Finally the most important structural development for hardware startups – the emerging of Kickstarter as a first huge funding source. In the old days, the HW startups have to raise money from investors to produce their prototypes and first batch of products. Since this usage of capital is relatively inefficient, the money they raise will take up equities of 30~40%, if not more. Later when the startups go on to raise the next round, the new investors will simply take a look at the Cap Tables and walk away. It's simply not gonna meet their required rate of return. However, today the greatest hardware startups raise their first big round of money for production from their end customers! There is zero equity dilution. Even more beautiful – this is the reverse of the receivables-payables mismatch! While lean SaaS startups have negative working capital, these HW startups have positive working capital for their first phase of mass production!! Consumers are paying in full way in advance – anywhere from 6 months to 18 months – to buy the products that excite them. The startups can then use the money to learn operations and logistics through their first mass production. At the same time, Series A investors look at the Cap Tables and now it has become an investable business. In short, the emerging of Kickstarter has delayed the equity dilution by an entire round and peeled away considerable investment risks, making investments in hardware startups interesting again.