Bolt Looks for Later-Stage Startups as Hardware Heats Up
For the past couple of years, entrepreneurs and investors have been warming to the idea that Internet-connected gadgets will spawn some of the next great technology companies.
Last week, Google made an emphatic endorsement by plunking down $3.2 billion in cash for smart-thermostat maker Nest.
Suddenly, in startup land, hardware is everywhere.
One of the leaders of this new wave of hardware entrepreneurship is Bolt, a Boston-based accelerator program that gives early stage companies a months-long residency, with access to industry experts and equipment, in exchange for up to $50,000 worth of equity investment.
But as it prepares for a second round of applications from startups, Bolt is changing the game plan: Instead of a six-month program that follows the typical startup accelerator model, Bolt is planning to add new companies on a more or less rolling basis several times throughout the year.
One of Bolt’s founders, Ben Einstein, says the change is driven in part by the large number of later-stage hardware startups that were interested in Bolt’s program, a testament to the amount of money being invested in hardware startups today.
“We assumed that most of the companies would be two guys and a dog in the basement, but that’s just not true,” he says. “There are a surprising number of them that are five guys and $2 million of funding and office space, already.”
Startups at that level don’t necessarily need the very early instruction and product handholding that Bolt might otherwise offer.
And since early stage startups have far different needs than well-funded companies, cramming them all together on a shared six-month schedule didn’t make much sense, Einstein says.
The move away from a twice-yearly application and “graduation” format also means that companies will be able to stay longer if they need more time to use Bolt’s facility, which houses $1 million worth of manufacturing and prototyping equipment, from 3D printers to table saws.
“We’re here to help you, and whether that takes five months or 10 months, we really want to get you to the point where you really feel good about your company,” Einstein says.
One example is PetNet, one of the first companies to move into Bolt headquarters last year.
The Pasadena, CA-based startup, which is making a smartphone-connected automatic pet feeder, already had thousands of pre-orders for its device when it came to Bolt. The startup had been through four different prototypes for its product, at a cost of about $100,000 each, and figured the stay at Bolt would get it to the manufacturing stage, CEO Carlos Herrera says.
Instead, the PetNet crew realized that it might be much easier to split its product in half, selling a portion-measuring “smart bowl” separate from the more expensive, larger automatic feeder.
That would get the PetNet product better placement on store shelves—heavy stuff in big boxes goes on the bottom—and give consumers an introductory product that they might upgrade later on.
“Everyone thought our feeder was cool, but we couldn’t convince everyone that thought it was cool to buy it,” Herrera says.
Today, PetNet is announcing that it’s raised a $1.1 million seed round, the first Bolt company to land follow-up investment, with backers including Grishin Robotics, Kima Ventures, SparkLabs Global Ventures, and Launch Capital. And the startup is still working at Bolt, getting its pre-ordered units built for early crowdfunding customers.
“Now, we’re in manufacturing with a product that we’re really confident about,” Herrera says. “And we’re able to do it without burning too much cash.”
It’ll be interesting to see what kinds of companies cycle through Bolt in the future, especially as companies like Google spend more money on big-name acquisitions and fuel more interest in the sector.
Einstein says Bolt has spent about a third of the $3.5 million it raised last year to pay for its operations and investments, giving it another year or more to test this new take on getting young hardware companies to the next level.
“Even though we’re an investor, we think like a startup,” Einstein says. “You have to kill things that aren’t working.”