Where are our Hardware Unicorns?

Can the UK create another Dyson?

Over 5,000 prototypes, that’s how many iterations James Dyson went through in five years before creating a bagless vacuum cleaner ready for market.

Overwhelming confidence and a supportive wife helped him reach that point. Yet, he still faced resistance from incumbents refusing to license his technology for fear of disrupting the recurring sales of vacuum-bags. Meanwhile, other companies tried to copy his design.

In the end, Dyson brought manufacturing in-house and took his product to market with £650,000 in bank financing, equivalent to roughly $3 million today. By today’s standards, that might be comparable to a Series A round for a consumer-facing company.

By contrast, firms like Nothing (earbuds and cell phone technology) and Humane (AI pin) have both raised over $200 million in debt and equity to fund innovation and growth.

Has the start-up market changed?

Are vast funding rounds the way? Or do dogged designers have a chance bootstapping their hardware products to market? Eventually achieving billion-dollar valuations while retaining full ownership?

Intrigued, I looked into UK unicorns to learn about their founders, business models, and funding. An article by Beauhurst served as my starting point, allowing me to investigate the founders, funding history, and market segments of 50 unicorns to compare them with Dyson.

First, more about James Dyson

James was in his thirties when he started to miniaturize the cyclone technology he witnessed in a factory environment years earlier for use in household vacuums, and it wasn’t until he was over 40 that Dyson Ltd was formed.

Before focusing on vacuums, he spent his twenties at art college and later designed and sold unique sea vehicles at Rotork, before launching his first venture.

That first venture reimagined the wheelbarrow by replacing the wheel with a ball. Although the “barrowball” gained popularity, Dyson was ultimately forced out by his investors, and the company failed.

You might assume such a background would appeal to venture capitalists who promote a fail-fast mindset. But in the UK at the time, corporate experience was still paramount, and his bitter experience led him to strike out on his own.

Today’s Funding Landscape

The UK now boasts a thriving venture capital ecosystem, and vast sums are raised with 20% of our unicorns receiving over £100 million in funding prior to achieving unicorn status.

There is evidently an appetite for investment, but does this money go to founder with a bright idea and a bucket full of determination?

Well, let’s see.

Looking at the age profile of unicorn founders in Figure 1, it appears many were younger than Dyson, suggesting youth is not a deal-breaker for investors. Yet a closer look at founders under 25 at companies like BrewDog, GymShark or Paddle, reveals they were already successful entities before raising venture capital.

These companies had demonstrated product-market fit and shown resilience in scaling. Venture funding was primarily used to accelerate growth and go global.

Figure 1: Age profile of unicorn founders in the UK

So, would a 30-year-old James Dyson, armed with an idea, a clear customer pain point, and a sizable addressable market but no revenue, still struggle to secure venture funding today? Probably, unless he also had robust experience.

Revisiting Figure 1, the largest cohort of unicorn founders are in their thirties. Examples include Flo Health, Monzo, Revolut, and Wise—each founded by people who built domain expertise in their twenties, often at start-ups or in finance.

The founders of Motorway previously worked at Zoopla, those at Darktrace came from Autonomy after its acquisition, and Zego’s founders had been at Deliveroo.

Therefore, for founders in their twenties, the product must already prove itself. For those in their thirties, domain expertise and a solid track record are critical.

This justifies James’ decision to go his own way, at least initially, to prove product-market fit and potential to scale. After this point, investors today would be more willing and aggressive in their funding.

The UK’s Appetite for Hardware

But is the UK prepared to fund hardware on the scale it demands? The answer, illustrated in Figure 2, is largely no.

FinTech, SaaS, and the emerging AI sector dominate among today’s UK unicorns, with minimal presence in robotics, quantum computing, or other physical product domains. Graphcore is an exception in semiconductors, but even it is primarily software-focused.

We literally have Nothing, as well as a few MedTech and Biotech firms like CMR Surgical and Oxford Nanopore, which benefited from academic research funding and patent-based validation.

Figure 2: UK unicorns by business sector

Still, the investment culture leans heavily toward software, likely due to London’s central role, where 75% of UK investment capital is deployed. Although AI funding is a bright light, which has demonstrated a track record with successes like Deepmind.

However, if the UK wants to develop companies that can employ thousands of people, which Dyson does, we need the risk appetite to fund more Nothing’s and go into sectors such as robotics, or quantum computing.

But we currently have no track record and these fields require a ton of capital and risk, which our investment culture is not ready for. Part of the success of AI, despite the cost of compute, is that it fits into our software-centric model that can be proven with lower investments then scaled.

Conclusion

If you’re a modern-day James Dyson, whether 20 or 50, and aiming to launch a hardware business, you still need that unwavering determination to develop the product, market the brand, and establish product-market fit. Only then might venture dollars come your way.

However, there is potential for change.

If Nothing or other hardware unicorns continue to succeed, the UK may become more willing to back similarly challenging endeavors. Just as Castore rode the momentum from Gymshark in sports apparel, we may yet see a new Dyson emerge in the wake of Nothing’s success.