There has never been a better time to be a hardware entrepreneur. With the internet making communication, marketing, and even manufacturing considerably easier, the barriers to entry have shrunk a great deal, regardless of your industry.
But as much as all these things have helped startups, hardware startup crowdfunding is still the tool that promises to be the most transformative of all. To say this has been growing rapidly would be an understatement. In 2010 crowdfunding was a small market with just $880 million. By the end of 2015, this is thought to have grown to $34 billion (Source) which is actually more than the venture capitalists estimate each year.
Kickstarter is undoubtedly the biggest and most popular of these crowdfunding sites, and in this case, project creators only get the funds they’ve been promised if they manage to surpass their goal in the time frame. The other popular options include:
And all of these are bringing in big numbers. In fact, in Q1 2015, 128 hardware companies managed to pre-sell almost $70 million worth of products (Source) . That’s actually around 35% of the total amount hardware projects made since Kickstarter and Indiegogo launched – which shows that the area is very much growing.
As a general rule though, the highest profile projects are found on Kickstarter, Indiegogo, or RocketHub. And some of the projects that began life on these platforms really did prove to be high profile ones. Some notable examples include The Oculus Rift, The Pebble Watch, The Coolest Cooler, The Ouya, and Dash, to name a few.
Which should you hop onto? Certainly Kickstarter and Indiegogo are the biggest two: 65% of the hardware companies to exceed the $100,000 threshold in Q1 were on Kickstarter while 35% were on Indiegogo.
Whichever platform you choose, there is a lot of money to be made here. The game Star Citizen, for instance, managed to raise a whopping $89,002,775, followed by Elio Motors (a privately organized project that has thus far raised $21,161,869), the Pebble Watch ($20,338,986), Ethereum ($18,439,086 privately raised), and Coolest Cooler ($13,285,226). Note that all the highest earning projects were either on Kickstarter, or independently organized. However, it is very rare to see a project reach $1 million dollars or more in campaign funds. Most campaigns in the technology & design segment tend to raise less than $100,000.
Which products specifically are doing well? Well, data from Q1 shows that there were 17 wearable projects, 27 accessories, 15 home products, 5 bike projects, 5 drone projects, 11 3D printers and 9 cameras. That said, it was the wearable category that earned by far the most.
So what is it that makes crowdfunding so appealing for hardware startups, and should you get involved?
Of course, the central concept behind crowdfunding is that creators have a means to fund their dream projects, without giving away half their business. For the backers part, they get to see projects that they’re passionate about come to life where they otherwise might never have – and to play a part in that story as well.
But there are many more advantages to using crowdfunding too. For starters, this is a fantastic way to market an idea, and to generate buzz and hype around it, prior to a launch. Better yet, hardware entrepreneurs can create a passionate community of ambassadors, who will shout about the project from the rooftops, who will provide feedback and advice, and who can offer motivation and support.
And if your project should fail? In that case, you can rest assured there was probably never a market there for it or you didn’t appeal to the right market with the right value proposition. Crowdfunding is a brilliant way to verify your idea, and thereby avoid wasting time on a concept that doesn’t have legs. And if it is successful, then you’ll also be able to use these figures in order to possibly obtain more funding from VCs – the more successful your crowdfunding campaign, the more appealing your project would seem to invest in. If you’re a maker with an idea, and you haven’t known how to make it happen, then it’s high time you got on a crowdfunding platform.
Do you have any experience of crowdfunding for hardware startups? Was it positive or negative? Which crowdfunding platform do you recommend? Leave your feedback as a comment below for the rest of the community. Do subscribe to our newsletter for more exciting news in the hardware industry.