Hardware Reference
In-Depth Information
Channels are important for everything else mentioned in this chapter as well. When
you create your business, ask yourself: Which things get exchanged and which channels
are needed for this industry? Which of these channels do you want to create and maintain
yourself? Which channels could be used by others, and how could they pay for it? Chan-
nels are assets you can make money from.
Funding and Crowd Funding
Funding and crowd funding are options that you can pursue to get some early money into
your pockets. Most of the open source hardware businesses are bootstrapped, but some
are backed by venture capital funding. When businesses obtain VC funding, they are of-
ten asked to close some designs down. VC funding, however, is not as big or important as
people tend to think. As Diane Mulcahy pointed out in her
Harvard Business Review
piece
ital from VCs and the VC industry is shrinking.
“If you can, bootstrap it. If you own 100%, then every dollar you earn is a dollar
you can keep. Once you get VCs involved, you're diluted out; also, your gains are
illiquid until a so-called “liquidity event” when you get VCs involved—it can take
years before you see a dime, if anything. The VC wants to shoot the moon, and will
encourage you to squander every dime building the company up to be huge, even if
you don't want that. Remember, the VC is paid out of management fees and per-
formance of a composite fund, but you're paid out of just one horse in the race.
However, if you own 100%, you can take a dividend or a payment out of your com-
pany anytime you think is appropriate.” (Bunnie [Sutajio Ko-Usagi])
An alternative to VC funding is crowd funding. Crowd funding is very popular with
open source hardware projects. Most crowd-funding platforms require a working proto-
type, so such campaigns are often used for gaining attention and growing a community for
an existing or advancing product. Crowd funding leverages viral videos of campaigns. It
is also used to test the water and collect feedback for the product, in the form of open in-
novation, or to collect pre-orders and collect some money before getting in touch with
producers. Click through literature about crowd funding before you jump into these wa-
ters, as crowd-funding sites have different stipulations.
Anecdote: Crowd Funding
Marcus Schappi
