Another problem would be: should the underwriters, led by Goldman Sachs and Morgan Stanley, be responsible for this? If they had seen a sharp divide between private equity investors ($15) and public traders ($10) during book-building, they should have advised the founders to lower the subscription price to below $10 even though the PE people have put in enough subscription at $15 to complete IPO. 

Staged financing, which is the nature of VC industry, whips the startup into hitting KPIs in different stages so as to be able to raise new money at higher valuation – huge incentives. Living in the fear of running out of cash as a startup also puts the entire team on a relentless driving mode.

One of the most intriguing behaviors is VCs talking about investment horizons that are beyond normal fund lives, e.g. 10~12 years. They talk about how they are willing to wait another 3 or 4 years before the team rolls out a really good deep tech product. They talk about real disruptions in energy generation, material sciences, etc, as opposed to yet another teenager social networking app. They talk about how the 10-year bet would either monopolize a market or perish.

So much is talking, especially that some of those VCs do not have backgrounds as entrepreneurs or even engineers in the said deep-tech fields.

I believe that this is not the case in FCFF & EV valuations, as there's no effect on how the FCFF is distributed if we exclude tax impacts. I would say that if the Terminal Values in your FCFF models account for huge part of your EVs, the models are still unreliable. This is the case of many LBO modelings where revenue growths are modeled only up to 5 years and also to be low single-digits. 

In the case of high-growth startup modeling, it's important to project FCFFs up to 10 years or 20 years until the company hits maturity. If after doing all this a significant portion of the EV still comes from Terminal Values, then this model is just as unreliable as a 5-year LBO one, if not more.

Unlike the lean-startup world where pure-play VCs dominate almost all early-stage investments, we have seen quite some corporate investors stepping into early stage investments in the hardware field. Usual suspects are large manufacturing firms such as Foxconn or Flextronics, as well as some consumer electronics brands.

I believe that a more complete hardware investment eco-system will take form in the next 2 to 3 years. However, before that happens, a hardware founder should, like any founder, really think carefully over all funding options. A dollar is never just a dollar. There could be a lot of good things and bad things coming with it.

Like many hot startup subjects, crowdfunding is an oft-misunderstood one. At the Hardware Club we have more than 20 startups that broke $1M on Kickstarter or Indiegogo. In our portfolio companies along we have 3. We consider ourselves knowing the art of crowdfunding better than most average investors.

However, I constantly run into hardware founders that have very distorted views on crowdfunding. This article is to share my opinions on this subject as an investor.