Where are the Manufacturing Startups? Right now the environment is favourable to them…

2 mins read

By Martin Vares, co-founder & CEO, Fractory

Financial, consumer, and software-as-a-service enterprises were, for a while, or so it seemed, springing up everywhere, thriving on easy ideas and accessible funding. But it’s now increasingly difficult to conceive simple startup ideas. Many straightforward problems, such as home food delivery and flight booking, have been addressed many times over. Also, the age of cheap money is past and there are new challenges associated with fundraising.  

Meanwhile, industrial manufacturing businesses are becoming more attractive to investors, as they should, when the potential for significant innovation there is so enormous. The venture capital community has sometimes underestimated the probability of success for tackling difficult problems while overestimating the ease of solving simpler ones. However, the hard problems in the manufacturing and industrial sectors are the ones that truly need attention. Solving these problems can make a difference to the world in ways that consumer solutions just can’t. And investors are turning to them.

Simpler startups typically focus on convenience, speedier shopping, enhanced online social connectivity etc. While these services might make daily life easier or sweeter, they rarely address pressing issues. In contrast, the industrial and manufacturing sectors have the potential to make important breakthroughs.

Meeting Manufacturing Startup Costs

The scarcity of manufacturing startups can partly be attributed to the inherent difficulties of launching them. Addressing complex problems requires substantial capital, patience, and a long-term vision that goes beyond the quick-profit mentality prevalent among many investors. A manufacturing venture often requires capital goods – including a dedicated manufacturing facility - whereas addressing consumer needs can sometimes be managed with a few laptops!

Selling the Manufacturing Startup Vision

My business, Fractory, simplifies strategic sourcing for manufacturing procurement, making difficult processes more efficient, saving money, labour, time, and energy. This frees engineers from non-engineering tasks, allowing resources to be better used. It’s a powerful idea, but it required explanation.

Building a manufacturing startup can be challenging. I mean, Fractory didn’t require the enormous capital resources associated with some businesses, but because it tackles a complex problem, one not easily solved or even always understood, it had to be laid out and it had to be proven. Happily, the savings it brings to our customers and the growth seen by our investors is evident. But there was a hurdle to get over right at the start.

Now is the Time

Despite these challenges, the current economic climate presents a clear opportunity for entrepreneurs to tackle more substantial issues. Yes, the shift away from easy finance means successful startups must demonstrate potential for long-lasting value. But also, entrepreneurs now have the chance to redefine success, moving beyond quick financial gain.

Industrial startups, with their potential to address foundational problems, show the importance of innovation with purpose. Emphasising environmental and economic sustainability demonstrates the broader impact they can have. Applying the flexibility, creativity, and problem-solving skillset of startup culture to the manufacturing world can effect meaningful change.

This is certainly a good time for the entrepreneurial ethos to address sustainability and global betterment. Investors and entrepreneurs are recalibrating priorities, seeing the potential value in solving hard problems. And the industrial and manufacturing sectors, with their myriad challenges, offer fertile ground for innovation.

Stakeholders in the startup world are right now venturing beyond the familiar, simple consumer sphere and embrace the daunting yet rewarding issues across industry. Now is a great time for manufacturing innovation.