Home / Explore Technology / Phones / Haltian Can Save Your Kickstarter Hardware Disaster

Haltian Can Save Your Kickstarter Hardware Disaster

OULU, Finland—Hardware is hard, they say. Kickstarter and Indiegogo are littered with big-ticket consumer hardware failures: the $1.5-million Pirate3D printer, the $3.5-million MyIDKey, and the $3.2-million Zano drone, for example. Other crowdfunded projects fail, but hardware projects tend to fail big.

Kickstarter recognizes the problem. Over the years, it's tightened its requirements for hardware projects, finally announcing a new "Kickstarter Hardware Studio" last month that will debut in September and help creators actually, successfully make devices.

A 2015 report commissioned by Kickstarter said that about 9 percent of all Kickstarter projects fail. The problem with consumer hardware, as a 2012 analysis I did pointed out, is that hardware projects are often big-ticket items. Compared to, say, a $20,000 theater performance, more people get burned when a million-dollar printer project melts down.

The story is often the same: Entrepreneur has a great idea, entrepreneur's great idea gets way too much money, entrepreneur doesn't know how to manufacture the product to meet the sudden demand. Misery ensues.

Way up in the Finnish sub-Arctic, we found another solution. Haltian, an 85-person company mostly made of ex-Nokia engineers, has been quietly churning out Kickstarter and Indiegogo successes, both for itself and others. The QuietOn headphones and OuraRing wearable (pictured below), which made $651,803 on Kickstarter, are two of the most notable.

Oura wearable

The company, like the city of Oulu itself, is a bit of a recycled industry. Oulu was a major R&D center for Nokia in its mobile-phone glory days, and Haltian's original five-person team was in Nokia's "emerging projects" department, building tablets and wearables that would never make it to market. When Nokia collapsed in 2012, Haltian's now-CEO Pasi Leipala leveraged his knowledge of Nokia's suppliers to start a contract manufacturer. Now Haltian has an airy suite of offices in a bustling technology-incubator building that used to house Nokia offices.

"Eighty percent of our products are our clients' ideas. We provide design services, and they own the IP," Leipala said. Although Haltian usually gets hired before the crowdfunding starts, it can also step in when Kickstarted companies realize they're in over their heads.

"In most cases, the startups in Kickstarter do not have the understanding [of] what development of a commercial product requires, and without the right partners, try to do too much. That's one of the key reasons [for the] high percentage of failed projects," Leipala said.

Take Omata, a "mechanical biking computer" with a Shinola-like retro look; it netted $229,904 on Indiegogo. Though Omata was also started by an ex-Nokia crew, "They didn't have a clue how to make it," Leipala said. "We designed the motors and then had Seiko from Japan manufacture it."

Omata

Access to trusted manufacturing partners is one of Haltian's big advantages. The Chinese manufacturing ecosystem is rife with IP theft: Look at the 2015 hoverboard fad to see how quickly one company's idea got copied, permuted, and watered down.

Since there are still electronics factories in Finland—another legacy of Nokia—Haltian can make prototypes in Finland and then take them to factories in Eastern Europe or "Asia" (Leipala's word) that aren't likely to steal customers' intellectual property.

"We don't take any products to China in the early phase, for … some reasons," Leipala said.

Related

Some Oulu companies make an even bigger deal about manufacturing in Finland. Bittium, which makes secure smartphones, says that making its phones in Finland helps it avoid government surveillance in other countries during the manufacturing process.

Haltian's projects do have a theme. They're elegantly designed, by and large, with rounded edges and simple interfaces. Remember Nokia's physical designs in the era of the Nokia N9—the simple, bold shapes made of colorful polycarbonate? Well, the heritage shows.

Now, the company is moving into "camera and imaging products," according to Leipala, and is even developing a video game for a client. "There's a good demand for a highly skilled, specialized engineering team," he said.

Read more

Check Also

Golden Gate Ventures closes new $100M fund for Southeast Asia

Singapore’s Golden Gate Ventures has announced the close of its newest (and third) fund for Southeast Asia at a total of $100 million. The first hit a first close in the summer, as TechCrunch reported at the time, and now it has reached full capacity. Seven-year-old Golden Gate said its LPs include existing backers Singapore sovereign fund Temasek, Korea’s Hanwha, Naver — the owner of messaging app Line — and EE Capital. Investors backing the firm for the first time through this fund include Mistletoe — the fund from Taizo Son, brother of SoftBank founder Masayoshi Son — Mitsui Fudosan, IDO Investments, CTBC Group, Korea Venture Investment Corporation (KVIC), and Ion Pacific. Golden Gate was founded by former Silicon Valley-based trio Vinnie Lauria, Jeffrey Paine and Paul Bragiel . It has investments across five markets in Southeast Asia — with a particular focus on Indonesia and Singapore — and that portfolio includes Singapore’s Carousell, automotive marketplace Carro, P2P lending startup Funding Societies, payment enabler Omise and health tech startup Alodokter. Golden Gate’s previous fund was $60 million and it closed in 2016. Some of the firm’s exits so far include the sale of Redmart to Lazada (although not a blockbuster), Priceline’s acquisition of Woomoo, Line’s acquisition of Temanjalan and the sale of Mapan (formerly Ruma) to Go-Jek. It claims that its first two funds have had distributions of cash (DPI) of 1.56x and 0.13x, and IRRs of 48 percent and 29 percent, respectively. “When I compare the tech ecosystem of Southeast Asia (SEA) to other markets, it’s really hit an inflection point — annual investment is now measured in the billions. That puts SEA on a global stage with the US, China, and India. Yet there is a youthfulness that reminds me of Silicon Valley circa 2005, shortly before social media and the iPhone took off,” Lauria said in a statement. A report from Google and Temasek forecasts that Southeast Asia’s digital economy will grow from $50 billion in 2017 to over $200 billion by 2025 as internet penetration continues to grow across the region thanks to increased ownership of smartphones. That opportunity to reach a cumulative population of over 600 million consumers — more of whom are online today than the entire U.S. population — is feeding optimism around startups and tech companies. Golden Gate isn’t alone in developing a fund to explore those possibilities, there’s plenty of VC activity in the region. Some of those include Openspace, which was formerly known as NSI Ventures and just closed a $135 million fund, Qualgro, which is raising a $100 million vehicle and Golden Equator, which paired up with Korea Investment Partners on a joint $88 million fund. Temasek-affiliated Vertex closed a $210 million fund last year and that remains a record for Southeast Asia. Golden Gate also has a dedicated crypto fund, LuneX, which is in the process of raising $10 million.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Disclaimer: Trading in bitcoins or other digital currencies carries a high level of risk and can result in the total loss of the invested capital. theonlinetech.org does not provide investment advice, but only reflects its own opinion. Please ensure that if you trade or invest in bitcoins or other digital currencies (for example, investing in cloud mining services) you fully understand the risks involved! Please also note that some external links are affiliate links.