18.05.2015

Crowdfunding is also a good choice for hardware startups

Thanks to crowdfunding campaigns, a large number of technology projects have become reality. There is one category that has been a clear beneficiary and continues to experience a surge in collective funding: hardware.

Until now, getting enough money to carry out one of these projects was a complex mission because of the high levels of investment required. Platforms like Kickstarter and Indiegogo have become a boon for gadget and device manufacturers. The sector is at its peak.

The first quarter of 2015 saw record amounts of collective funding for such projects: in the first few months of the year, 128 hardware companies raised a total of $70 million (just over 60 million euro) through crowdfunding.

That figure represents 35% of the total amount that has been raised by these companies since Kickstarter and Indiegogo began, and shows the excellent investment climate for hardware projects right now thanks to the support of their users.

Smartwatches and virtual reality

hardware crowfunding

As shown in the above graph, wearables and accessories for mobile phones and computers were the projects that received most money through crowdfunding in the first quarter. Other standout categories are the home category, which refers to devices related to the Internet of Things, as well as bikes and drones.

One of the big winners during the first quarter in the wearables category was the new Pebble smartwatch, Pebble Time. This new model broke all records, raising over $20 million (17 million euros) through its Kickstarter crowdfunding campaign.

The first Pebble smartwatch was one of the earliest and most popular hardware projects funded through this kind of micro-sponsorship. This campaign launched in 2012 and, for just $99 (about 90 euros) the company gave the opportunity to users (and investors) to get their hand on one of these smartwatches if the crowdfunding was successful.

Another notable case is that of Oculus Rift. The virtual reality headset began with a Kickstarter campaign and now is part of the Facebook empire (Mark Zuckerberg’s company bought them for $2 billion, or more than 1.7 billion euros.)

With a prototype and a video, a hardware project can get enough funding to start off on its journey. However this is only the beginning: a successful crowdfunding campaign is usually followed by financing from professional investors.

According to one report, these successful micro-sponsorship projects have already raised more than $300 million (more than 269 million euros) in venture capital funding.