Funding the Future – Botfactory’s Quest for Sustainable Growth (Teaching Note)

Lessons Learned

The Role of Leadership

One time, Jonathan (Senior Mechanical Engineer) and I were demonstrating to Carlos (CEO) how the ink cartridge could be clicked into the cartridge holder that I designed. Kate (QC and Assembly Technician), always intrigued by anything that could be taken apart, heard the “click” and came over, asking, “Did we break something?” We had not, of course. After admiring the cartridge holder, she quipped, “As long as we don’t break Carlos’ spirit, we’re good!”

The “Carlos’ Spirit” is embodied in his daily routine of giving a high five or fist bump to every employee as he cheerfully strides into work each morning. No matter how tired, dejected, or discouraged we might feel, his energy inevitably lifts the team’s morale. Having joined the company when it was on the brink of collapse, I believe Kate’s passing comment reflects the depth of her experience with Carlos' unwavering optimism and resilience during those challenging times. Although I was not with the company during Nico’s tenure as CEO, it is clear that Carlos played a pivotal role in turning things around. His ability to realign the company’s ambitions, craft a five-year roadmap for additive manufacturing of electronics and strategically allocate resources must have been instrumental in transforming a struggling startup into a financially stable business, ultimately achieving a modest yet positive year-end profit.

Leadership in this company shines brightest through those who are most tenacious. Every day is seen as an opportunity to keep adding value to one’s work. Carlos exemplifies this by consistently investing the necessary resources to turn goals into reality. His unwavering spirit for everyone to draw upon has been just as vital to the company’s growth as its technological advancements and sales strategies.

Embracing Flexibility and Adaptation

While "flexibility" and "adaptation" are overused buzzwords in the professional world, they take on real meaning in Botfactory, a hardware startup that has been around for nearly a decade. Botfactory may not boast a groundbreaking idea that attracts eager investors, but it has a promising product in a niche industry – one that has required a long, yet essential, period of development and growth.

Operating in such a specialized technical field presents unique challenges that go far beyond the surface-level demands of typical startups or SaaS companies. We cannot simply pull technical knowledge about our inks and processes from a quick Google search; even our manufacturers, with all their expertise, sometimes struggle to provide the specific details and answers we need. This environment requires us to constantly experiment, innovate through trial and error, and deliver the product to the best of our knowledge.

Additionally, long lead times are a common reality in the prototyping process, often requiring us to wait on hardware and electronic manufacturers. These delays sometimes force us to shift priorities and recalibrate our approach, demanding a high level of flexibility and a collective willingness to adjust course as a team. To some, this might seem like disorganization or poor project management. And while there may be a kernel of truth in that perception, the reality is more nuanced. In an environment as dynamic and technically demanding as ours, adaptability becomes a crucial asset. The ability to shift gears and refocus on developing different components or products as needed allows us to maintain progress, even when external factors slow us down. This fluidity not only keeps the team engaged but also ensures that we continue making meaningful strides, despite the inevitable obstacles that come with working in a niche, highly specialized industry.

Delivering Value

Botfactory’s discovery of its product-market fit marked a crucial turning point for the company. Initially, the team targeted hobbyists and makers, a logical choice given the excitement and success surrounding 3D printing for consumer products at the time. Their experience with slow hardware prototyping as students and early market validation during their accelerator days reinforced this direction. However, the team remained flexible and open to a critical realization: their PCB printer had far greater potential and value in the professional market, particularly among engineers and corporations needing rapid prototyping solutions.

This required redefining what it meant to deliver value to their customers. Instead of focusing on affordable, easy-to-use and versatile printers for quick and dirty electronic prototyping, Botfactory had to shift their understanding to meet the more sophisticated demands of corporations who wanted high mix low volume PCBs. Pivoting to this new market required a complete overhaul of their business model. They had to understand the specific pain points of businesses and identify how additive manufacturing of electronics could fill those gaps. This shift also introduced a different competitive landscape, forcing them to learn from their competitors (Voltera) and adapt quickly. Ultimately, this realignment not only refined their approach but also unlocked new growth opportunities and helped turn the company around.

Botfactory must continuously reevaluate its business model to determine if selling printers is the optimal solution for addressing the challenges of high-mix, low-volume PCB manufacturing. Given the complexities of prototyping, PCB design, and the novelty of additive manufacturing, it might even be more efficient for Botfactory to explore a PCB-as-a-service model, offering specialized expertise and on-demand production to better meet customer needs.

Case Sypnosis

In early 2022, Carlos Ospina, co-founder and newly appointed CEO of Botfactory, faced a pivotal decision about the company's future. Despite the initial success of their products, Botfactory was struggling to sustain growth. The company found itself in a precarious financial situation, torn between seeking external investment, relying on organic revenue growth or pursue strategic partnerships to survive.

Botfactory, a startup founded in 2013, specializes in additive manufacturing for electronics, offering innovative desktop solutions for creating PCBs. Their desktop PCB printers—Squink and SV2—enable rapid prototyping and small-scale production of multilayer PCBs, transforming the traditionally slow and expensive process of high mix, low volume electronics fabrication. By integrating conductive ink printing, solder paste application, and automated component placement into a compact desktop unit, Botfactory empowers engineers, researchers, and corporations to quickly and cost-effectively prototype and iterate electronic designs.

The case traces Botfactory’s history, from its roots at NYU, where Ospina and co-founder Nicolas Vansnick identified the need for faster, more affordable PCB prototyping, to the creation of Squink and SV2. Initially focused on hobbyists, Botfactory eventually pivoted to serve corporate clients and professional engineers, which proved more lucrative but didn’t solve their financial challenges. Fundraising for a hardware startup was difficult, especially with investors expecting rapid scaling and profitability, which Botfactory’s long R&D cycles and niche market could not deliver. Meanwhile, organic growth from SV2 sales was extremely slow, as the team was largely waiting for sales to come in rather than actively driving demand.

With mounting financial pressure and the future of the company on the line, Ospina and his team must decide which path to pursue. Should they focus on driving organic growth through sales, explore partnerships or should they seek additional rounds of funding to accelerate their growth? The decision would define Botfactory’s long-term sustainability and growth potential.

Teaching Objectives

This case explores the unique challenges faced by a hardware startup in a high-tech niche, offering readers the opportunity to analyse strategic decision-making, leadership and market alignment in the context of emerging technologies.

Understand Challenges in Hardware Startups: Analyse the unique difficulties hardware startups face, such as long development cycles, high production costs and dependency on stakeholders. Readers will explore how these factors affect fundraising, product timelines and strategic decisions.

Fundraising vs Organic Growth vs Partnerships: Examine the trade-offs between seeking external investment and driving organic growth. Readers will assess the risks and benefits of each approach in a niche market, considering Botfactory's balance of revenue generation through sales, partnerships, and potential external funding.

Leadership and Strategic Decision-Making in Crisis: Learn how leadership is crucial during times of financial strain. By examining Ospina’s decisions, students will discuss how flexibility, resilience, and vision are essential for navigating operational challenges and ensuring company survival.

Target Market Alignment and Product Development: Explore how shifting target markets—from hobbyists to corporations—affected Botfactory’s product evolution and business model. Readers will evaluate the importance of aligning with market needs and how it influences customer segmentation, product features, and pricing strategies.

Innovation in Additive Manufacturing of PCBs: Expose readers to innovative technologies like additive manufacturing for PCBs, discussing their potential to disrupt traditional processes in electronics fabrication. Readers will explore how emerging technologies can transform industries and create new market opportunities.

Analysis

This analysis examines the case study "Funding the Future – Botfactory’s Quest for Sustainable Growth," utilizing both quantitative and qualitative frameworks to tackle the challenges faced by Carlos Ospina, CEO and co-founder of Botfactory. The key decision is whether to prioritize organic growth through sales, pursue strategic partnerships, or seek external funding to expedite growth.

Qualitative Analysis

A pros and cons comparison table will kickstart the analysis, providing a comprehensive framework to understand the factors influencing each possible pathway.

Quantitative Analysis

To complement the qualitative insights derived from the pros and cons analysis, we will employ a simple prioritization matrix to quantify the relative strengths and weaknesses of each option, weighted against each other and given a ranking based on how beneficial/detrimental it would be to Botfactory’s operations.

Pros and Cons Analysis

A pros and cons analysis can compare the three pathways that lie before Ospina.

Organic Sales	ㅤ
Pros	Cons
✅ Established customer base from existing SV2 product sales ✅ Strong product-market fit for professionals in R&D professionals and high-mix, low-volume production ✅ Recurring revenue from consumable sales (ink cartridges, substrates) ✅ Strong potential for partnerships and consulting opportunities driven by successful SV2 customer experiences ✅ Future expansion of the product line driven by incremental improvements and customer feedback in line with company vision	❌ Heavy reliance on occasional trade shows to generate sales leads, limiting lead-generation diversity ❌ Challenges in balancing sustainable price increases without risking customer attrition ❌ Limited market reach due to constrained marketing resources and efforts ❌ Presence of well-funded competitor (Voltera) with strong sales and business plan ❌ Limited scalability without external capital

Strategic Partnerships	ㅤ
Pros	Cons
✅ Successful track record with partnerships (eg. Airbus and US Air Force) ✅ Alignment with ongoing R&D efforts and contribution to machine enhancements ✅ Partnerships provide direct revenue for “engineering time” and is a non-dilutive funding opportunity ✅ New partnerships with high-profile clients could lead to significant revenue gains ✅ Strategic collaborations could foster technological advancements beyond in-house capabilities ✅ Custom development projects could enhance Botfactory’s reputation	❌ Reliance on third parties can lead to delays or project failures (eg. Birmingham Technologies) ❌ Potential loss of company strategic direction due to partner demands and priorities ❌ Complex and tedious negotiations and time-consuming relationship-building efforts ❌ Partnerships failing due to misaligned goals or technical hurdles (eg. Birmingham)

External Funding	ㅤ
Pros	Cons
✅ Proven concept with successful product launches (Eg. Squink and SV2) ✅ Track record of securing previous investments from New York Angels ✅ Opportunities to leverage industry advisors for insights and strategic guidance ✅ Access to capital to scale rapidly and develop new products ✅ Enhancing credibility with high-profile investors for further partnerships ✅ Increasing production capacity, workforce and marketing efforts to boost growth	❌ Financials not strong enough to impress investors (lack of high revenue/profit despite being around for almost ten years) ❌ Investor skepticism due to the wider struggles in the 3D printing industry ❌ Risk of ownership dilution and loss of control ❌ Unfavourable terms from investors demanding large equity stakes ❌ Difficulty in raising funds for a hardware startup ❌ Increased pressure from the board for rapid scaling, potentially comprising product quality

Simple Prioritization Matrix Analysis

To further enhance decision-making, integrating a prioritization matrix adds a layer of quantitative rigor to the evaluation process. This method ranks the importance of each factor by assigning weights, allowing us to transition from a broad qualitative understanding to a more objective, data-driven assessment.

Score (S): This indicates how well each pathway addresses that factor, with 1 being poor and 5 being excellent.

Weight: This shows the importance of the factor, with 5 being the most important and 1 being the least important.

Weighted Score (WS): Calculated by multiplying the score by the weight. Higher scores indicate a better fit for that factor, adjusted for importance.

Based on references from the teaching case, readers can come up with relevant factors and weigh them according to their importance to Botfactory.

Factor	Weight	Organic Sales	ㅤ	Strategic Partnerships	ㅤ	External Funding	ㅤ
ㅤ	ㅤ	S	WS	S	WS	S	WS
Degree of autonomy	4
Time to benefit/payoff	3
Capital requirements	4
Revenue certainty	5
Degree of attainability	5
Ownership retention	3
Innovation potential	3

Degree of autonomy

Refers to the level of control Botfactory retains in guiding its future
Weight of 4 given as the cofounders highly value maintaining significant influence over the company’s course, ensuring their vision remains intact

Time to benefit/payoff

Refers to how quickly the strategy delivers tangible results
Weight of 3 given as while faster payouts would ease financial strain, it should not come at the cost of sacrificing ownership or long-term sustainability

Capital requirements

Refers to the amount of capital required to execute the strategy
Weight of 4 given as Botfactory’s limited financial resources demand careful allocation to ensure that growth is both efficient and sustainable

Revenue certainty

Refers to the predictability and reliability of revenue streams generated by the strategy
Weight of 5 given as revenue generation is the most pressing concern in Botfactory’s current dilemma

Degree of attainability

Refers to how realistically each strategy can be achieved, considering the level of control Botfactory has and any external dependencies involved
Weight of 5 given as it is eminent that Botfactory can implement the strategy successfully

Ownership retention

Refers to the risk of dilution or loss of equity
Weight of 3 given as Botfactory is open to raising funds but seeks to avoid significant dilution, which could undermine long-term control and decision-making autonomy

Innovation potential

Refers to the ability of the strategy to foster innovation and drive new development opportunities
Weight of 3 given as while Botfactory’s position in a niche industry fosters opportunities for innovation, their immediate financial needs take precedence

By comparing between the 3 different pathways, a simple prioritization matrix could be obtained as shown.

Factor	Weight	Organic Sales	ㅤ	Strategic Partnerships	ㅤ	External Funding	ㅤ
ㅤ	ㅤ	S	WS	S	WS	S	WS
Degree of autonomy	4	5	20	4	16	3	12
Time to benefit/payoff	3	3	9	3	9	4	12
Capital requirements	4	3	12	4	16	5	20
Revenue certainty	5	4	20	3	15	2	10
Degree of attainability	5	4	20	3	15	2	10
Ownership retention	3	5	15	5	15	1	3
Innovation potential	3	4	12	5	15	3	9
Total			108		101		76

After tabulating the score, we can see that Organic Sales is the best option, followed by Strategic Partnerships and External Funding. A potential explanation is as follows:

Degree of autonomy

Organic Sales is fully within the company’s control, relying solely on the company’s own efforts and resources. Strategic Partnerships require alignment with external partners or grant providers, reducing some control. Fundraising involves external investors who often expect a say in the company’s operations.

Time to benefit/payoff

Fundraising offers the fastest route to securing capital, but for Botfactory, obtaining favourable terms that balance capital infusion with equity retention has proved challenging. Strategic Partnerships are also slow to secure and Organic Sales will require time for Botfactory to reinvent their sales and marketing strategy to gain better market traction.

Capital requirements

External Funding scores highest as it directly addresses capital needs, providing immediate access to growth funding. Strategic Partnerships allow resource sharing, reducing Botfactory’s expenses while driving R&D. In contrast, Organic Sales demands the most capital for scaling the business from the ground-up.

Revenue certainty

Strategic Partnerships, once secured, involve contracts or agreements, providing more stable and predictable revenue streams. Organic sales can fluctuate based on various factors such as product releases and market demand. Fundraising does not generate revenue directly but secures funds for future operations.

Degree of attainability

Organic Sales ranks the highest due to its independence from external decision-makers, while Strategic Partnerships and External Funding are scored lower because they rely more heavily on external parties, making them less attainable in comparison.

Ownership retention

Organic Sales and Strategic Partnerships allow Botfactory to retain the current level of ownership and control unlike External Funding.

Innovation potential

Strategic Partnerships often provide direct avenues for co-development or innovation through collaboration. Organic Sales allows the company to innovate through direct customer feedback and further iterations of their technology and printer. Fundraising has some innovation potential if investors support R&D, but it is generally less direct.

Recommendation

Organic Sales emerge as the most balanced and promising strategy, despite requiring large efforts to bootstrap. This strategy directly aligns with Botfactory’s business goals and offers control, revenue certainty and innovation potential.

Strategic Partnerships are also a strong option, provided that it is secured, as it opens new revenue streams and fosters innovation.

External Funding, despite addressing short-term capital needs, ranks lowest due to Botfactory's ongoing struggles with fundraising and the risk of ownership dilution.

Based on the above analysis, a recommendation would be to prioritize Organic Sales, to establish a stable foundation for consistent revenue. Strategic Partnerships can be pursued as a supplementary revenue stream; they are advantageous for driving growth through collaborative projects and new client relationships. However, without Organic Sales, solely relying on Strategic Partnerships may be challenging due to the lack of direct control over outcomes. External Funding can be kept as a secondary option, but should be pursued selectively, ensuring favorable terms and protecting against excessive equity dilution. The aim should be to complement partnerships and organic sales with funding when necessary, rather than relying on it as the primary growth driver.

Epilogue

In 2022, after years of struggling with fundraising and facing countless rejections from investors, Ospina and the co-founders made the difficult decision to shift their focus away from external funding and instead double down on driving organic sales. This decision was not easy, but it reflected the founders’ growing realization that chasing investors had become a distraction from their core business objectives.

For Ospina, the decision to bootstrap was a high-stakes, all-or-nothing move. He believed that if they could not succeed by delivering value through their printers, no influx of outside capital would provide a sustainable solution. Partnerships and grants were largely beyond their control, as the success of proposals depended on external decision-makers, making it risky to rely on such slim possibilities.

Leveraging on his technical expertise as former CTO, Ospina played a crucial role in guiding the company through this transition. His knowledge of marketing and sales empowered him to adopt a more aggressive and proactive approach to business development. He set ambitious sales goals and methodologically mapped out the technological and operational steps needed to reach them, aligning every part of the business with a clear path to growth.

This shift in strategy was not just about selling more units—it was about redefining how the company positioned itself in the market. Ospina’s vision was to build deeper relationships with existing customers, leverage the company's strong product-market fit, and pursue partnerships selectively, without being overly dependent on external parties. His ability to set a goal and align resources to meet it helped the company gain traction, particularly as they became more proactive in engaging with R&D professionals and expanding the SV2 product line in 2024.

Ospina kept investors at arm’s length to position the company for future negotiations when it would be in a stronger financial situation. By doing so, he could also gauge how investors viewed Botfactory without fully committing. This approach allowed the team to maintain control, avoid ownership dilution, and focus on growing through organic sales and strategic projects.