When Tandem began investing in hardware startups in 2013, the sector was only just beginning to shake off its reputation as “the ugly step-child of venture capital.” As our first-ever hardware investment, Tile, a device company building “the world’s largest lost and found,” provided a crash course in the opportunities and challenges associated with hardware investing. While the company’s co-founders, Nick Evans and Mike Farley, managed to quickly build a business selling millions of dollars of product only weeks after launch, no one at the outset could have predicted what the principal driver of this hyper-growth would turn out to be. One major factor in our decision to invest in Tile was the new ability to test product-market fit through..
A Silicon Valley truism used to be “hardware is hard.” It was a space not just overlooked but actively avoided by investors who agreed with Marc Andreessen’s prescient mantra that software is eating the world. And while software is indeed eating the world, hardware is becoming an increasingly diversified delivery vehicle through which software-based services reach consumers. Investors have caught on. Dow Jones VentureSource reports that in 2014 U.S.-based hardware startups raised $2.6 billion in venture capital through 159 transactions, marking a 53% increase in dollars raised and a 67% increase in number of transactions since Andreessen’s 2011 statement. While we fully expect this trend to continue, supported by the plethora of hardware-focused incubators, accelerators, and funds now coming to..