A few weeks ago, Wall Street Journal reported that Andy Rubin, creator of Android has raised $48 million to launch Playground Global LLC to provide support and advice to tech startups making devices for consumers and companies (see http://www.wsj.com/articles/android-creator-andy-rubin-launching-playground-global-1428353398).

This follows other recent announcements from Y Combinator (YC) (http://www.ycombinator.com), arguably the most successful Accelerator program that was started in 2005 for software startups. Y Combinator announced partnership with Bolt (https://www.bolt.io/) to provide hardware startups the critical support in design, prototyping, and manufacturing.

Why is this important?

Just like the launch of Y Combinator in 2005 filled a gap at the earliest stage where VCs didn’t normally invest, their foray into hardware startups begins to address a similar gap in the hardware startup space. Till recently, crowd funding (e.g. Kickstarter) offered the only viable source of funding for startups looking to build new products. As Internet of Things (IoT) brings together hardware, software, cloud, security, and communication technologies, Silicon Valley is becoming more interested in hardware companies to take advantage of new opportunities. In 2013, US VC funding for hardware startups was US$848 million (Wall Street Journal, March 2014), twice the amount invested in 2012.

The early Accelerator programs in hardware space are likely to be rewarded handsomely in coming years as entrepreneurs all over the world develop new “smart” products in areas as diverse as Wearables, Healthcare, Home automation, Smart cities, and others.

What changed for hardware startups? The ecosystem is now in place to support rapid growth of companies building products that leverage hardware as a key component.

First, the cost and difficulties in developing and launching hardware enabled products and services has dropped drastically in the last few years for many reasons--rapid prototyping (e.g. 3D printing), lean manufacturing techniques, explosion in open source communities around hardware designs, easier product distribution channels, and separation of design and manufacturing (i.e. contract manufacturing and fabless semiconductor industry models).

Second, continued miniaturization of devices driven by rapid growth in semiconductor technologies and advances in cloud computing, communication technologies, and analytics has created opportunities for innovation that did not exist just a few years ago.

Finally, the funding and mentoring part of the ecosystem is also now in place with more entrepreneurs, big name Accelerator programs, and VCs looking past software to the hardware enabled products and services as the next growth areas.

The author, Sunil Gupta, is the Director of Product Innovation at IEEE and has over 25 years of experience leading research in speech & signal processing, hardware/software product development, embedded systems, startups, finance, portfolio analytics and education.