Crowdfund-to-production platform accelerates IoT start-ups

Article By : Chris Wiltz

Start-up culture often invokes images of a small handful of people, working in a cramped space, creating some new technology with nothing but sweat and determination. But IoT has a lot more challenges than your typical app or even hardware start-up might experience.

Arrow is looking to give the little guys a shot a innovating in the Internet of Things (IoT) space.

The global electronics supplier recently partnered with crowdfunding platform to create a "crowdfund-to-production platform" that will give entrepreneurs and their IoT-related projects direct access to Arrow's design tools, engineering experts, prototype services, manufacturing support, and supply chain management.

Projects will also be given access to Arrow engineers for one-on-one consultations (via HD video through Arrow's website) as well as discounts on materials and design software. All in, the company says the total package of benefits is worth up to ₹3.38 crore ($500,000).

Arrow will review all projects submitted for the platform and access them based on technical feasibility, manufacturability, and overall impact.

"If you ask an electrical engineer, they're surprised to know that Arrow really has a whole design capability," Matt Anderson, Arrow's chief digital officer, told Design News prior to the partnership announcement, which was made at the 2016 Maker Faire in San Francisco.

[Solar Roadways Indiegogo]
__Figure 1:__ *Solar Roadways, a successful Indiegogo looking to create energy-harvesting panels for roads, has already enjoyed support from Arrow. (Source: Indiegogo)*

Start-up culture often invokes images of a small handful of people, working in a cramped space, creating some new technology with nothing but sweat and determination. But IoT has a lot more challenges than your typical app or even hardware start-up might experience. "What makes it double hard for smaller companies is that the ecosystem surrounding the hardware space was not meant to help small companies, especially before companies like Digi-Key and Mouser came along," Anderson said. "Business schools and technical schools aren't training students to be IoT entrepreneurs. They're training them to be last revolution's entrepreneurs. They don't take electrical engineering, for example, and combine it with marketing and supply chain management. There's no degree like that, but that's what it takes to be able to do this."

Arrow's goal is to help break down some of these hurdles. "The challenge in the [IoT] space that's really different from the Internet revolution or the app revolution is that all you needed in the Internet revolution was like jogging pants, 15 guys, a house, and Cheetos, and you can literally get together and start typing on a computer and make something from nothing," Anderson said. "But this isn't like that. You need to know materials science, FCC certification, you've got reverse logistics, and all of the same stuff—like marketing and software development—that you had in the Internet revolution, but a lot more need and a lot more complexity and skills."

But what about risk? How do you leverage the opportunity of finding the next big crowdsourced technology like the Oculus Rift, versus a high-profile potential failure like the Google-acquired Nest?

Anderson clarified that Arrow's partnership is not private equity or venture capital for companies.

"We're not giving people money in exchange for equity in a company. Our relationship with companies is really around that we will dedicate resources to help you design, prototype, manufacture, connect to the cloud, and scale up." He said that rather than having a venture arm, Arrow believes it can create value and takes its share of value through the commercial relationship it will establish with companies. "We help them get connected that's how we get value out of the relationship with the customer—from all of our free design services and tools."

Before establishing the new platform Arrow had already previously worked with two successful Indiegogo campaigns. Solar Roadways, a company that creates solar panels that can be built into roads to turn them into energy harvesting arrays, raised more than ₹13.51 crore ($2 million) in funding on Indiegogo and is currently installing its first arrays in Idaho with Arrow's support. The other project, Jibo, is a voice command "social robot" (similar to Samsung's Otto) meant to act as a home assistant and control device in your smart home. The robot raised ₹20.27 crore ($3 million) on Indiegogo and is currently taking product orders.

Anderson said moves like the Arrow/Indiegogo partnership are going to become more and more necessary as IoT technologies alter the marketplace. Digital technology is allowing start-ups and smaller companies to scale at a pace that larger companies can't keep up with—hence why most larger companies look for acquisitions rather than doing development in-house. "Digital lets you scale when the existing market model is breaking," Anderson said. "That's what's happening right now. The market is fragmenting. The share of R&D projects is not at Nike, Google, or Facebook anymore. It's way into crowdsourcing and Nike, Google, Facebook, and others are just watching these to find what they should buy."

Arrow is betting that this shift will continue to lower the barriers to entry—meaning R&D dollars around true IoT innovation will move out of the big companies and into small ones. "I can get a virtual team from a virtual labour pool, I can get prototype quantities online, I can get access to all of the data sheets," Anderson said. "And now [Arrow is] providing our most precious resource, engineering time, on the Internet. So what more do you really need to take a shot at something?"

Those interested in participating in the new Arrow/Indiegogo program can visit for more information.

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