Physical gadget VC funds coming, crowdfunding leading the way

Until recently, software gadgetry has taken up a lot of the limelight in the startup world: social networking, mobile apps, browser plugins, you name it.  But a new trend is emerging that will drive Venture Capital to create specific hardware gadget funds, analogous to the way that Kleiner Perkins' iFund targets iPhone/iPad apps.  This time though, crowdfunding is leading the way.

We've already seen the creation of a handful of really popular hardware gadgets, such as the credit card reader from Square (angel, VC, and corporate investors).  And the TikTok / LunaTik watch band which lets you snap or bolt in an iPod nano (Kickstarter).  And the incredible Satarii Star accessory for the iPhone which automatically swivels to track you while taking video (IndieGoGo).

But of course, one of the main drivers behind the proliferation of software startups are the relatively lower barriers.  Tinkering with hardware gadgets, while popular amongst the 'maker' crowd, has traditionally presented some steeper barriers.  CNC lathes, milling machines and 3D printers aren't things the average tinkerer buys at Fry's on a whim.  So the playing field for prototyping hardware gadgets has until now, been drastically restricted.  And when I say "until now", I mean TechShop.  This is a truly amazing new model, which will crack open the market for physical item startups.  Analogous to what gym memberships did for giving broad access to work-out equipment, TechShop is doing to bring access to all the dream tools a maker would need.  Molding, milling, drilling, welding, water-jet cutting, 3D printing, design software, etc.  Being modern, many of these tools are of course, CNC based.  TechShop provides training & mentorship, and of course a community of makers to interact with.

What was really interesting at a recent TechShop event at their San Francisco location, was that there was quite a bit of talk about crowdfunding!  People were really charged up about crowdfunding as a natural fit.  When I asked if there were VCs sniffing around, they said a few have, but they're waiting for enough deal flow to make it worth their while.  Well, have a look at the TechShop locations which are operational or coming soon.

Given the enormous latent innovation that this new model unleashes, if I were the VCs, I wouldn't wait long to make my brand name in the space.  Not just because TechShop startups like DODOcase are learning how to become successful without VC money.  And not just because of the explosive nature of the space.  But because this time around, there is significant competition.  Crowdfunding is already establishing a beach-head.

Note to avant-garde VCs, calling it the MakerFund would be a great way to dial into a whole culture of tinkerers...

Disclosure: no positions