Wow. I was part of a small team that put an industrial product together, and we didn't need nearly that much money. It was not a startup, so the cash flow from existing business easily supported the one-year timeframe. (We did the design in our 'spare time' when we weren't busy with day-to-day work.)
No industrial design (very utilitarian product, simple molds), and we had someone with a bit of molding experience. Had to go outside for mold design and construction, of course. We went with hard steel, single cavity, half a dozen molds all in, but I'd certainly go with aluminum (for the initial production) if I were to do it over again. I'm thinking we spent just over $100k on mold stuff before we had our first test shots. Talk about an exciting UPS package! ;-)
Our product didn't require much certification, so we saved there as well.
Not only are the first 100 electronic widgets much more expensive, it (was?) hard to get them made because our usual suppliers weren't set up for a low-volume job, and we didn't have existing relationships with the more proto-oriented CM. I did a lot of soldering that year.
It would be much easier today, especially with so many cheap dev/eval/reference kits on the electronics side and the rise of quick turn mold shops such as Quick Parts and Protomold.
Hardware is a real blast. Nothing quite like seeing those molded parts once they start coming in in pallet quantities!
I've put small/niche little projects out the door with less than $500K of my own money, and I've seen hardware startups blow $40M with nothing to show for it.
I didn't give the full breakdown, but the numbers I used above also take into account that you're building an actual company. Where you're paying people vs. having people work in their spare time, and you have other overhead (rent, etc.). Also accounting for a moderate PR and tradeshow budget, which would all be typical if you're trying to build a Consumer Electronics product, even with the ref. designs and such out there today.
There are a lot of variables involved, and a lot of places to save money. Prior experience on your team also works in your favor.
No industrial design (very utilitarian product, simple molds), and we had someone with a bit of molding experience. Had to go outside for mold design and construction, of course. We went with hard steel, single cavity, half a dozen molds all in, but I'd certainly go with aluminum (for the initial production) if I were to do it over again. I'm thinking we spent just over $100k on mold stuff before we had our first test shots. Talk about an exciting UPS package! ;-)
Our product didn't require much certification, so we saved there as well.
Not only are the first 100 electronic widgets much more expensive, it (was?) hard to get them made because our usual suppliers weren't set up for a low-volume job, and we didn't have existing relationships with the more proto-oriented CM. I did a lot of soldering that year.
It would be much easier today, especially with so many cheap dev/eval/reference kits on the electronics side and the rise of quick turn mold shops such as Quick Parts and Protomold.
Hardware is a real blast. Nothing quite like seeing those molded parts once they start coming in in pallet quantities!