Application Deadline: December 31st 2018

faq

Everything you wanted to know about HAX but are afraid to ask

What is HAX?

HAX is a venture capital-based program for startups with a hardware element. We give our companies pre-seed money, product development support, prototyping infrastructure, business mentorship and follow-on funding to take teams from proof of principle prototypes to manufacturable products and lay the foundations of a scalable company.

What do you mean by venture capital-based?

Over the years, we have come to realize that the classic accelerator model of pre-seed funding and passive business mentorship is inadequate for hardware companies. As a result, we’ve shed the accelerator moniker. We have iterated and improved our system to create a comprehensive model which helps hardware entrepreneurs succeed. There are four unique differentiators that we bring to the table:

– We give you active product development support. Our team of engineers, designers and sourcing staff supplement your core competencies to help you rapidly execute on prototype iterations and set up your supply chain.

– We are cognizant that hardware needs more resources. That’s why we have a fully-equipped workshop and bio lab on site. We give you enough pre-seed capital but money means nothing without infrastructure.

– HAX offers follow-on funding. We are a wholly-owned entity of SOSV, a global venture capital fund which is the world’s leading early stage investor. This lets us provide entrepreneurs with more monetary support post HAX.

– We function like somewhat of an incubator after the program is done. Manufacturing is hard and we recognize that teams will need some additional time in Shenzhen while ironing out processes with their factories. Contingent on visible progress, HAX is your home until such time as you raise a Series A. Opening our doors to alumni has also allowed us to create a helpful community that is able to share knowledge with incoming teams and assist them in getting further faster.

How long has HAX been around?

HAX started in March 2012. Since then we have gone on to invest in about 200 companies across our two offices in Shenzhen and San Francisco. We are one of the world’s largest investors in hardware.

How does the HAX program work?

The HAX program takes teams with hardware prototypes and turns them into functional, sustainable companies. We recruit 4-5 teams every month, typically with 2-5 entrepreneurs, who have a concept or an early prototype for a high-growth startup.

The teams go through a competitive application process and agree to locate themselves in Shenzhen for the duration of the program. Over fifteen weeks, they will build and refine their prototype product, launch to an initial group of customers (generally via crowdfunding), and test their delivery and/or business models. During the last two weeks, each startup creates a polished company pitch and demo to present to press, investors and potential partners at HAX Demo Day.

Following time in Shenzhen, teams will move on to grow their business, network, and skill set in San Francisco.

Where are your offices located?

The Shenzhen office is located in 42,000 square feet of space in the Huaqiang Bei electronics market. Our location is critical in giving startups immediate access to 90% of Shenzhen’s factory representative for their supply chain setup. Our San Francisco office is located in the heart of the city, just south of Market St. in SOMA.

What's expected of me during the program?

We can’t tell you what to do. This is your company, after all. The only obligation is to be physically present and participate in all the sessions offered by the program.

You’re expected to work hard, and come out on the other side with something better than what you started with.

What does this mean? At the end of the program, you’ll present your product to investors, partners and possibly prospective customers. You should have a compelling solution and presentation to deliver – critcal toward acquiring additional funding.

Do I need to be in Shenzhen and San Francisco during the program?

Yes. Your team needs to be based in those cities throughout the duration of the program. It’s the best way for us to help you during this critical period of productization.

What happens at the end of the HAX program? Am I on my own?

No. The HAX experience doesn’t stop at the end of the initial program. We will continue to help as you move forward with your startup. There’s a lot that has to come together to turn a great idea into a great company — resources, talent, marketing, sales, partnerships, etc. We’ll be there to help as you take those important next steps. Remember, we succeed only if you succeed.

What if San Francisco is irrelevant to my company's plans?

We understand that San Francisco might not be relevant to teams targeting Asian markets. If that is the case, we will continue supporting your business goals from Shenzhen. Shenzhen is also great for business development and investor connections as it is the nerve-centre of the Chinese startup scene and is a short train ride to central Hong Kong.

Am I expected to keep my company in Shenzhen after the program ends?

No. However, you will need to have a strong operation basis for your business to scale, and lifetime relationships in that part of the world. Following your time in San Francisco, you should be near your customers, ideally, but alums are always around and we have extra desks for you to use during your subsequent stays in China.

What can the program offer me?

We’ll help you launch your company and increase its chances of success. Specifically:

– Providing initial funding for you to develop your business plan and build enough of a demo, prototype or beta product, in order to launch your product on a crowdfunding campaign or generate revenue. That’s up to $100,000 per company.

– Providing in-house manufacturing and engineering expertise to assist you on the hardware side of your project.

– Helping you create your company, its business model, positioning, branding and product design all the way through launch and manufacturing.

– Connecting you with potential investors and strategic partners, as well as advisors and press.

– Introducing you to world-class mentors and alumni who have expertise in starting companies, developing innovative consumer products, and creatively marketing those products to millions of consumers. These will be some of the most valuable connections you’ll make as an entrepreneur.

We expect some (well, most) HAX companies to get to revenue at the close of the initial program. We’ll organize that process and guide you through it. Some companies may seek substantial funding while others may require a smaller amount to be successful. We like the self-funding route. We’ll help you identify your problems, understand your options, and think through any difficult decisions you may face.

What does the team look like?

The program has a large and experienced technical, design, and marketing team that will help you get from proof-of-principal state to launch-ready execution and beyond.

For a full list of who’s who, check out our team here.

Can you describe HAX's engineering, design, and sourcing support in more detail?

HAX has an experienced team of mechanical, manufacturing, electrical and embedded systems engineers. You are expected to bring the core competency to execute on the functionality which drives your product. So, for instance, if you are working on micro-fluidics for soil testing, don’t expect us to help you with chip chemistry. The engineering team will help you, however, navigate electromechanical complexity to optimize for performance and optimize for costs. Practically speaking, we assist you with things like mechanical design, manufacturing considerations, PCB layouts, material selection, power system requirements and firmware.

On the design front, we help you think through human factors that affect the usability of your product and define the functional interaction to create an industrial design which brings you to a ‘works like-looks like’ version of your refined prototype iteration.

For sourcing, we have intimate knowledge of the Shenzhen ecosystem and are able to guide you through the myriad of suppliers that the city has to offer. We help you source production grade parts so that, while you are prototyping, you simultaneously set up your supply chain.

How much access will we get to the mentors?

Different mentors will be coming in and out of the HAX space at different times. Some won’t be physically present but will be available via email, phone, video chat, and forums. Some will interact once in a while, some every day. We’ll be working on setting up office hours so everyone can get some one-on-one time, and will have workshops with mentors as they are available. You will interact on a daily basis with everybody else.

What's in your workshop?

HAX caters to the immediate needs of development in various disciplines by not only providing access to the diverse Shenzhen ecosystem, but also via the tools and equipment in our dedicated workshop space
.

The mechanical shop allows teams to create and modify their physical prototypes immediately on site from a broad choice of technologies featuring a full sized metal turning lathe, knee mill, bandsaw, SLA 3D printer, FDM 3D printers, a laser cutter, vacuum former, sand-blasting cabinet, metal wood and plastics chop saws, various power tools, hand tools and more.

The electronics lab allows teams to develop, assemble and test high fidelity electronics designs in an ESD safe environment, main features include: 5 stage industrial reflow oven, stencil application machine, oscilloscopes, electronic loads, environmental testing chamber, power supplies, soldering stations, microscopes and more.

The chemical/biological lab is set up to allow teams to perform some more specific and sensitive work while in Shenzhen for the program, main features include: chemical fume hood, HEPA filtered clean bench, precision scales, precision hot-air oven, dry bath heating block, magnetic stirrer, glassware, lab disposables and more.

How do I apply for the program?

The application for the HAX program is available here.

When is the application deadline?

We have a rolling deadline model, with applications due at the end of every month. It is advantageous to apply early in order to provide us with sufficient time to review your application. However, early applications do not receive higher priority or guarantee acceptance.

I already have funding. Can I still apply?

Absolutely, it’s not at all uncommon. In your application, please specify the nature of your previous funding.

How do you choose which companies are accepted?

We choose great founders who are working on ideas that solve real problems or create a meaningful change to our current technological state. It’s all about the team and the market opportunity.

The best ways to strengthen your application are: round out your team with business, technical, and other necessary skills, make progress on your prototype or product and reference it in the application, and show us that you are passionate and that you’ve really thought about your business. Getting into the HAX program is hard. We will only accept the best startups.

What kind of teams are you looking for?

We invest in founders who can dream big and execute on technically challenging projects. Founders must have a deep understanding of a market, a customer and a problem. We invest in a wide variety of companies in the following areas:

– Technology that drives enterprise innovation using sensing, connectivity, and IOT hardware

– Robotics for industrial applications and solutions for advanced manufacturing

– Connected lifestyle devices and consumer electronics with imbedded intelligence

– Healthcare devices that go beyond tracking toward preventing and healing

Do I need to have startup experience?

No experience required. We just ask that you’re passionate about your idea and willing to work hard at making it a reality.

I've been running my company for a year. Can I still apply?

Yes. It’s very likely that you will already have an early prototype of your product ready to demonstrate, and many applicants have already launched early versions of their products.

My prototype is at a very advanced stage and I already have sales. Is the HAX program still right for me?

If you need could use help optimizing for costs and performance, then yes. Or if you’re looking to create a version two to scale into other verticals and/or markets then HAX would still make sense.

What is the HAX investment package?

HAX is a VC, not an accelerator. We provide a comprehensive package aimed at setting you up for seed investment post-program.

We have three stages of investment, but are selective about how we deploy funds. Our yearly allocation looks like this:

• 36 companies $100k – 5% common stock, 2% on SAFE ($50k cash + $50k services)

• 24 companies further $150k – 8% on SAFE ($100k cash + $50k services)
• 12 companies further $500k – up to 33% of a round lead by another party or syndicated by us (100% cash)
• 6 companies further $1m USD – up to 25% lead by qualified VC (100% cash)

Please note that the $100,000 is an additional investment in-kind on our part and is not expensed to you from the $150,000. The help covers engineering, design, sourcing, business mentorship and prototyping infrastructure across Shenzhen and San Francisco.

How much equity does HAX take?

Between 7% and 15% initially. Our target is to be between 15-20% ownership prior to Series B for companies we truly believe in.

Doesn't HAX predominantly invest in consumer hardware?

No. While we do make investments in B2C tech, our portfolio is predominantly B2B. In the first two years of HAX’s existence, our portfolio was almost entirely B2C. More than anything, this was a reflection of where hardware development was at the time: i.e. just moving out of the maker phase. This has since changed. Today we aim to have a robust world view and continue to push the envelope by looking to invest into into consumer, enterprise, industrial and health companies with equal preference.

Is HAX a Chinese fund investing mainly in Chinese companies?

HAX is the hardware investment arm of SOSV which is a global venture fund with offices in San Francisco, New York, New Jersey, Shanghai, Taipei and Shenzhen.

We invest in companies from all over the world. On average, 50% of our companies come from North America, 24% from Europe and 26% from the APAC region and the rest of the world. 14% of our portfolio is composed of Chinese startups.

How will my cap table look after I have raised my seed round?

You don’t need to take angel money prior to coming to HAX. And we will make up 33% of your seed round. Fully diluted, the cap table will look roughly like this (based on 20% dilution):

• Founders and any previous investors (inc 15% ESOP) – 70%
• SOSV – 10%
• SEED INVESTORS (SOSV likely to be 20-33% of this round) – 20%

Isn’t working in China a huge risk to my IP?

90% of our teams have a software component which provides the defensible layer to their products and that is close to impossible to copy in a manufacturing setting. Furthermore, we teach you how to structure your contracts and prepare the necessary documentation for your factories which helps safeguard your physical IP.

Does HAX provide housing?

No. We do, however, offer guidance on finding living arrangements and put you in touch with the other teams so that you might make arrangements together. Where you live is up to you. China is fun.

How can we deal with visas?

While you will have to apply personally to get the requested temporary visas (eventually both US and China), we will provide invitation letters where necessary in order to make the process less painful.

Is living in Shenzhen hard?

Shenzhen is one of the greenest cities in the world, has a highly modern public transport system, affordable rent, an abundance of activities and is close to Guangzhou and Hong Kong. Yes, learning some basic Chinese while living away from home for a few months and juggling the demands of the HAX program can be hard, but you’ll have a cluster of entrepreneurs around you who are going through the exact same experiences. We’ll also help you get a visa, acquire sim cards, open a bank account, find housing and assist you with emergency doctor visits. Things can be overwhelming initially, but trust us, you will be fine.

Program

What is HAX?

HAX is a venture capital-based program for startups with a hardware element. We give our companies pre-seed money, product development support, prototyping infrastructure, business mentorship and follow-on funding to take teams from proof of principle prototypes to manufacturable products and lay the foundations of a scalable company.

What do you mean by venture capital-based?

Over the years, we have come to realize that the classic accelerator model of pre-seed funding and passive business mentorship is inadequate for hardware companies. As a result, we’ve shed the accelerator moniker. We have iterated and improved our system to create a comprehensive model which helps hardware entrepreneurs succeed. There are four unique differentiators that we bring to the table:

• We give you active product development support. Our team of engineers, designers and sourcing staff supplement your core competencies to help you rapidly execute on prototype iterations and set up your supply chain.

• We are cognizant that hardware needs more resources. That’s why we have a fully-equipped workshop and bio lab on site. We give you enough pre-seed capital but money means nothing without infrastructure.

• HAX offers follow-on funding. We are a wholly-owned entity of SOSV, a global venture capital fund which is the world’s leading early stage investor. This lets us provide entrepreneurs with more monetary support post HAX.

• We function like somewhat of an incubator after the program is done. Manufacturing is hard and we recognize that teams will need some additional time in Shenzhen while ironing out processes with their factories. Contingent on visible progress, HAX is your home until such time as you raise a Series A. Opening our doors to alumni has also allowed us to create a helpful community that is able to share knowledge with incoming teams and assist them in getting further faster.

How long has HAX been around?

HAX started in March 2012. Since then we have gone on to invest in about 200 companies across our two offices in Shenzhen and San Francisco. We are one of the world’s largest investors in hardware.

How does the HAX program work?

The HAX program takes teams with hardware prototypes and turns them into functional, sustainable companies. We recruit 4-5 teams every month, typically with 2-5 entrepreneurs, who have a concept or an early prototype for a high-growth startup.

The teams go through a competitive application process and agree to locate themselves in Shenzhen for the duration of the program. Over fifteen weeks, they will build and refine their prototype product, launch to an initial group of customers (generally via crowdfunding), and test their delivery and/or business models. During the last two weeks, each startup creates a polished company pitch and demo to present to press, investors and potential partners at HAX Demo Day.

Following time in Shenzhen, teams will move on to grow their business, network, and skill set in San Francisco.

Where are your offices located?

The Shenzhen office is located in 42,000 square feet of space in the Huaqiang Bei electronics market. Our location is critical in giving startups immediate access to 90% of Shenzhen’s factory representative for their supply chain setup. Our San Francisco office is located in the heart of the city, just south of Market St. in SOMA.

What’s expected of me during the program?

We can’t tell you what to do. This is your company, after all. The only obligation is to be physically present and participate in all the sessions offered by the program.

You’re expected to work hard, and come out on the other side with something better than what you started with.

What does this mean? At the end of the program, you’ll present your product to investors, partners and possibly prospective customers. You should have a compelling solution and presentation to deliver – critcal toward acquiring additional funding.

Do I need to be in Shenzhen and San Francisco during the program?

Yes. Your team needs to be based in those cities throughout the duration of the program. It’s the best way for us to help you during this critical period of productization.

What happens at the end of the HAX program? Am I on my own?

No. The HAX experience doesn’t stop at the end of the initial program. We will continue to help as you move forward with your startup. There’s a lot that has to come together to turn a great idea into a great company — resources, talent, marketing, sales, partnerships, etc. We’ll be there to help as you take those important next steps. Remember, we succeed only if you succeed.

What if San Francisco is irrelevant to my company’s plans?

We understand that San Francisco might not be relevant to teams targeting Asian markets. If that is the case, we will continue supporting your business goals from Shenzhen. Shenzhen is also great for business development and investor connections as it is the nerve-centre of the Chinese startup scene and is a short train ride to central Hong Kong.

Am I expected to keep my company in Shenzhen after the program ends?

No. However, you will need to have a strong operation basis for your business to scale, and lifetime relationships in that part of the world. Following your time in San Francisco, you should be near your customers, ideally, but alums are always around and we have extra desks for you to use during your subsequent stays in China.

Resources

What can the program offer me?

We’ll help you launch your company and increase its chances of success. Specifically:

• Providing initial funding for you to develop your business plan and build enough of a demo, prototype or beta product, in order to launch your product on a crowdfunding campaign or generate revenue. That’s up to $100,000 per company.

• Providing in-house manufacturing and engineering expertise to assist you on the hardware side of your project.

• Helping you create your company, its business model, positioning, branding and product design all the way through launch and manufacturing.

• Connecting you with potential investors and strategic partners, as well as advisors and press.

• Introducing you to world-class mentors and alumni who have expertise in starting companies, developing innovative consumer products, and creatively marketing those products to millions of consumers. These will be some of the most valuable connections you’ll make as an entrepreneur.

We expect some (well, most) HAX companies to get to revenue at the close of the initial program. We’ll organize that process and guide you through it. Some companies may seek substantial funding while others may require a smaller amount to be successful. We like the self-funding route. We’ll help you identify your problems, understand your options, and think through any difficult decisions you may face.

What does the team look like?

The program has a large and experienced technical, design, and marketing team that will help you get from proof-of-principal state to launch-ready execution and beyond.

For a full list of who’s who, check out our team here.

Can you describe HAX’s engineering, design, and sourcing support in more detail?

HAX has an experienced team of mechanical, manufacturing, electrical and embedded systems engineers. You are expected to bring the core competency to execute on the functionality which drives your product. So, for instance, if you are working on micro-fluidics for soil testing, don’t expect us to help you with chip chemistry. The engineering team will help you, however, navigate electromechanical complexity to optimize for performance and optimize for costs. Practically speaking, we assist you with things like mechanical design, manufacturing considerations, PCB layouts, material selection, power system requirements and firmware.

On the design front, we help you think through human factors that affect the usability of your product and define the functional interaction to create an industrial design which brings you to a ‘works like-looks like’ version of your refined prototype iteration.

For sourcing, we have intimate knowledge of the Shenzhen ecosystem and are able to guide you through the myriad of suppliers that the city has to offer. We help you source production grade parts so that, while you are prototyping, you simultaneously set up your supply chain.

How much access will we get to the mentors?

Different mentors will be coming in and out of the HAX space at different times. Some won’t be physically present but will be available via email, phone, video chat, and forums. Some will interact once in a while, some every day. We’ll be working on setting up office hours so everyone can get some one-on-one time, and will have workshops with mentors as they are available. You will interact on a daily basis with everybody else.

What’s in your workshop?

HAX caters to the immediate needs of development in various disciplines by not only providing access to the diverse Shenzhen ecosystem, but also via the tools and equipment in our dedicated workshop space
.

The mechanical shop allows teams to create and modify their physical prototypes immediately on site from a broad choice of technologies featuring a full sized metal turning lathe, knee mill, bandsaw, SLA 3D printer, FDM 3D printers, a laser cutter, vacuum former, sand-blasting cabinet, metal wood and plastics chop saws, various power tools, hand tools and more.

The electronics lab allows teams to develop, assemble and test high fidelity electronics designs in an ESD safe environment, main features include: 5 stage industrial reflow oven, stencil application machine, oscilloscopes, electronic loads, environmental testing chamber, power supplies, soldering stations, microscopes and more.

The chemical/biological lab is set up to allow teams to perform some more specific and sensitive work while in Shenzhen for the program, main features include: chemical fume hood, HEPA filtered clean bench, precision scales, precision hot-air oven, dry bath heating block, magnetic stirrer, glassware, lab disposables and more.

Application

How do I apply for the program?

The application for the HAX program is available here.

When is the application deadline?

We have a rolling deadline model, with applications due at the end of every month. It is advantageous to apply early in order to provide us with sufficient time to review your application. However, early applications do not receive higher priority or guarantee acceptance.

I already have funding. Can I still apply?

Absolutely, it’s not at all uncommon. In your application, please specify the nature of your previous funding.

How do you choose which companies are accepted?

We choose great founders who are working on ideas that solve real problems or create a meaningful change to our current technological state. It’s all about the team and the market opportunity.

The best ways to strengthen your application are: round out your team with business, technical, and other necessary skills, make progress on your prototype or product and reference it in the application, and show us that you are passionate and that you’ve really thought about your business. Getting into the HAX program is hard. We will only accept the best startups.

What kind of teams are you looking for?

We invest in founders who can dream big and execute on technically challenging projects. Founders must have a deep understanding of a market, a customer and a problem. We invest in a wide variety of companies in the following areas:

• Technology that drives enterprise innovation using sensing, connectivity, and IOT hardware

• Robotics for industrial applications and solutions for advanced manufacturing

• Connected lifestyle devices and consumer electronics with imbedded intelligence

• Healthcare devices that go beyond tracking toward preventing and healing

Do I need to have startup experience?

No experience required. We just ask that you’re passionate about your idea and willing to work hard at making it a reality.

I’ve been running my company for a year. Can I still apply?

Yes. It’s very likely that you will already have an early prototype of your product ready to demonstrate, and many applicants have already launched early versions of their products.

My prototype is at a very advanced stage and I already have sales. Is the HAX program still right for me?

If you need could use help optimizing for costs and performance, then yes. Or if you’re looking to create a version two to scale into other verticals and/or markets then HAX would still make sense.

Investment

What is the HAX investment package?

HAX is a VC, not an accelerator. We provide a comprehensive package aimed at setting you up for seed investment post-program.

We have three stages of investment, but are selective about how we deploy funds. Our yearly allocation looks like this:

• 36 companies $100k – 5% common stock, 2% on SAFE ($50k cash + $50k services)

• 24 companies further $150k – 8% on SAFE ($100k cash + $50k services)
• 12 companies further $500k – up to 33% of a round lead by another party or syndicated by us (100% cash)
• 6 companies further $1m USD – up to 25% lead by qualified VC (100% cash)

Please note that the $100,000 is an additional investment in-kind on our part and is not expensed to you from the $150,000. The help covers engineering, design, sourcing, business mentorship and prototyping infrastructure across Shenzhen and San Francisco.

How much equity does HAX take?

Between 7% and 15% initially. Our target is to be between 15-20% ownership prior to Series B for companies we truly believe in.

Doesn’t HAX predominantly invest in consumer hardware?

No. While we do make investments in B2C tech, our portfolio is predominantly B2B. In the first two years of HAX’s existence, our portfolio was almost entirely B2C. More than anything, this was a reflection of where hardware development was at the time: i.e. just moving out of the maker phase. This has since changed. Today we aim to have a robust world view and continue to push the envelope by looking to invest into into consumer, enterprise, industrial and health companies with equal preference.

Is HAX a Chinese fund investing mainly in Chinese companies?

HAX is the hardware investment arm of SOSV which is a global venture fund with offices in San Francisco, New York, New Jersey, Shanghai, Taipei and Shenzhen.

We invest in companies from all over the world. On average, 50% of our companies come from North America, 24% from Europe and 26% from the APAC region and the rest of the world. 14% of our portfolio is composed of Chinese startups.

How will my cap table look after I have raised my seed round?

You don’t need to take angel money prior to coming to HAX. And we will make up 33% of your seed round. Fully diluted, the cap table will look roughly like this (based on 20% dilution):

• Founders and any previous investors (inc 15% ESOP) – 70%
• SOSV – 10%
• SEED INVESTORS (SOSV likely to be 20-33% of this round) – 20%

China

Isn’t working in China a huge risk to my IP?

90% of our teams have a software component which provides the defensible layer to their products and that is close to impossible to copy in a manufacturing setting. Furthermore, we teach you how to structure your contracts and prepare the necessary documentation for your factories which helps safeguard your physical IP.

Is living in Shenzhen hard?

Shenzhen is one of the greenest cities in the world, has a highly modern public transport system, affordable rent, an abundance of activities and is close to Guangzhou and Hong Kong. Yes, learning some basic Chinese while living away from home for a few months and juggling the demands of the HAX program can be hard, but you’ll have a cluster of entrepreneurs around you who are going through the exact same experiences. We’ll also help you get a visa, acquire sim cards, open a bank account, find housing and assist you with emergency doctor visits. Things can be overwhelming initially, but trust us, you will be fine.

How can we deal with visas?

While you will have to apply personally to get the requested temporary visas (eventually both US and China), we will provide invitation letters where necessary in order to make the process less painful.

Does HAX provide housing?

No. We do, however, offer guidance on finding living arrangements and put you in touch with the other teams so that you might make arrangements together. Where you live is up to you. China is fun.

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