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For Some Hardware Startups, Y Combinator Gives Boost Beyond Crowdfunding

From "smart" grills to Bluetooth luggage, the Internet of Things is now most definitely a thing at Y Combinator.

Lauren Goode

Tech startup accelerator Y Combinator is usually associated with the software bigs: Dropbox, Airbnb, Reddit, Stripe and Twitch are just a handful of well-known companies backed by YC.

And Mondays’s YC Demo Day, a kind of graduation ceremony for companies that have undergone a three-month bootcamp, was still primarily a showcase for software companies.

But more hardware companies are finding their way in Y Combinator, as the “Internet of Things” becomes an even bigger thing and as Y Combinator seeks to fund more of these startups. Out of the 59 companies that gave their two-minute pitches onstage today in Mountain View, Calif., seven were hardware companies. From a “smart” George Foreman-like grill to 3-D printed rockets, hardware startups stole the show.

For some of these companies, it’s an opportunity to focus not just on a hardware product but to refine its software, too. For others, YC provides a network of industry contacts that previously were unreachable.

And for others, YC might simply offer opportunity that crowdfunding websites can’t.

“Growth,” declared Lisa Q. Fetterman, the co-founder and CEO of Nomiku, when I asked her what her biggest takeaway was after putting her sous vide machine through YC. “At YC they teach you that every single growth hack that can be done with software can be done with hardware.”

Some examples, Fetterman said, are around the company’s recurring revenue and mobile app. Nomiku, which previously only made sous vide hardware, now does regular shipments of meat to customers. It has also made an app called Tender that aims to engage the sous vide community.

These are strategies that San Francisco-based Nomiku didn’t think to employ when it was raising money through its Kickstarter campaign a few years ago, Fetterman said. Now, the company is readying its second sous vide machine — a Wi-Fi connected one, to boot.

 YC Demo Day company SmartSpot uses an Xbox Kinect and an LG display to create a “smart” mirror that guides you while you’re working out.
YC Demo Day company SmartSpot uses an Xbox Kinect and an LG display to create a “smart” mirror that guides you while you’re working out.
Lauren Goode

A drone-focused Canadian company called Perceptiv — which doesn’t actually make drone hardware, but enables cinematographers with its drone software — said one of the biggest draws of going through Y Combinator was the network that it offered.

“They allow you to focus on the two metrics that really matter: Sign ups and development,” said Yan Mah, co-founder of Perceptiv. “It also attracts manufacturing partners. We’ve had six reach out to us since we started here.”

Diego Saez-Girl, the co-founder and CEO of a “smart” luggage company called Bluesmart, agrees that YC helps attract “top-notch manufacturing partners.” (Bluesmart, like Nomiku, got its start through an online crowdfunding campaign — but on Indiegogo rather than Kickstarter.)

“Hardware is slower than software,” Saez-Gil said. “So the acceleration you get during the duration of the program is really valuable.” The company plans to ship its $300 luggage, which comes equipped with Bluetooth, GPS and charging ports, this summer. Saez-Gil said Bluesmart has now also partnered with Uber: If a customer losers her bag, she can locate it and summon an Uber to return it.

“I think adding connectivity allows for lots of interesting applications in hardware,” said Y Combinator partner (and Twitch co-founder) Justin Kan.

Kan cited the “smart” bicycles made by Vanhawks, another YC Demo Day company, as an example. The carbon fibre bike connects wirelessly with a rider’s smartphone to create a Waze-like network of driving directions and road hazards, and also helps users find lost bikes.

Still, Kan said, while there are lots of innovations happening in hardware right now, he thinks hardware startups “probably have greater execution risk. There are more moving pieces, so it’s more likely to face delays.”

Monday was only Day One of YC Demo Day; on Tuesday, 50 more companies will present, most of which are in biotech, enterprise tech or financial services.

For a six-second explanation of what a few of today’s hardware companies were about, check out these Vines:

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