Hailed as engines of economic progress and innovation, start-ups are feted by the government and market leaders alike. However, the path to success for start-ups is often riddled with roadblocks.
According to reports, only about 50% of start-ups survive beyond the five-year mark (India has about 27,000 start-ups compared to 72,000 in the US), with many succumbing to market pressures, resource constraints, and the complexities of scaling.
It is important to note that these statistics don’t represent the reality for all start-ups! For hardware start-ups, the journey is even tougher. Only 24% of hardware companies manage to raise second-round funding, and 97% die or become zombie companies.
The Hardware Development Lifecycle: A Time-Intensive Process
Unlike software start-ups, where ideas can be iterated rapidly, hardware development requires more time and funding and often involves intricate manufacturing processes that amplify the risk of failure.
According to the 2022 data set, the two main reasons for failure were the lengthy development phase (42%) and the lack of the right product-market fit (34%).
The hardware development process, from the ideation and proof of concept to a tangible product, involves a long iterative cycle of designing, prototyping, testing, validating, manufacturing, and distribution. Each stage is highly interdependent on others and requires significant time and meticulous management.
Beyond the development process, the start-up must undergo a rigorous testing phase and meet the compliance requirements set forth by various agencies and standardised bodies for its product specification.
Why is Compliance Critical
Compliance can be a ticket to success for a hardware start-up, often signalling to users the quality and trustworthiness of the product. For example, a US FDA-approved device will be accepted more readily by doctors or healthcare institutions than a non-certified alternative, even if it is more innovative than the certified device.
Compliance hurdles are not easy to crack; they vary based on the product type and where you want to sell the product. For example, if a start-up is launching a medical product in the US, it has to comply with the FCC standards; on the other hand, if the product is being launched in India, it needs BIS compliance to hit the market. Furthermore, ISO 13485 is a mandatory quality management standard that every medical device company needs to adhere to.
These regulations are critical and are not just red tape or mere formalities. They have been designed by recognised bodies after years of research to ensure the safety and reliability of products. Every test has a practical purpose —such as the Electrostatic Discharge (ESD) test, which simulates how products react to static electricity – and requires careful preparation from the start-up.
While there is a larger set of compliance requirements which are based on the product profile, here are the 5 key compliance areas that most hardware start-ups need to clear in order to enter the market:
- EMI/EMC Testing: Electromagnetic interference (EMI) and electromagnetic compatibility (EMC) tests ensure that a device does not interfere with other devices and vice versa. Start-ups must consider EMI/EMC issues during the design phase, incorporating circuit planning, component selection, filter requirements, and shielding. Failure to pass these tests often requires start-ups to return to the drawing board, a costly and time-consuming process.
- Environmental and Mechanical Testing: Environmental and mechanical testing confirms a product’s durability across conditions like temperature changes, moisture, dust, and impact. This is critical for devices used outdoors or in rugged settings—such as solar equipment facing UV exposure or industrial sensors in high-vibration environments. Testing ensures products meet regulations while remaining reliable, safe, and high performing, whether in extreme climates or challenging operational settings.
- Reliability and Durability Testing: A product’s ability to perform optimally in real-world conditions is critical for a company’s reputation. For example, Imagine getting an erroneous heart rate result on an expensive smartwatch or a new bicycle that breaks down on rough roads.
- Safety Testing: These tests ensure that the product doesn’t pose any health or safety hazards to anything or anyone. This is a critical and expensive process, and usually, every country has its own guidelines, such as UL in the US, CSA in Canada, CE in Europe, and BIS in India.
- Regulatory Compliance: Each country has specific regulatory standards for hardware products based on the product type, process or business segment. These regulations are usually mandatory and are needed to sell in a certain geography.
Navigating Compliance: A High-Stakes Process?
Unfortunately, most companies underestimate these requirements at the initial stage of product development and end up incurring a heavy cost afterwards. A report by Intertek Testing Services, Boxborough, MA, estimates that 50% of devices fail EMI testing on the first try. Intertek notes that after the initial 50% failure rate, between 5% and 7% failed the retest, and 1% to 2% failed it a third time. Another report by the same agency puts the EMC testing failure rate even higher, at 97%.
What Causes These Test Failures?
Several factors contribute to hardware start-ups failing compliance tests, including:
- Lack of knowledge of EMI/EMC principles
- Failure to apply these principles during the design process
- Misunderstanding of regulations
- Unknown interactions among circuit elements
- Use of non-compliant modules or components in the final product
Most compliance and testing agencies work as service-oriented businesses, acting like vendors offering specific deliverables against a set cost. This business-like approach works well for established organisations; however, start-ups need more flexibility and handholding. Start-ups need help in two main areas:
Understanding the compliance ecosystem: Many start-ups are not fully aware of all the certifications they need. There is very little documentation or guidance available online, and whatever is available is usually too technical or complex for start-up founders. This whole scenario becomes even more complex if the product is a completely new device or innovation that falls outside the expertise of the testing agencies as well.
Testing Costs: Testing can cost anything from INR 50,000 for developmental EMI-EMC to INR 5,00,000 for certification. This is a fair chunk of money for most start-ups. Repeating a test is a scenario that most start-ups do not want to even consider. Not only is getting a testing slot notoriously difficult for small companies, the whole process is also not designed to help product developers. The testing result is often just a 2-3 page document just stating whether the product passed or failed with very little detail of the product’s performance. The team does not get any detailed analysis, making it impossible for any layperson or a non-expert to understand why the product failed – leaving start-ups with no clear direction or understanding of what they need to do to improve their product.
Social Alpha’s Solution for Start-ups
Social Alpha Labs offers start-ups a critical advantage with unrestricted access to pre-compliance services – setting it apart from traditional testing agencies that operate on fixed, service-based models and seldom engage with innovators to understand the underlying issues of the product. We provide personalised attention to start-ups to help them refine and strengthen their product(s), equipping them to navigate final certification testing at accredited labs smoothly and cost-effectively.
With our labs, we provide innovators a safe and affordable space to conduct early-stage testing to “fail fast,” minimising costly iterations and boosting confidence at every stage of development.
Social Alpha Labs supports deep-tech start-ups on their lab-to-market journeys with holistic testing infrastructure that can significantly reduce testing time and costs. For more details on our lab offerings, visit us at https://www.socialalpha.org/platforms/
- Written by Ahmad Ali, Social Alpha Labs