Hardware & IoT
Connected devices carrying both a manufacturing cost base and a software margin expectation.
Hardware companies with a software layer get judged on software multiples and funded against hardware costs. The two do not naturally reconcile, and the gap shows up as a valuation conversation neither side can win.
The way through is to make the mix explicit: separate device margin from recurring service margin, show how the recurring share grows with the installed base, and fund the two with different instruments — debt and incentive capital for tooling and inventory, equity against the software attach.
We build that separation into the financial model and the capital plan, so the business is underwritten on what it actually is rather than on whichever half the room prefers.
How we work in Hardware & IoT
What the engagement usually looks like
Device and recurring margin split
Model hardware and service economics separately, and show the recurring share compounding with installed base.
Tooling and inventory capital
Structure the debt and incentive capital that funds a physical product without spending equity on it.
Diligence for a hybrid model
Revenue recognition, warranty provisioning, and a data room that pre-empts the hardware-versus-software argument.
Capabilities
Where this work sits in the studio
- Debt & Blended FinanceWorking capital, venture debt and blended structures for businesses that should not be raising equity.Read more
- ControllershipThe controls, reporting structures and governance systems that make a company's numbers trustworthy.Read more
- Strategy ConsultingPositioning, functional alignment and the operating discipline that turns a plan into traction, for founders and boards past the validation stage.Read more
Talk to someone who knows the sector
Tell us where the business actually is and we will tell you what we would do first. No deck required.