Comment by amirhirsch | Hacker News Reader

Comment by amirhirsch | Hacker News Reader

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Good luck! One valuable differentiation you could provide is a line of credit. If you can’t win on price, you can help your customers win on cash-conversion cycle.

I’ve been making hardware for 20 years. My highest-volume product was Flybrix, a LEGO drone kit manufactured by Seeed and UniPrecision in China and by Sparqtron in Fremont, California. I’d be happy to work with you on a v2 reboot: Flybrix Swarmz, because every American high school needs a drone swarm.

Beyond that, I’ve worked with many domestic suppliers and built ITAR-controlled products as well. Even without owning the production capacity, if you can offer Net 90 on fabrication and extend credit for components--beyond existing DigiKey, Arrow, Mouser, and vendor credit lines--then I can build products and get paid without putting all the capital at risk upfront.

Factoring is expensive, especially against a purchase order rather than an invoice, and I don’t know of anyone offering working-capital credit based solely on an SBIR award.

Credit is what makes the spice flow.

Wow. Sounds like a super interesting product. Hadn't considered lines of credit yet, but definitely would be valuable to some higher ticket customers.

We currently use a small US contract manufacturer that works pretty much as you say. The turn times are terrible (7+ weeks, not 7 days), and this is a major issue, but there are exactly two reasons we continue to use them:

1. Line of credit - we are not billed until we take delivery of tested product. 2. Willingness to handle high mix, low volume products. One product line example: a dozen SKUs with 95-98% parts in common on 2 PCBs, a single set of parts (that we aren't billed for up front) and quoting to build 20 of SKU 1, 50 of SKU 2, 10 of SKU 3, etc. without charging 2-3x the price.

We manufacture in the research / test equipment / defense space and I've heard similar things from other small hardware companies that are like us.

My experience with lines of credit isn't unique, and I think it's one of the underrated advantages of doing business in the US: we have a sufficiently stable commercial legal system that a huge amount of the economy can run on credit.

I have thought that there is a big opportunity financing components by optioning the sale of overstocked parts ahead of time. For a consumer electronics product that had heavy Q4 sales, my annual sales were entirely dependent on how many chips I could order by October 19, but then I'd have excess stock every January because things are sold in reels of varying sizes.

Ok, fair points. 2. is our focus right now and then we may add 1. over time.

Sad to see the Lego drone sold out, hope you get that reboot going!

Credit based on a SBIR is a great idea. Seems like something the Small Business Administration should offer.

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