How should a hardware startup build its capital stack before Series A?

Build the stack around what customers, suppliers, and lenders can already verify: payments, orders, receivables, and assets. Use equity for uncertainty that those sources cannot finance, rather than making another priced round the only route to production.

Match the instrument to the evidence

A customer deposit can fund an order; supplier terms can bridge production; an asset lender may finance equipment with a resale market. None automatically covers engineering risk or an unproven product. Separate those uses before comparing proposals, and model repayments alongside delivery costs.

Chapter 5 emphasizes that revenue history matters as well as revenue size. Its Wayflyer example starts at $10,000 average monthly USD revenue for the preceding six months, subject to the provider’s other requirements. That published floor is an application condition, not a promise of an offer. Wayflyer requirements, checked October 30, 2026.

Worked example: a production order

Illustrative assumptions, not a company case. A company needs $240,000 to build an order. The customer will pay a $100,000 deposit, while the manufacturer offers $60,000 of deferred payment. The immediate production gap is $80,000: $240,000 − $100,000 − $60,000.

That does not mean the company needs only $80,000 overall. Add payroll, freight, taxes, defects, and any delay before collection to the weekly cash forecast. Compare financing for the residual gap with a smaller run or a revised deposit schedule. Ask the manufacturer what happens if delivery slips; deferred payment is still a liability.

A useful next step

Make one schedule with each use of cash, its payment date, the proof available to a funder, and the cash available to repay. Discuss actual terms with providers before putting their capital in the base case. Explore Cap Stack Compass.

This page is an original summary of an argument developed in Speedstrap, not an extract from the book.

From Chapter 5 of Speedstrap. Find the book on Amazon.

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