DRAGON INNOVATION, INC. !

THREE THINGS YOU NEED TO KNOW BEFORE CROWDFUNDING

!SEPT 9, 2014

HARDWIRED NYC !!!!!!

SCOTT N. MILLER | CEO | @DRAGONINNOVATE | WWW.DRAGONINNOVATION.COM

Slides located here:

bit.ly/3-things-before-crowdfunding

Manufacturing is Complex

Going from prototype to production can be a long journey with many unknown unknowns:

•COGS, tooling and manufacturing costs •Lead times •Permanence of Quality •Iteration cycles •DFM •Factory Selection and Management •Team Scalability •Schedule & Project Management •Specialized skills (ME / EE / SW/ Q / SC / Logs)

Hardware Requires Cash

Typical funding sequence: •Bootstrapping •Friends and Family •Angels •Crowdfunding •Venture Capital

BE CAREFUL YOU DON’T SELL SOMETHING YOU

CAN’T BUILD

The Three Things You Need to Know

•How much cash do you need? •How long is it going to take? •What is the status of your Design for Manufacturing?

7

How much cash do you need?

Manufacturing Factors That Drive Funding Requirements

-NRE for Prototype to DFM -COGS -Tooling Costs -Manufacturing Costs -Crowdfunding Transaction Costs

Understanding Cost of Goods Sold (COGS)

-The COGS of your product will determine the financial success of your company

-Create a Detailed Bill of Materials (BOM) -Separate Mechanicals (Plastic, Metal, etc.), Purchased, Electronics, Packaging, etc.

-Include Labor -Include Scrap, Markup, Overhead and Factory Profit -For each line item, separate into core operations for greatest transparency.

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How long will it take?

Idea DeliverCrowdfund

Manufacture

PERCEIVED PRODUCT TIMELINE

Prototype

D E F G H I J K L M N O P Q

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

R S T U V ZW X YA B C

Idea DeliverCrowdfund Manufacture

MORE REALISTIC PRODUCT TIMELINE

Proto

CF Prep

X Y ZK L M N O P Q R S T U V WI J F G HC D E A B

Manufacturing Is Hard

Schedule

•Many consumer products are driven by the Holiday Season (which has a fixed date).

•Plan contingency in your schedule. Things never go according to plan.

•Have an onsite presence at the Factory •Track schedule carefully and take corrective actions early. •Avoid: “There is never time to do it right the first time, but there is always time to do it again. ”

The Road to Production

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What is the status of your design for manufacturing?

Typical Stages

-Paper sketches -Handmade prototype (popsicle sticks and hot glue) -3D printed prototype (works-like) -Industrial Design model (looks-like) -Design for manufacture (for Tool Start) •Injection Molded with drafts, rounds, minimal undercuts •Die Cast •Stamped •CNC -Final Product Design in Manufacturing

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Questions?

Agenda

Dragon Innovation scott@dragoninnovation.com

@dragoninnovate

http://www.slideshare.net/dragoninnovation