How can a hardware startup with good technology and enough money still fail to deliver? According to research conducted by the Wharton School of the University of Pennsylvania in March 2015, the broad failure rate of technology projects on Kickstarter—meaning at least one backer considered the project a failure—was over 10%. Chad Xu, the co-founder and managing director of Shenzhen Valley Ventures (SVV) argues that the majority of hardware delivery fails because it is not designed properly.

“It’s not the factory, it’s the design that determines whether the production is feasible or not,” Chad says. “Outsiders, like investors and customers don’t understand why hardware startups can’t deliver the product. But inside people like us, we know if a product is properly designed on the inside or not. If it’s not properly designed inside, even Foxconn can not deliver it.”

If the hardware’s design is not done properly, it will be difficult for a factory and its suppliers to manage the supply chain and production. This can affect the entire production from parts and components subcontractors to the factory.

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Eva Yoo

Eva Yoo is Shanghai-based tech writer. Reach her at evayoo@technode.com