What Happens After You Get Money For Your Startup?

(Image credit: Arrow Electronics)

“I remember one story about someone who had a great idea for earphones and spent six months casting about in Shenzhen without figuring out how to get them made,” said Matt Anderson, Chief Digital Officer & President at Arrow Electronics, the giant electronic components and solutions company.

“Innovators need to be technically competent in their respective fields, but often they’re not technology compliant.”

Anderson was describing conversations he had a few years ago with various startup funding platforms, prompted by a hunch that the innovation market could use similar structural support.

“Platforms like Indiegogo are end-user funded, so tech serves that end instead of being it,” he explained. “What’s hard for many of these innovators is scale.”

“What kills them is growth.”

It was a profound insight, informed by Arrow’s offering, which had evolved from a classic distribution model, to a design engineering ecosystem that not only sold parts, but gave counsel on sourcing, supply chain, and manufacturing to some of the world’s largest companies. Anderson recognized that Arrow was selling to some of those startups, too.

“We wondered if it was technically feasible to give innovators free access to our engineers and knowledge via online tools that would let them flesh out their designs, and then use a collaboration tool to identify and then pull up the materials they’d need,” Anderson said. “If it worked, we could give them a badge on their funding page that affirmed it.”

It did, and a program with Indiegogo was announced in late May and launched in August to offer the service to startups. Badges will be reflect inventors who use its free planning tools and are given live help from company experts and discounts on prototyping and other expenses (“certified”), and a rarified number of projects to which Arrow offers access to its creative financing tools.

The potential value of that “free” planning service cannot be overstated: It possesses a “super curated database,” as Anderson puts it, on 500 million components that lets it forecast not just part and system reliability, but estimate the likelihood that a component might be discontinued, and should therefore be avoided. It’s now working on building a digital interface for those insights.

Arrow also operates one of the largest media networks for tech stories via its Tech News & Views, Product Datasheets, and Reference Designs, which it intends to use to attract net new startups to Indiegogo with the promise of a veritable “seal of approval” for dreams that have the best chance of coming true and, therefore, might be particularly attractive to funders.

Obviously, they may also grow up to be great Arrow customers.

“Right now, Indiegogo is on track to do 1,500 new tech campaigns every month, and Arrow will review every one of them,” Anderson said.

The numbers could be far bigger, though, considering Anderson’s point about technical vs. technology expertise. Unlike the traditional incubator model that tries to connect tech to a problem worth solving, the idea driving Arrow’s program is that there are many more problem-solvers who need tech expertise. So the badging will be available to any project on Indiegogo.

“A botanist might think it would be great if an orchid could tell you it needs water, but doesn’t know anything about microprocessors or supply chain management,” he said.

“Innovators need a design-to-production engine. I think what we’re doing is creating the first-ever production model driven by social engagement.”