Current market trends point towards increased investor interest in hardware technology.

Chris Quintero recently published his annual State of Hardware Funding piece, detailing year-over-year investment in hardware companies. Quick plug for Chris and the team over at Bolt: the information provided is sharp and transparent in all the ways you like to see from a VC. Kudos.

The main takeaway: number of hardware funding rounds and total dollars raised continue to increase. This confirms what many in the tech industry are already claiming: hardware is back in town, and back to stay.

This takeaway, however, contradicts a malaise that Chris mentions (and refutes): “The peak of the recent hardware hype cycle has come and gone.” Many people, especially outside the hard tech space, seem to be accepting this sentiment at first glance. Both users and observers of technology seem to be distracted by the shiny lights (and dark tunnels) of social media and colorful smartphone apps. They aren’t seeing a ton of front page innovation in once-buzzy areas like 3D printing and wearables, and they’re overlooking the already-transformative impact of the IoT. 

But the reality that Chris points out, and that we're seeing, is that hardware and consumer electronics funding is at an all-time high. The massive effect that the IoT and the era of connectedness will have on every corner of our lives is not lost upon investors or entrepreneurs, even if it is being realized more slowly by the general public.

There's structural wheel-greasing here. Thanks to the lean evolution of the smartphone supply chain over the last decade, tech infrastructure is primed for low-cost development and quick-to-market production. Democratization is occurring: more products are getting to market and into the hands of consumers.

In turn, this is allowing Darwinism and the Snowball Effect to combine into a single force of hyper-efficiency. Bad products are getting pushed off shelves more quickly and good products are more easily finding early adopters and evangelists. The effect is positive for both producers and consumers: barriers to entry in a market are much lower, and the potential of seeing products with real utility is much increased.

As the IoT grows across verticals like smart home, digital health, robotics, manufacturing, and more, expect to see more and more innovation and funding in hardware and devices.

In short, things are thriving.

A closing shoutout to our hometown of Boston: after surrendering the hardware funding silver medal to NYC last year, we’ve retaken the second step on the podium with strong performances from some big ecosystem players like Desktop Metal. The gold medal will rest safely on the shoulders of the Bay Area for at least a few more years, but Boston is a deep and strong innovation hub that is proving its merit in many, many ways. Talking to you, Jeff Bezos.

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