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See why this once rising Singapore startup is now back at square one

It's working on an undisclosed product.

ITwin used to be a rising star in Singapore’s startup scene. First emerging as a spin-off from Singapore’s national research agency A*STAR, the company was one of about a hundred young companies hand-picked to pitch at TechCrunch50, a conference held in 2009 by the prominent Silicon Valley tech blog.

It bagged awards from CES and Popular Science, and received an undisclosed amount of funding from venture capital firms Walden International, Innosight Ventures, and 3V SourceOne Capital.

Its flagship product, a twin-headed thumbdrive-like device that functions as a private and public virtual private network (VPN) between two devices, has been selling pretty well. While the company began with online marketing, it later moved to retail distribution, which helped drive the majority of the firm’s sales.

But something happened in the midst of iTwin’s expansion. By the end of 2013, the founders, CEO Lux Anantharaman and COO Kalyan Takru, stepped down. Both are now back at A*STAR.

Many of its early employees, including Khim Teck Chua and Akash Nemani, left the year before.

Tech in Asia reached out to both founders for an interview, but neither was able to comment on-the-record due to “confidentiality” obligations. Walden International vice-president Kris Leong, who headed up the iTwin investment, also declined our interview request.

Needless to say, it’s clear that iTwin is trying to get back on its feet. Anantharaman has said that the startup is still operational and in “stealth development mode”. The company is working on an undisclosed product, despite working with leaner operations due to the departure of many of its staff.

Missed opportunity in tablets
One ex-employee did speak to Tech in Asia on the condition of anonymity. He said the existence of cloud drive services like Dropbox, a theoretical competitor since it also enables data transfer wirelessly, didn’t seem to affect iTwin’s initial market performance since their product was more about providing security.

But once Dropbox for iPad came out, there was a huge movement towards cloud storage with people using it essentially as a flash drive for tablets. These services saw a huge surge in user numbers. People had begun moving onto mobile devices en masse, but iTwin didn’t support these devices, and so could not be used on those platforms for secure file access.

But product-market fit wasn’t the only challenge iTwin faced – as a hardware startup, progressive product adjustments and tweaks come with higher opportunity costs. Compared to software companies, errors in hardware startups are more costly to correct. A problem with casing design, or a product that fails certification tests means that the entire design and prototyping process needs to be restarted, which requires additional time and money.

There are also a lot more moving parts, such as fulfillment, logistics, packaging, and retail distribution. While the marginal cost of building software is zero, the same does not apply for hardware.

The end result then is that hardware startups – which often operate as full software companies with the additional complexities of hardware and firmware – require much more upfront investment.

Nonetheless, while running a hardware company is hard, he noted that it is good more startups like Innova Technology, iMotion, and Pirate3D are taking a shot at it. Singapore’s startup scene has grown more diverse since iTwin was launched.

With crowdfunding sites like Kickstarter becoming a viable funding source, today’s hardware startups certainly have more options to look forward to, even if their investor may not be able to support them with additional money.

(Editing by Josh Horwitz and Steven Millward)

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