Today we’re thrilled to announce our new $20 million fund. Over two years ago when we started Lemnos, we encountered many people who were skeptical that hardware startups were viable in the digital age of venture capital. In 2014 there have been over $5 billion in acquisitions for hardware companies so far [by Google and Facebook no less] and there are rumors that both Jawbone and GoPro will IPO later this year. I think we can now confidently say that they were wrong.
It is really our founders that deserve thanks. It was because of their big ideas that we were able to raise our new fund, largely by the success they have achieved to date. It’s still early for metrics, but our first portfolio has raised over $35M as a group (including three A rounds) and we expect this number to double by the summer.
The way that we invest is still the same ($100k for 10% is typical), but we’re now able to tackle more ambitious hardware ideas with a larger initial check ($250k) and reserve capital for later rounds. What we’ve found is that some companies, especially high tech ones, may need more money to hit their first milestone.
Our focus will continue to be on quality over quantity. We make sure that we have enough partner bandwidth (and enough space in the warehouse) to ensure success at the earliest stage of hardware. To this end we will invest in 8-12 companies a year and spend 6-15 months with them. Our definition of hardware remains broad — anything that involves moving atoms or electrons — but we’re specifically focused on aerospace, robotics, transportation, agriculture and IoT (both consumer and B2B).
Although it’s exciting to see the huge uptick of hardware startups, it’s still not for the faint of heart. It still takes an experienced multi-disciplinary team with knowledge of mechanical engineering, electrical engineering, firmware, software, manufacturing, logistics, marketing, fundraising…and that’s just the tip of the iceberg. But we’re here to make it a little less hard.