By Jenna Buehler
From recent episodes of Shark Tank to the Netflix series, Grace and Frankie, the subject of startups and incubators is infiltrating mainstream media. Anyone tuning in knows that getting a hardware startup funded by venture capitalists is difficult because the “margins just are not there” and “dealing with China” does not excite high rollers. Nationally, however, the number of early-stage funds investing in higher-risk, tangible products is up 30 percent from 2010. Central Florida startups are mitigating risk for investors by developing relationships with local incubators and accelerators.
Jaycon Systems Spans Markets
Co-founder of Jaycon Systems, Derek Blankenship, runs a boutique prototype-to-manufacturing company. The growing team includes business-savvy designers, technologists and engineers committed to changing the future by transforming ideas into leading-edge products. Jaycon Systems believes in every proposal coming through the door whether it is an idea, prototype or ready for mass production.
Jaycon Systems spans markets including aerospace, medical and communications. It has consulted for more than 15 Kickstarter projects to date, grossing more than $1.5 million. The team has undergone sprints of construction in recent months because sales are up 100 percent following deals with Disney and Toys R Us.
“We are excited about the new pivots which allow us to expand,” Blankenship said. “We are developing partnerships across the country with engineering designers, and focusing on what we do best and what makes us money: quick-turn manufacturing for custom products.”
Five years ago, Blankenship launched the company out of his garage while still in his twenties. Today, Jaycon has landed a contract with Disney and Toys R Us. He even opened a second office in Shenzhen, China. Blankenship believes that while the hardware industry continues to flourish, the reality of what it takes to build a product and build a business around a product is still widely misunderstood.
“Before starting a company, founders need to ask themselves if this is a product people are going to buy,” Blankenship said. “Entrepreneurs also need to be realistic about whether or not their requirements are possible to engineer using today’s technology.”
In an effort to bring the community together to celebrate new milestones in hardware startups and demystify the manufacturing process, Jaycon engineers will serve as mentors during the Prototype Series hosted by Groundswell Startups and the Economic Development Commission of Florida’s Space Coast. Selected applicants receive 8 weeks of intensive business and technical support from industry experts in the Groundswell network.
“We are located on the Space Coast because everyone supports us here. We are looking to contribute value in a way that is beneficial to the whole community,” Blankenship said.
Alertgy Develops Partnerships Beyond Florida
Co-founder of Alertgy, Marc Rippen, believes that regardless of whether a company has a hardware or software product, founders must identify their differentiator in a market primed for disruption. “Anyone seeking to raise capital for a Series A round of investment is going to need to be associated with an incubator, or vetted individuals with a track record of success, to secure meetings and checks from funds out west,” Rippen said.
Startup founders are also making efforts to develop partnerships beyond the Space Coast to secure success. Rippen has put forth steps to disrupt the multibillion dollar diabetes market. He developed strategic partnerships and benefitted from consulting support from Y Combinator in San Francisco and the Mayo Clinic’s Walleye Tank in Rochester, MN.
“Y Combinator said they only incubate software companies,” Rippen said. “While they do not do medical devices, they did fly us to California for an interview. They were interested in potentially offering support down the road. They said it was a good idea.”
While a hardware renaissance may or may not be on the horizon for companies such as Alertgy, representatives at the Economic Development Commission of Florida’s Space Coast (EDC) said they are making efforts to incentivize early-stage companies to stay in the area. The EDC is increasing access to certification and training for emerging manufacturing talent in addition to offering tax incentives to companies seeking to ramp up production.
“The Made in Brevard initiative is designed to help elevate manufacturing within the community of Central Florida,” EDC senior business development director, Greg Weiner said.