R/GA Accelerator Sees Fewer Wearables, More Established Startups

Wall Street Journal

As 10 startups streamed through the doors at the R/GA Accelerator in New York on Monday to start the program focused on connected devices, two aspects stood out about them–many are established companies and few are focused on wearables, the hot trend in hardware for a while.

Crowdfunding sites and cheaper electronics led to a wave of launches of new hardware startups. Then things got hard. These companies are now up against challenges that go beyond designing a gadget–how to build a brand, how to create a product lineup, how to deliver their promised products on time, and how to design great apps to accompany and interact with their devices.

As Jenny Fielding, managing director at the R/GA Accelerator, run jointly by Techstars and advertising and product design firm R/GA, scouted the country over the past few months looking for startups, she said she received interest from established startups, many backed already by venture capital and some that have gone through hardware-accelerators, that wanted to learn how to advance their businesses through the next phase.

About half of the new class at the R/GA Accelerator have revenue and substantial outside funding, according to the program’s managers. This shift to more mature companies has happened in several Techstars’ programs, not just in the connected devices space, as VentureWire reported.

The makeup of the new R/GA Accelerator class is also different in another key way–fewer of these companies are making wearable devices and other consumer gadgets.

In the recent wave of hardware startups that attracted venture capital, there was an “unspoken emphasis on gadgets,” said Nick Coronges, chief technology officer at R/GA.

“The Internet of Things will transform not just gadgets but also agriculture and heavy industry,” said Stephen Plumlee, global chief operating officer at R/GA and head of R/GA Ventures, a venture arm at the firm.

RGA’s new class includes companies like Diagenetix Inc., which helps food producers diagnose pathogen risk; One Million Metrics, which is aimed at employers of industrial workers that want to improve safety; and Lisnr, which helps brands send messages to consumer phones via audio beacons. Many of these companies are focusing less on innovation in the hardware itself, and more on making the software and data analysis more useful, according to Mr. Coronges.

R/GA, itself, which has had a strong consumer practice for a while, having been heavily involved in the launch of Nike+ FuelBand and through clients like Beats Electronics Inc., is now seeing more demand from companies that want design help with products that aren’t focused on the consumer, Mr. Coronges said.

He characterized the accelerator’s move into non-consumer facing products as an “expansion,” rather than a turn away from consumer. He also said that this wasn’t a result of Nike’s decision to de-emphasize its wearable health tracker.

Consumer products still have a place at the accelerator, with companies including Astro, which is developing a simple home automation system; Bitfinder, which aims to help individuals with asthma detect airborne irritants; Freedom Audio, which makes waterproof audio products; and Latch, maker of keyless entry systems.

Many of these companies, Ms. Fielding said, have a dual consumer and business market strategy. Chargifi, which makes wireless phone charging products, sells them to consumers but also works with venues to make charging available.

The accelerator also welcomed companies that are making products that improve the production and use of hardware, such as Pinoccio, a maker of a kit to make hardware products, and SkySpecs, a software system that helps drones avoid collisions.

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