Most people associate startups with software, with successful founders developing digital platforms, AI tools, and apps that can scale at little cost. But that overlooks a critical part of the economy, where there’s a massive demand for physical innovations that can solve some of the biggest problems of our age. Those bring with them a unique set of challenges that are foreign to the digital world, such as questions about manufacturing costs and the reliability of supply chains.
Somerville, Massachusetts-based FORGE helps startups navigate these challenges, which is why it won Startup Boston’s Community Award as Best Accelerator or Incubator Program. To learn more about FORGE and its ambitions, Startup Boston caught up with its president and executive director, Laura Teicher.
Startup Boston: Let’s start with the basics: Could you describe to readers what FORGE does and how it works with startups?
Laura Teicher: FORGE is a nonprofit, and we help startups and other innovative companies with physical products along their journey from prototype to impact at scale. We do this with a tight focus on supporting the physical product build. FORGE’s unique wheelhouse is product development, manufacturing strategies, and supply-chain-focused support, education and connections.
SB: What unique challenges do startups in the physical products space face?
LT: First, I'd like to start with why it matters to support physical build and physical products, especially since so much of the ecosystem is more stacked toward highly scalable, highly investible software innovations. Some of the world's toughest challenges, issues we need to solve – in areas such as climate change, an aging population, scaling transportation – all require physical innovation. So, a focus on de-risking the added layers of challenges that come with building a physical product is really impactful.
SB: And what are the specific challenges? I imagine the cost is a big one.
LT: You hit on one of the major points, which is that it is far more capital-intensive to build a physical product, especially if you're talking about something that’s first of its kind. And if you're looking at that more complex and deeper tech, the amount of money and time it takes to build a durable and scalable product is very different; it’s not just that the product has to work, but you have to consider whether you can afford to scale to 5,000 or 5 million units. You still want to test things and evolve quickly in hardware, but you can't go through 500 iterations; that would put you out of business. So we help founders think about how to spend upfront capital wisely and understand the methodologies and the kind of added technical aspects of planning new scale production early on. That can be a real game changer for these companies. FORGE helps with that on the education side.
And then there's the connections side because it will take a village to supply, source, assemble, package, and ship a physical product. We deal with a lot of very knowledgeable technical founders who've solved a problem for the first time with something unique. But if they haven't gone through the experience of thinking through design for manufacturing, assembly, and use – as well as identifying the right supply chain partners, managing supply chain risks, scaling, costs of goods sold, and margins – those are different from pure engineering. We help give access to all of that information and then connect rising companies and product innovators with all of the suppliers and contract manufacturers they might need to bring it to fruition. Making sure they're working with the right partners makes a tremendous difference for these companies.
SB: I’m curious about the challenges around supply chains. Are you seeing a trend or a push to source things closer to home?
LT: The logjams during Covid raised awareness that you can source some things locally, and there can be value there. And at the policy level – at the federal and even state levels – we're seeing more of an emphasis on supporting local and domestic manufacturing. But that doesn't always translate into action when you have a company that has to build their supply chain for the first time. It's not that easy.
This is where an intermediary like FORGE can make a really big difference by working with a whole portfolio of innovators and really cataloging, understanding, and driving their readiness to go into production and engage supply chains. And then on the other side of the marketplace, working with hundreds of local contract manufacturers and suppliers that want to engage with innovative products. And we've cataloged their capabilities so we can facilitate right fit matching. Without that, there's a lot of cold calling between innovative companies and established manufacturers.
So yes, there's a rising interest in nearshoring. Yes, there is a driving policy incentive. But there still needs to be some work in the middle to make it all happen.
SB: One other thing I wanted to ask you about was the funding environment. I imagine you help some of these startups or make connections with investors. Given that, what’s your view of the funding environment?
LT: Let me start by saying this: A very small percentage of investment goes to hard tech in the first place; I've seen credible estimates that put it around 4 percent. Most of the investment is going to software, AI, machine learning, etcetera.
At FORGE, we try to educate companies about that reality. Some do get investments, and we have great success stories, but it's a little bit like planning to be a professional athlete. You need to have a plan B, C, D, and E, and more importantly, you need to really think about whether it’s the right capital model for your business.
We encourage our startups to look at the full potential capital stack: bootstrapping, getting non-dilutive funding and awards from government and startup support organizations like FORGE, getting the revenue as fast as possible, crowdfunding, and creative vested partnership agreements. Yes, we should be paying attention to venture trends, but we shouldn't focus on just that one potential vehicle.
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About the author:
Randall Woods is a former editor at Bloomberg News and currently is a Senior Vice President at SBS Comms, a communications agency for technology companies and startups.
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