The capital outlay required for pretty much any hardware product is enormous (compared to software-based products). Besides needing to sustain development effort to comply with emissions/safety/etc standards dictated by the regulatory environment, you also need to fund months to years of Q/A testing to ensure your physical widget can be reliably mass-produced. And all this has be done before you have anything to sell for revenue.

Respinning a hardware prototype is generally slow and expensive (i.e. can't just recompile), with degree of slowness/cost increasing as you tread further down your development path.

Regulation. The kind of people who build a successful software startup don't want to deal with OSHA, the EPA, and local zoning boards.

If you're freewheeling and you want to build something physical you have to go to China.