Issues in Science and Technology: Let Rocket Scientists Be Rocket Scientists - A New Model to Help Hardware Start-ups Scale

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For hardware start-up companies, growth can be dangerous. Scaling up production, coupled with expanding physical space to meet quickly rising production targets, is a challenge unique to companies that make complex physical objects, such as solid rocket motors or lithium-ion batteries. For hardware companies supplying products to the defense and space industries, the squeeze is often more severe, exacerbated by the difficulty of obtaining the appropriate infrastructure for testing, prototyping, and manufacturing. This has real consequences for national security.

Consider the recent experience of a dual-use military and commercial robotics company in Texas. Rapid growth in demand from customers caused the company to expand so quickly that it needed to relocate three times in just three years. With each move, the company had to break lease agreements, pay substantial moving costs, and relocate heavy and difficult-to-calibrate pieces of machinery—all while navigating multiple disruptions to its production process.

Hardware start-ups face different challenges from those for software or other industries; typically, they require long lead times to ensure robust development and significant capital investment to demonstrate market potential, making emerging companies less attractive to both potential investors and commercial landlords. In 2017, CB Insights looked at nearly 400 consumer hardware start-ups and found that they were half as likely to raise second-round funding as tech companies in general; by their fifth year, 97% had failed. New strategies are needed if we want to see more promising hardware companies succeed and reach their market potential… Read the full article on Issues.Org