mHUB launched two years ago as a massive space for Chicago's hardware entrepreneurs to design and build their products. Now, the manufacturing hub wants to give makers something hardware startups need even more: funding.
mHUB announced on Tuesday that it's planning to raise a $15 million fund to invest in early-stage hardware startups. The fund, called the Accelerate Impact Fund (AIF), will be raised over the next three years and aims to back 60 hardware businesses.
The launch of the fund coincided with a $300,000 grant mHUB was awarded this week from the U.S. Department of Commerce through the Economic Development Administration’s Regional Innovation Strategies competition. mHUB was one of 44 U.S. organizations to receive a piece of the $23 million total investment from the EDA.
Early-stage hardware startups often struggle to raise funding compared to their software counterparts. Hardware startups are seen by some investors as riskier bets, as they require more upfront capital to scale.
AIF looks to give hardware founders a boost by investing $75,000 in each business in exchange for 5% equity. But the fund is more than just a financial investment, mHUB says. Its portfolio startups will also participate in an incubator program, which will pair early-stage companies with larger corporations. The idea is to establish relationships between startups and large enterprises to help create potential customer relationships and investment opportunities, as well as mentorship.
mHUB said it plans to raise the $15 million fund through its corporate partners, VCs and angel investors. It plans to begin backing its first cohort of startups in early 2020.
