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Forbes Business Council member Shaun Arora is a founding partner at MiLA Capital, a seed-stage venture capital firm in Los Angeles, focused on funding tech you can touch. Shaun fights for underdogs; he believes that hardware startups can be built in a capital-efficient manner.
MiLA Capital has chosen to tread a somewhat lonely road. We are a seed-stage venture capital firm that invests in tech you can touch. But as the only hardware-focused investor in Southern California, we face questions from other businesses about our choice of specialization and location. Why hardware? Why SoCal?
Why Hardware?
We are often asked why we work in the hardware industry. There is a perception among entrepreneurs that hardware is capital intensive, despite evidence to the contrary. In the past decade, the cost of building tech startups has decreased dramatically, whether they focus on developing hardware or software. It’s true that hardware can be expensive in the seed stages if founders are de-risking the wrong thing. It’s also true that scaling hardware becomes increasingly cheap in the growth stages.
We’ve chosen to specialize in tech you can touch, and in our many decades operating and investing in companies that rely on physical products, have found many hacks to overcome some of the difficulties of starting out in hardware. We teach founders to:
- Be frugal. When faced with a challenge, with cash on hand, it’s easy to spend their way out of a problem. But when they have a frugal mindset, they are inventive and uncover innovative solutions, which in turn builds a culture that embraces this mindset. Running efficient businesses minimizes dilution and maximizes returns for investors and founders alike.
- Front-load the development journey with failures. Going after the wrong market with the right product kills hardware startups. The more they learn about a product and market in the early stages, the cheaper the rework when corrections are needed.
- Keep the tech you can touch ugly longer. It’s tempting to make your product pretty, yet we see that a pretty prototype tends to create blind spots. Product companies do best when their prototypes evolve based on consumer-centric needs and not founder-centric assumptions.
Yes, hardware can be complex. But by establishing ourselves firmly in that world, we are able to savor the complexity, capture other best practices, and make the intimidating manageable.
Why Los Angeles?
Los Angeles is a great city for talent and companies. The city and mayor are extremely entrepreneur-friendly and it shows, especially in the caliber of people flocking to the city.
L.A. is known for its incredibly creative community, strong talent pool, supportive startup environment, massive port, and deep manufacturing roots. Factor in incredible talent factories like UCLA, SpaceX, USC, CSUN, JPL, and Caltech and you can see why Los Angeles is a prime location for technology-enabled hardware. We are a city of rocket scientists, wireless power talent, memory drives, VR early adopters, and blockchain beach.
But even in a community like L.A., entrepreneurs can feel alone. When you have a question or hit a fork in the road, you should have all the right people on the bench to make your business successful. Los Angeles is swimming with those people. We have identified 400 founders navigating tech you can touch in L.A., and there are more emerging every day. We built Toolbox LA as a hub for anyone to prototype or meet others building tech you can touch.
Finding a Niche
When creating a business, it is imperative to carefully choose both the industry and the location for your venture. Finding our niche — hardware in L.A. — has enabled us to create strong leadership in the local venture industry and to help hard tech startups establish themselves here.
