California is one of 21 states with personal exemption rates exceeding 2%. The nonmedical exemption rate was 3.1% among kindergartners for the 2013-2014 school year - 17,253 little kids whose parents chose to enroll them in school with exemptions. The number of who weren’t up-to-date overall was 51,791. There are around 533,000 kids in CA kindergartens.

    Across all US states, California is below average on coverage for most vaccines - including DTaP, Polio, and MMR, according to the CDC’s Estimated Vaccination Coverage report.

    Recognizing that statewide vaccination rates are approaching dangerously low levels - the herd immunity threshold for the measles is 83-94%, for pertussis is 92-94% - California’s legislature has recently taken baby steps to change this - as of the Sept 2014 school year, PBEs now require a doctor’s signature, stating that the parent has been made aware of the risks and been given information about vaccines. In response, antivax sites have begun to disseminate list of doctors willing to sign the form without “pushing” vaccines.

    This more stringent requirement is a step in the right direction, but not enough. The PBE has no place in California schools - particularly not taxpayer-funded public schools, where parents who vaccinate their children have no recourse to insist that the school enforce a sensible immunization policy.

    The winner of the public school with Highest PBE % in California: San Geronimo Valley Elementary in Marin, at 79%

    Looking at the most recent data from the 2013-2014 school year: 542 schools with 10 or more pupils (6129 reporting) had PBE rates over 10%. You can look your school up here.

    Here’s the overall public vs private breakdown.

    As CNN put it when looking at private schools in LA, “LA’s wealthiest neighborhoods have child vaccination rates lower than West Africa.” The Hollywood Reporter did a deeper investigation into private schools for the wealthy in LA; administrators admitted fears that wealthy parents would enroll their children in other schools if they were pressured to vaccinate.

    “The irony is that normally people with lower socioeconomic status have an increased risk of infectious diseases, but with vaccine-preventable infectious diseases, the risk is higher for those higher in socioeconomic status,” noted Dr. Kenneth Bromberg, director of The Vaccine Research Center, in yet another article on the topic…this one specifically covering whooping cough outbreaks among the unvaccinated wealthy.

    I’d like to specifically call out the ticking time bombs that are the Waldorf schools. There are approximately 20 in the state of California with “Waldorf” in the name, though there may be more that practice the philosophy. Of these, only five have >50% of the student population up to date on immunizations. Six have rates in the teens. One, Maple Village Waldorf, has zero students who are up to date (and an 87% PBE rate).

    So, out of the 677 kindergartners enrolled in California Waldorf schools, there were two with PMEs, and 349 with PBEs. Only 235 (35%) were up to date on their shots. That is fucking ridiculous.

    Felix Salmon wrote a great post highlighting the idiocy among Waldorf parents two years ago, but not much has changed. The Waldorf brain trust responds to their abysmal vax rates with…nothing. No comment. They do, however, halt classes temporarily when Pertussis outbreaks occur.

    Calls to eliminate the PBE are generally met with pushback from antivaxxers who argue that parental rights would be violated by eliminating “vaccine choice.” That’s false. The Supreme Court has already repudiated that. There is precedent for compulsory vaccination, both historical and recent, as evidenced by a 2014 case in New York…which understands what it means to be a city. ;)

    The goal of this post - if you’ve stayed with me this long - wasn’t just to rant about California’s stupid policy and lousy vaccination rates, it’s to invite people to help make a change. Look up your school and county rates, and demand accountability from your administrators. They shouldn’t be pandering to science denialists.

    If you want to go further, fire off an email to your representative and tell them the PBE is terrible policy - that it puts the unsubstantiated beliefs of some above the welfare of others, puts the young, the elderly, and the immune-compromised at risk, and that it should be eliminated.

     

  6. Hardware by the Numbers: A Narrative

    Last year in July, I did some preliminary research on the hardware startup ecosystem. The goal was to examine the growth of the sector by looking at funding events, on both the venture and crowdfunding front.

    This year, for my keynote at O'Reilly’s Solid conference, I wanted to put together a much more in-depth narrative looking at the trends that are shaping hardware, and leading to that growth. I’m interested in the growth of a community that encourages founders; the new support ecosystem that facilitates building hardware businesses; the manufacturing trends that govern where and how things are made; and the types of businesses that flourish as a result.

    This presentation and talk summarize that research.

    Here’s an updated table of Kickstarter data* :

    Year 2011 2012 2013
    Hardware Projects 120 239 784
    Product Design Projects 649 1373 2453
    Total Projects 26,124 41,440 46,100
    HW as percentage of total 0.46% 0.58% 1.70%
    PD as percentage of total 2.48% 3.31% 5.32%
    Hardware project dollars raised $2,543,850 $9,768,304 $46,645,309
    All project dollars raised $104,625,478 $323,555,323 $469,452,086
    Hardware $$ as percentage overall 2.43% 3.02% 9.94%
    Hardware project number of backers 19,019 91,996 370,189
    All backers 1,409,190 4,365,213 6,369,255
    HW backers as percentage of overall 1.35% 2.11% 5.81%

    And an updated bubble chart showing funding events (Series A and earlier; this latest version includes medical devices):

    Botsourcing stats…

    My slides (though, really, view them on Presentate - speaker notes and all citations are right there next to the relevant slide, it’s a much better experience):

    I’m inspired by numbers. I look forward to Mary Meeker’s Internet Trends every year (and it’s coming out this week!). One of the most challenging aspects of transitioning from Wall Street to seed-stage VC was the relative absence of quantitative data for decision-making. The fact is, while I’ve made a vested effort to source and cite each and every piece of information in this presentation, the underlying data is often dirty or scattered.

    If you compare this data set with my post from last year, you’ll undoubtedly find things that are included in one but not the other - this is due to changes in the classification taxonomies of the source databases. Crunchbase 2.0 has made a lot of progress and is a valuable resource, but even it is dependent on users making edits as they discover errors or incomplete information (ie, Boston Dynamics being classified solely as a software company). If you discover any glaring errors, please point them out to me (ideally, kindly!).

    If you’d like to chat about other interesting facets of analysis to add going forward, get in touch!

    A million thanks to the teams at Crunchbase, Octopart, and my very talented husband, Justin Hileman, for going above and beyond in helping with this project.

    *with the same caveat as last year: Kickstarter campaigns are limited to one category, so some consumer electronics projects, like Pebble, are in Product Design.

     

  7. Long-overdue update: book & baby!

    So, I fell off blogging here for a while (though I still wrote occasionally at O'Reilly Radar). This is why.

    I’ve been working on a book with my friend Nick Pinkston. It’s called The Hardware Startup: Building Your Product, Business, and Brand. The first four chapters were just released at O'Reilly Solid. The pre-release stamp is pretty funny - Raw and Unedited! Makes it sound like a sordid tell-all. :)

    It’s been the most time-consuming project I’ve ever undertaken. Both of us want the book to be genuinely useful to hardware founders. Software startups have some great roadmaps, such as “Do More Faster” and “Lean Startup”…there isn’t much long-form material out there for founders working through manufacturing challenges on the product while simultaneously building a business. We’ve been packing it full of case studies with entrepreneurs who have worked through some of the really complex processes unique to starting a hardware business.

    Putting out an unfinished pre-release teaser was challenging for me, since I like things to be polished before they see the light of day. It’s kind of a minimum viable product for the book, though, and the goal is to get feedback (which includes negative feedback). If you’re a hardware founder and you have thoughts about what you’d like to see, feel free to comment.

    Anyway, tying this back to my last post…I had this crazy idea that I’d be able to get the book done while pregnant. That didn’t happen, but it was primarily because I decided to pack in a bunch of work-related travel right up until 36 weeks. After China, I did a bunch of stuff within the US and then went to a conference in Turkey. My flight back to SF was on the last day I was legally allowed to be on an airplane. :) (The Air Berlin folks weren’t pleased.)

    Then I had our baby - I’ve blogged about that a bit on my personal/DIY project blog, and will eventually post something here about the maternity leave experience. In brief, though, Xander was born on December 18th. He’s now 5 months old. He’s a real handful but getting more fun by the day. Obligatory proud mama photos below.


    In the hospital


    2.5 mo family photo shoot


    Yesterday at just past 5 mos.

    I also thought I would get the book done while on maternity leave, and that was even more laughably unrealistic. For me, writing requires sustained focus and a big chunk of time. I was able to keep up with email and meetings and discrete tasks, but with a baby who woke hourly and never napped, writing was pretty difficult. I was relieved when we started daycare; I felt productive again.

    So! Now that things have settled into a routine, we’ll be putting the finishing touches on the book and I’m looking forward to posting here more regularly.

     

  8. Pregnancy and competence

    I just got back from ten days in China - factory tours in Shenzhen! photos and video forthcoming! - and am getting caught up on news.

    Anti-Foreigner VC Also Supports Hiring Discrimination
    One advantage startups have over established companies is that there are no discrimination laws about starting businesses. For example, I would be reluctant to start a startup with a woman who had small children, or was likely to have them soon. But you’re not allowed to ask prospective employees if they plan to have kids soon. Believe it or not, under current US law, you’re not even allowed to discriminate on the basis of intelligence. Whereas when you’re starting a company, you can discriminate on any basis you want about who you start it with.

    It is amazing to me that this is news.

    It’s amazing because almost every woman I know in the tech industry has known about that Paul Graham quote for years. It’s occasionally still brought up at diversity dinners - when people ask why there aren’t more female founders, or more women VCs. It’s not causal, obviously, but it is indicative of an undertone of condoned discrimination. Occasionally a male colleague hears about it for the first time and doesn’t believe it until he’s read it for himself.

    I’m six months pregnant at the moment. Maybe that means I’m less capable than I was six months ago. Maybe it means that in another three months my productivity will suffer some sort of precipitous decline, from which it won’t recover for an indeterminate period of time. No one seems to wonder whether my husband’s work ethic will suffer the same fate.

    I don’t talk about gender issues very much on this blog because I prefer to focus on things I do, rather than things that happen to be. But during in my time in male-dominated fields, I’ve gotten the sense that people think differently about professional women during and after their transition to motherhood. That perception has long made me rather ambivalent about having a baby in the first place - what would I be doing to my career, exactly?

    It’s not really PC to talk about that kind of ambivalence; being concerned about that sort of thing makes a woman sound like a callous careerist with misplaced priorities. But as we’ve entered our late 20s and early 30s, most of my ambitious female friends agonize about “when to do it” and wonder about the economics of freezing eggs. When I was in finance, we joked about it in terms of amortization. Conventional wisdom says that there’s never a good time for anyone - but when one of the gurus of your industry is publicly on record talking about how he wouldn’t do a startup with a new mommy, and the joys of being able to discriminate, there’s a sense that your marketability somehow decreases once you’ve reproduced.

    This is one of the reasons why I had such a difficult time with “Lean In.” It’s a great message, but it falls short against the reality of cultural conditioning in many industries. Many women I’ve spoken with feel that after their kids, they’ve had to work even harder just to be taken as seriously as they were before. I’m trying to come up with parallels that male colleagues experience, but falling short. Maybe the best example would be a male employee having major surgery. Sure, there will be a period of adjustment for the company and the individual, but the most likely outcome is known and can be planned for. The person may be physically impaired during recovery, but it’s assumed that his professional capability will be back to normal in no time.

    So maybe it’s good that this PG story is news. Maybe it shows that attitudes are changing. But for the moment, I’m still wondering: Can motherhood ever be a biological rite of passage without being a professional one?

     

  9. Hardware, by the numbers

    Conventional wisdom around Silicon Valley is that hardware is hot. Influential incubator founders and VCs have been blogging about their interest in the space, and popular tech blogs are constantly writing about prototyping technologies and hardware startup fundraises. However, there’s been very little in the way of actual numbers or data documenting the growth of the ecosystem.

    So, let’s have a look at hardware by the numbers: the number of companies started, the flow of venture and crowdfunding dollars, the overall growth of the hardware community, and the degree of broader public interest.

    It’s tough to track exactly how many hardware startups are out there, or whether that number has increased over time. One interesting data point to start with is the number that have gone out and attempted to fundraise. AngelList keeps track of this, and was generous enough to share their data. In 2011, 94 hardware companies went out and opened rounds on AngelList…25 of them successfully closed a round (though not necessarily via AngelList’s platform). In 2012, that number jumped to 267 opened, 96 closed. So far, as of mid-July 2013, 259 have already opened rounds, and there have been 46 closes. While fundraises aren’t an exact proxy for number of startups, those figures make it seem like there is an increasing number of hardware companies. (The slight dip in percentage closed is also an interesting thing to note.)

    Let’s have a look at the actual dollar amounts that angels and VCs are investing in hardware startups. Crunchbase and AngelList both track this information. Since we’re looking for indications of a hot market, I pulled data for angel, Series A, and seed rounds.* The information below comes from Crunchbase and is represented in an interactive chart form so you can dig in and see the underlying funding events. The chart is derived from Crunchbase’s funding data from all 12 months of 2011 and 2012; the data from 2013 stops at 30 June 2013.

    There were 52 early-funding events in 2012, totaling $209.5MM; in the first six months of 2013, there have already been 47, totaling $222.9MM.

    Since crowdfunding has had a profound impact on the growth of the hardware startup ecosystem, let’s have a look at Kickstarter data as well. Kickspy is a great resource for tracking Kickstarter project stats.

    Year 2011 2012 2013
    Hardware Projects 121 248 365
    Total Projects 26,319 42,113 23,274
    HW as percentage of total 0.46% 0.59% 1.57%
    Hardware project dollars raised $2,551,986 $9,750,168 $22,683,014
    Hardware project number of backers 19,181 93,870 195,449
    All backers 1,438,657 4,496,155 3,354,019
    HW backers as percentage of overall 1.33% 2.09% 5.83%

    Based on the data, in the first seven months of 2013 we can see an increase in the percentage of hardware** projects on the site, and an increasing percentage of the site’s backers are helping to fund hardware projects.

    Update 8/1/2013: Someone helpfully pointed out that HW projects on Kickstarter are split between the “Hardware” and the “Product Design” categories. So, the hardware numbers above are actually a conservative estimate. The Product Design category is a bit messy (any physical good can wind up there), but there were 1,809 projects launched (419 successful) that raised $19MM USD from 1/1-6/30/2013. In 2012, there were 570 successful projects that raised $41.1M. Check out Kickspy for more details.

    To gauge community interest, Nick Pinkston recently looked at Hardware Startup Meetup data. The growth in the San Francisco membership roster is interesting (see graph below). Nick has some additional stats about community on his blog, including a map of hardware meetups around the country.

    But what’s happening outside the tech and early-adopter communities of Silicon Valley? Checking Google Trends for “hardware startup” was completely inconclusive (seems like a lot of people search for that term when they’re having a difficult time getting their computers to boot up). However, looking at specific hardware-focused technology terms shows that interest in topics such as the “Internet of Things” and “3D printing” is at an all-time high.

    The examples of growth cited in this post are based on potentially incomplete data. There are some confounding factors (ie, AngelList and Kickstarter are themselves startups that have experienced high growth in their own audience between 2011-2013). There are also other indications of growth that I didn’t touch on here - the arrival of top-notch hardware-specific incubators, and the new crop of logistics and distribution startups designed to help the hardware startups take their products to market. However, overall, all of the data seems to validate the conventional wisdom that investors are paying an increased amount of attention to hardware companies these days. It’s great to see such a thriving ecosystem.

    If you know of any other interesting data or touchpoints around the growth of hardware startups, please share in the comments below!

    Many thanks to the folks at AngelList, Crunchbase, and Kickspy for their help in pulling together various data sets for this post, and to Justin Hileman for his help with the viz. Also: the folks at Hizook have been keeping tabs on the robotics subset of hardware startups - check out the funding data they’ve compiled!

    *You’ll notice some outliers; while most people traditionally think of a Series A as being under $10MM, Crunchbase applies the term more liberally; for example, Anki and Lytro’s $50MM “Series A” rounds. I didn’t include B or later because I felt that those rounds were a function of the specific successes of individual companies than a reflection of investors making early bets on a hot vertical. Crunchbase has it, though, so you can get it if you’d like.

    **There is a potential for misclassification to be skewing results here – some projects are classified only as “technology,” and lack the more specific ‘hardware’ tag.

     

  10. Taking VC funding, and tracking metrics

    Two more Dear Abby posts are up! It’s been really interesting to see what people are asking. Last week, an entrepreneur asked me whether taking VC funding is necessary at all. This is an increasingly hot topic, particularly as equity crowdfunding rule changes have the potential to impact the early-funding landscape. Here’s an excerpt:

    Does every startup need venture funding? Sometimes I wonder if founders think they need funding because it is said so often that they simply start believing it. Do you think if a startup has a true solution and an effective story, venture is needed? - Female founder, health startup

    There are definitely situations in which venture funding is not needed. The primary things to consider are how competitive your market is, and how quickly you are likely to reach a point where your business is bringing in cash. If the market is competitive and a first-mover has a clear advantage, outside funding may be a good idea.

    If your true solution and effective story yields results – meaning you begin to gain widespread adoption during the early bootstrapped phase – the dilution you’d take from venture funding may not be worth it. Venture capital is for scaling more quickly than otherwise possible and not every company needs (or wants) to do that. GitHub is one example of a company that became successful without venture funding; they provided a service that their customers loved, and they grew organically. While they did eventually take VC funding, their first round – $100 million - happened when the company was four years old and needed some cash reserves and capital to continue to scale.

    This week’s question was about metrics. Specifically, which metrics are most important to monitor following seed capital, while looking ahead to a future Series A raise. It’s a question that reflects the entrepreneur’s desire to avoid the “Series A crunch.”

    Once a promising seed-stage company is funded, what are the business milestones that stage-A VCs like to see before investing? -Female technologist, San Francisco

    Meaningful ones! That answer isn’t a cop-out; it really varies according to the type of business the company is in. Generally speaking, the metrics that matter are the ones that track meaningful customer engagement with your product. B2B metrics are very different from B2C, and investors evaluating a company will compare your metrics to comparable companies in the same sector.

    Seed stage capital is for finding product-market fit. You want to show trends over time which demonstrate that fit: user numbers continuing to increase, revenue (if you have it) picking up, a growing number of enterprise clients moving through your pipeline. The specifics may vary, but ultimately you’re looking to demonstrate that your market is excited about what you’re building.

    Keep the questions coming!