John V. | October 30, 2023
Crowdfunding platforms have significantly influenced the hardware industry, both positively and negatively. On one hand, they have provided a new source of funding for startups and innovators, enabling them to bring their products to market. On the other hand, there has been a growing concern about the number of projects that fail to deliver their final product after raising funds, leaving backers out of luck.
The Positive Impact of Crowdfunding
Crowdfunding platforms have become a popular source of funding for technology entrepreneurs. They not only provide financial support but also offer valuable feedback, ideas, and word-of-mouth marketing. Successful crowdfunding campaigns, such as the Oculus Rift virtual-reality headset, which raised $2.4 million, demonstrate the potential of these platforms.
$2.4 million
Raised by the Oculus Rift virtual-reality headset crowdfunding campaign
The Challenges of Crowdfunding
Successfully completing a crowdfunding campaign is just the beginning for hardware startups. They then face the challenge of manufacturing and delivering the product, a process that can take anywhere from six to twelve months. Furthermore, crowdfunding puts the performance of early-stage companies in full public view, making failures feel significantly harder.
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6 to 12 months
Time it can take to manufacture and deliver a product after a successful crowdfunding campaign
Despite the challenges, crowdfunding continues to be seen as a way to reduce risk in new product development and manufacturing. By setting a funding goal that assures adequate volume for a profitable launch, startups can reduce the risk in new product launches. However, backers are advised to be cautious of campaigns promising to disrupt mainstream markets, as these could be red flags.
The Future of Crowdfunding
The chart illustrates the growth of the crowdfunding market in the hardware industry from 2023 to 2028. The market size is expected to grow from USD 1.30 billion in 2023 to USD 2.69 billion by 2028, at a Compound Annual Growth Rate (CAGR) of 15.70%. Europe is projected to be the fastest-growing region in this period.
Crowdfunding hardware products could lead to Billon dollar exits
Fitbit acquired pebble for $23m and Facebook aquired Oculus for $2b
