Date
25 May 2017
Finding reliable distributing and manufacturing partners are typical challenges of  internet of things startups. Photo: internet
Finding reliable distributing and manufacturing partners are typical challenges of internet of things startups. Photo: internet

How this venture fund picks internet of things startups

Internet of things is a huge topic.

Some developers such as makers of smart meters are dedicated to solving business problems.

Others focus on making products consumers can use in day-to-day life. These are the kinds of innovators Enchant.JV likes to back with its money.

Enchant, a venture capital firm, has gone through several batches of startups and has been involved in a wide array of consumer hardware ranging from lighting devices to tea brewers, baby care systems and intelligent massage jackets.

When selecting startups to support, Enchant must first like the product.

Enchant prefers products that offer certain distinct added value but won’t cost an excessive amount of money to produce.

Otherwise, the retail price won’t be competitive compared to existing alternatives, Gene Berger, managing partner of Enchant explains.

A large addressable market is also crucial.

A smart tea maker developed by one of the startups backed by Enchant has huge market potential because tea is one of the most popular drinks in the world, Berger says.

Also, there are only a few tea makers compared with, say, coffee making machines.

In helping startups achieve their best potential, the venture fund adopts a hands-on approach.

There is a nine-month development program, in which Enchant will conduct frequent meetings with these fledging firms and make sure they are on the right track.

Apart from advising on business strategies, Enchant will introduce its rich contacts with a group of reliable makers in China that startups can tap for handling the often complex manufacturing processes.

Enchant also advises on how to use crowd funding platforms, where people can preorder products before first the batch of production and is often one of the best ways to test market acceptance of a product idea.

The venture capital firm will introduce to startups its contacts with retail pipelines as well as potential investors for their next round of funding needs.

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RA

EJ Insight writer

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