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Comment by kami8845 | Hacker News Reader

I'm certain there are some companies that need more runway than others. Is it possible for, say, hardware companies to renegotiate for, e.g. 30k per VC rather than the current 20k?

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I'd never thought of that. Maybe in version 2.

I'd recommend staying at ~$80k. One of the mistakes I made last year was over-building inventory (possibly because I had access to $150k from Start fund).

Also for version 2 and inline with the needs of hardware startups:

http://news.ycombinator.com/item?id=4834831

From our perspective (hardware company), the 150k did provide some runway, but more than that, it provided funds for R&D. We could finally make future versions of the product without always finding a customer for it first.

We could order components just to try them out, without worrying that we were spending money on what may potentially turn out to be an unusable or unnecessary part. We could answer a lot of questions about what was possible using test setups rather than assumptions based on scraps of information collected from various sources.

80k probably would not have provided both R&D funds and some runway.

EDIT: I mean 'runway' in the sense of money for salaries, excluding R&D and other costs which could possibly be seen as ongoing costs of operation too.

This doesn't preclude a company from seeking funding elsewhere and I can imagine very, very few companies at this stage that could legitimately burn through $80k in 3 months. If that doesn't get you close enough to at least prove something that could be used as a basis for raising more, it's probably time to take a step back and figure out if that's really the best strategy for moving forward.

Yes. But this takes time away from building things when you only have 3 months before demo day, and I'm sure there's always stigma attached to pursuing "outside-money" when everyone else is fine taking the 80k from the 4 investors YC trusts.

I agree. I meant that you could raise after demo day. As I said, it's pretty unlikely that you must have more than the 100k you'll get during that time, even for hardware. Plus constraint in this case is a good thing, virtually anything can be built given enough money, but in order for a company to exist you need to be able to build it at some reasonable cost. If your prototype is going to burn through all of that cash, it's time to get creative and find a way to do it for less.

That may be true in many cases but as a counterexample, SpaceX needed rather more than 100k to reach minimum viable product.

The 150K was crucial for us as a hardware company. But it's hard to find the optimal balance between development speed and burn rate for hardware. Being able to more freely purchase things (components, raw materials, equipment, prototyping services, express shipping) helped us move much more quickly than before. With 80K, we would have adjusted our judgement calls and consequently moved a little more slowly.

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