Crowdfunding Gives Health and Fitness Gadgets a Real Workout

Robert Mullins, CFB Sr. Staff Writer

In the wearable computer space, Google Glass has generated the buzz, but the Pebble watch has generated results.

pebblePebble Technology had raised $375,000 from a venture capitalist for a wristwatch computer that would share information with a user’s Apple or Android OS smartphone, but was unable to raise more. In April 2012, Pebble signed up with the crowdfunding company Kickstarter and took off. By May of that year, Pebble had raised a total of more than $10 million and by July 4 of this year, it had sold 85,000 units of the $150 watch.

Pebble Technology is seen as a success story not just for the wearable computer space but for the phenomenon of crowdfunding, in which investors chip in as little as a few hundred dollars to fund a startup and collectively raise funds sufficient to get a startup some serious market traction. But as with any hot trend in technology that everybody wants to get in on, some – but not all — are concerned that crowdfunding will create more wearable computer startups than the market can support and that there will be an inevitable consolidation of the space with some companies being Betamaxed out of existence. Nonetheless, Pebble’s success at crowdfunding has drawn a lot of other wearable computer entrepreneurs into the business.

“I think it’s becoming a phenomenon,” said Julien Blin, a onetime industry analyst who now blogs about the wearable computers space at Gizworld.com. “If you take the Pebble story … I think it’s inspiring a lot of entrepreneurs who have ideas but sometimes it’s difficult to raise money from a VC. So [crowdfunding] is kind of a disruptor in the market.”

To be sure, crowdfunding in and of itself is no guarantee of success, Blin added, and starting a successful wearable computer company requires mastery of engineering, supply chain management, production, distribution and all manner of other issues.

stained glass

Founder Redg Snodgrass of Stained Glass Labs

Founder Redg Snodgrass of Stained Glass Labs

Such challenges create a high barrier to entry in the space, particularly because it’s a piece of hardware, not software, added Redg Snodgrass, founder and chief executive officer of Stained Glass, a company that is trying to raise $25 million to fund wearable computing startups.

Stained Glass itself doesn’t use crowdfunding, but some of the companies it is nurturing may combine funds from Stained Glass with crowdfunding efforts of their own.

But the prevalence of crowdfunding from companies like Kickstarter, Indiegogo and others is “absolutely not” creating a glut of wearable computing contenders, Snodgrass said.

“The big issue with wearable technology is that it’s so expensive to prototype something,” he said. “It’s very different than building software because you need components, and if a component doesn’t work, you’ve actually got to go and create another component.”

When a hardware startup is developing its product, it typically needs to do a production run to see how the product gets built and distributed in order to gauge demand, he said. But a production run could cost anywhere from $50,000 to $100,000. Even if a company’s been able to raise $150,000 or so from the crowd, there’s not much left over afterwards.

So while crowdfunding doesn’t overcome every challenge to a hardware startup, it’s an important first step that hadn’t been available previously, Snodgrass said.

“What the crowdfunding evolution has really allowed to happen is that it has allowed for all these startups to get that initial seed funding,” he said.

Crowdfunding helps entrepreneurs chase after what’s forecast to become a nearly $6 billion market for wearable computers.

Pages: 1 2

Tags: , , , , , , , , , , , , , , , , ,

HEADLINE NEWS

Crowdfund InsiderRecommendations Provided to EU to Boost Crowdfunding in Renewable EnergyCrowdfund InsiderA group of 14 different partners worked on the project that saw the participation of the European Crowdfunding Network and four different crowdfunding platforms in the renewable e [...]

Jamaica GleanerPointers to Publishing | Consider crowdfunding to finance your bookJamaica GleanerYou have great ideas but do not have the funds, or you do not want to take the risk of taking a loan or asking for financial support from family. Crowdfunding might be your best bet, and t [...]

FortuneCrowdfunding: Women Better at Raising Money Than Men Are ...FortuneA new study has found that women are generally better than men at crowdfunding.Women are better at crowdfunding than men, shows study | The ...The IndependentWhy women join the crowd: Gender gap in bank lending, [...]

The VergeDonald Trump's terrible crowdfunding site was a microcosm of his political careerThe VergeAnd from the beginning, the site had Trump's populist edge. Zanker boasted that “the reign of Kickstarter's Brooklyn hipsters is over,” referring to Kickstarter's New [...]

ForbesWhy Crowdfunding Is Still Booming, Especially For Chinese Tech CompaniesForbesBased on recent media reports, it looks like crowdfunding is now in the "disillusionment" phase of the famous Gartner hype cycle, after peaking a few years back. I will argue that crowdfundin [...]

Social media, crowdfunding skirmishes encapsulate Endy debateThe Herald JournalAfter that, a campaign with the same goals and the same organizer appeared on a separate crowdfunding site, FundRazr.com. This campaign also drew negative attention on social media, and after a few hours th [...]

How Women Trounce Men When Raising Seed Crowdfunding CapitalForbesMale entrepreneurs may account for the majority of business owners raising finance on crowdfunding platforms in the UK, but their female counterparts are far more likely to get the support they seek, new research shows. [...]

Android Authority (blog)Crowdfunding project of the week: ORII allows for making calls using your fingerAndroid Authority (blog)Did you ever watch those movies where special agents communicate with each other by putting an index finger up to the ear? I wasn't always able to see a [...]

Wired.co.ukAfter budget cuts, museums are crowdfunding to preserve historyWired.co.ukIn 2015, the Smithsonian National Air and Space Museum in Washington, D.C. launched its very first crowdfunding campaign to 'Reboot the Suit'. The idea was to raise much-need funds to conser [...]

Awesome tech you can't buy yet: Sun-defying tents, bee monitors, dream masksDigital TrendsAt any given moment, there are approximately a zillion different crowdfunding campaigns happening on the Web. Take a stroll through Kickstarter or Indiegogo and you'll find no shortage [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |