Speak investor language: Show the “why” behind your hardware numbers
With the UK deep-tech sector – which includes hardware – having consistently attracted more than £5 billion in venture capital (VC) funding every year since 2020, opportunities clearly exist for sufficiently enterprising hardware startups in the country’s intensely competitive tech ecosystem.
However, when you are looking to pitch your own hardware startup to investors, you can’t depend on simply dazzling them with raw numbers or technical specifications.
Investors, whether in the UK capital’s “Silicon Roundabout” or Manchester’s expanding tech hub, won’t reach into their pockets unless they understand the “why” behind your figures. So, as a hardware entrepreneur, you will need to be capable of translating complex technical metrics into compelling narratives that put the spotlight on your product’s value, scalability, and market fit.
In this article, then, we will take a closer look at how you can articulate the significance of your project’s hardware numbers, telling a story to which prospective investors can relate.
The investor mindset: Why your numbers require context
If you are attempting to steer a UK hardware startup to success, there are many different types of investors to which you might potentially turn for funding. These encompass such options as government-backed funds and schemes, accelerators and incubators, angel investors and networks, and VC firms, some of which focus on specific sectors like hardware.
The most potentially advantageous investors, however, inevitably tend to be inundated with pitches. So, the investors that you have your eye on won’t just be on the lookout for innovative hardware; they will also want assurance that your product solves a genuine problem, delivers value, and has a clear path to market.
Raw data in relation to your hardware – such as a circuit’s power efficiency, or a filter’s cutoff frequency – isn’t likely to mean much to investors without context. By explaining the “why” behind these numbers, you will be able to convincingly bridge the gap between technical complexity and commercial potential.
An example of the importance of context: Cutoff frequency
Let’s imagine that your hardware involves signal processing, as is common on Internet of Things (IoT) devices, audio equipment, or medical sensors.
If this is the case, the cutoff frequency of a low-pass or high-pass filter will be a critical parameter. The cutoff frequency acts as a precise boundary, determining which frequencies a low-pass or high-pass filter will block, and which frequencies it will allow to pass.
All this will have major implications for your device’s noise handling, signal clarity, and performance optimisation.
Investors generally don’t care about the equations that underpin cutoff frequency; they will, however, want to know what your device’s cutoff frequency enables.
So, while it is one thing to know how to calculate your cutoff frequency in your project, you must also be skilled in translating the precise metrics into a story that highlights customer benefits, competitive advantages, or cost savings.
3 ways to ‘speak investor language’ about your hardware startup
Continuing with the example of filter cutoff frequency, here are some of the approaches you can take to framing this number, to help make it meaningful for investors:
- Make clear how it solves a customer problem
If, for instance, your device uses a low-pass filter to cut out high-frequency noise in a medical sensor, you might choose to explain the benefits for patient outcomes.
This may involve you saying something like: “The 500 Hz cutoff frequency of our sensor ensures accurate heart-rate monitoring, thereby driving down false readings by 30% compared to competitors.”
- Demonstrate the product’s market fit
It can also be a persuasive move to tie the technical metric to a specific market need.
For instance, you may outline to investors that “our audio device’s 20 kHz cutoff frequency delivers studio-quality sound. This satisfies the demands of the UK’s consumer audio equipment market, which is expected to grow at 9.24% CAGR between 2024 and 2029.”
- Draw attention to cost efficiency
It may be the case that your hardware project’s filter design greatly helps to minimise component costs or power consumption.
In light of this, then, you might point out to would-be investors that “our optimisation of our high-pass filter’s cutoff frequency to 10 MHz has enabled us to lower production costs by 15%, at the same time as maintaining signal integrity. This has helped boost the competitiveness of our IoT device in the smart home market.”
Your communication to investors could greatly influence your hardware startup’s success or failure
Apply the above ideas and tips to your investor pitch, and you will be able to more effectively transform technical metrics into impactful stories of value and opportunity.
Your hardware numbers are certainly important. However, your ability to make a head-turning narrative out of those digits could make the difference between a polite rejection and the funding that secures your startup’s future.