If you plan to grow the company to over $100m in annual revenues and want to raise at least $750k now, go to VCs; if either of those is false you should raise money from angels.

I wouldn't worry at this stage about how favorable the terms might be. That's sort of like thinking about what to have as a snack when you get to the top of Everest. It's very hard to convince investors to give you money, and VCs especially. VCs invest in less than 1% of the companies that approach them. So the first order of business is to convince anyone to invest in you at all. After you do that you can optimize the terms.

Hi ComputerGuru,

I guess the main question for me is, what stage are you at? Have you done adequate manufacturing engineering? Worked on the factory contacts? Just getting started on the science? Working on product refinement? A few demos out and helpful?

In terms of investors that I know about, both Khosla Ventures and Kleiner Perkins are willing to invest in hardware projects with huge potential: with Khosla Ventures even at the science project stage. Angel investors are also pretty good bets, due to the social good angle.

Due to your describing it as 'hacked together,' and the lack of IP protection thus far (you should consider filing for provisional patents ASAP, they're far less expensive), you're probably seed or series A stage for Khosla Ventures, possibly too early for the other VCs that I know about, but potentially you could also raise money from a variety of foundations and from NIH, for example.

Good luck! If you'd like to contact me I can be reached at dani.fong at google's mail service.

Currently, the science is all complete, the hardware is pretty much polished as is the firmware. The mechanical parts are the real problem; currently built at local metal workshops and some CNCs.

I have a single demo unit that is working great, and have ideas for future improvement that would need access to more than a local workshop. Haven't actually gotten in touch with anyone for real manufacturing mainly out of IP fears - I'm in the initial stages of talking to an IP lawyer now, but haven't actually handed over any of the inner workings partially out of paranoia and partially because I'm not sure what I'm looking for just yet. I'll take your suggestion and look at provisional patents in a few.

Basically both the idea and the implementation are novel and are what I'm looking to patent. The actual mechanical details are out of my field of experience (computer engineering) and I have several different designs and I'm sure someone in the industry would have better ideas as well - that's something I'm hoping a VC could help me secure, somehow.

Thanks for the Khosla Ventures suggestion. I'll keep them in mind as I formulate my list & next steps :-)

Take some videos of the thing working, and post them somewhere that you track and that's password protected. The reason for this is so that you can easily show one person at a VC firm, who, if excited, can easily show the rest. A working prototype is the litmus test for VCs, who by the nature of their trade can rarely be experts in everything.

If you've got the money to fast track a provisional patent, so that you can say "We've filed a provision patent," it will give you major credibility, more negotiating leverage, and in particular you'll have the IP that VCs want.

You definitely need to open the kimono a bit. In particular it is practically unheard of that a patent lawyer will screw you -- more often they will just take your money. A patent lawyer's entire career is ruined if they're caught stealing -- whereas you could probably still succeed by out-executing and out-innovating the competitors.

Best

Let me emphasize SBIRs at NIH most especially if you're serving a medical market. The money is good and they'll take you from prototype to market starting usually with less than $100k and over three stages to over $1M. The application process is a bit troublesome but no more troublesome than meeting with each and every VC. Check out:

http://www.sbir.gov/index.html

When you see an opportunity that could fit, contact the program officer. Talk to them about about what you're working on and how it fits. Most importantly, keep checking back.

Here's a common route:

1) Get provisional patents

2) Build a protoype of the finished product, if not possible then graphics showing the final product when polished.

2) Go to a couple of big customers and show them your product + graphics and get some letters of intent (we'll buy x many of this product)

3) Go to a bank with your letters of intent and get a loan against them. Banks are experienced with this sort of thing, it's a pretty common route for new inventors to go down.

4) Use the loan to tool up and get the product manufactured in a smallish quantity

5) Fulfil the sales you've made and make more sales.

You don't need VC money to take a hardware product to market, most inventors don't take VC money to get a product to market. But if you decide you do need it for whatever reason then the more of these steps you take before approaching the VC the more chance you have of getting funded.

Especially getting a patent and getting sales on the table.

I have never taken a hardware product to market, but I did have key roles at VC-funded companies, co-founded a company we got funded, and in 2005 did the VC tour on a hardware product.

What I'll say --- and again, don't take my word for it --- is that what you're saying may be the opposite of true. Hardware companies have a higher cost of sales, supply chain issues, worse margins, and must carry inventory (sometimes millions of dollars worth) to fulfill customers. The "hardware" part of what we were doing was, for the VCs that got into real due diligence, the least attractive part of what we were doing.

You may have a resume that is a mile long in hardware, and that may mitigate some of the concern.

I can possibly help you with some of this, the majority of things I've been involved in have been hardware, not software.

I have a decent mutual NDA if you want to chat.

Not to be arrogant, but I'm busy enough and happy enough with my current gigs that I don't have any motivation to steal your ideas ;)

I've been through most of the UL, FCC, CE-Mark and similar cert processes, done parts relating to CNC, plastic injection mold, vacuum-form, PCB design/layout/stuffing, packaging and so on.

Check out http://www.open-pandora.org/

They are well on their way to completing a production run of 3,000 consoles based on an open software platform, and have documented a lot of the steps along the way to getting the device through manufacture.

You might talk with Mitch Altman, founder of Cornfield Electronics. Mitch has a successful hardware business now, selling the TV-B-Gone remote among other things. http://www.tvbgone.com/cfe_main.php

Mitch did it without needing VC. Mitch is also incredibly generous and approachable; we've worked together in creating and running a hacker space. He recently led a trip to China for people who wanted to learn more about manufacturing there. If you sent him a short blurb + video he might be able to offer some useful advice.

Be very careful about what you want to achieve and why. Developing a product and holding on to the business requires years of commitment and a solid cradle to cradle strategy. Help lines, refunds, quality control and government standards all come in to play. import export requirements, material quality requirements not to mention differing taxation requirements per country and state. Be clear on wanting to license the concept, sell the IP or actually make a business. Not to mention that the profit on hardware is minimal compared to content. (I worked in new business development for Philips electronics for 6.5 years)

I don't have anything smart to say except that I fully support you in your endeavor!

Someone else has already mentioned the issue that handicapped people may not have the money for something that helps them. A bigger problem can be that handicapped people tend to be very resistant to change. We have a difficult enough time doing anything and change can be especially hard and dangerous for us. This is a serious obstacle to market development. If you haven't already, I suggest you give some thought to it or you may find that there isn't enough money in the world to make this fly.

Good luck.

How big is the market of the blind who can afford something like this? My initial instinct would be that the market is too small.

The idea is to sell to intermediary agencies (such as human relief, NGOs) and government contracts.

How many blind people are there in the U.S? How old are most of them?