Hardware Crowdfunding: Hearables Show Promise & Pratfalls

The hearables market just passed the $50m mark for total crowdfunding investment in February. This milestone demonstrates both the promise of the hearables market as well as the challenges of hardware crowdfunding and building hearables.

Analyst Nick Hunn recently penned his latest piece on the state of the hearables marketplace via his LinkedIn page. Having coined the term “hearables” roughly four years ago, there is no better source from which to get honest and accurate insights on this emerging sector.

With over $50m collectively raised through crowdfunding initiatives as of February of this year, the hearables market is taking off in earnest. The volume of investment grown to a significant level, and by all accounts appears to still be accelerating.

Via Nick Hunn / LinkedIn, “Hearables attract $50 million of crowdfunding”

However, as Hunn astutely observes, raising funds is only just the beginning of a long journey for aspiring hearables manufacturers:

“The average fund-raise is around $800,000, with ten exceeding $2 million. However, these are pre-orders which need to be fulfilled – it’s not pure development investment. Hearables, particularly earbuds, are not easy to design and manufacture, and it probably costs between $5 million and $10 million to bring a set of earbuds to market, particularly if they include any complex new functionality.”

Every manufacturer likely initiates their crowdfunding campaign with the best intentions. Yet the “average delay is still running at 13 months after the promised delivery date” among crowd-funding campaigns within the hearables sector. Even tech giant Apple demonstrated the challenges inherent in hearable technology, announcing multiple shipping delays during their Airpods launch.

Hardware Crowdfunding and Getting from Prototype to Production

Beyond the hearables sector, the challenge of going from prototype to product face virtually all hardware startups. In a post for Autodesk’s Redshift, venture capitalist Avidan Ross writes, “For years, nearly every venture capitalist in Silicon Valley had an unspoken, and sometimes explicit, ‘no hardware’ rule.”

This unwritten rule likely stemmed from the expense, complexity, and time needed to bring new hardware to market. In a 2016 post titled, “The Dirty Secrets of Hardware Crowdfunding,” Butterfleye CEO Ben Nader expands on this reality:

To build a physical product — whether it’s a super cooler or a smartwatch — requires more than a GitHub account and a fridge full of beer. It demands early and deep knowledge of disciplines like prototyping, tooling and supply chains. If a campaign doesn’t have that expertise, things start to go off the rails rather quickly.”

At Nuheara we’re fortunate to have extremely capable and experienced partners. Alignment with a manufacturing leader like Flextronics, and the unparalleled product development expertise of our experienced team who have done this before, has been invaluable in bringing IQbuds™ to market in less than 12 months from the first working wearable prototype. Nick Hunn summarizes the challenges of building a hearables device:

“As I said above, these products are still very difficult to develop…. They need sub-miniature transducers to render audio, multiple radios (typically Bluetooth to stream music from the phone and NFMI to distribute it between the left and right earbuds), multiple microphones with DSPs for beam-forming, noise cancellation and audio enhancement, clever battery and power management design to produce decent operating life, and innovative antenna designs. That’s before you get to the physical challenge of packing that all into something which fits in your ear and is comfortable to wear.”

We’re extremely grateful for the support and patience of our early backers from Indiegogo. Fulfillment of those earliest orders has been our highest priority. Although there have been challenges along the road, we expect the process to complete within the coming weeks.

As pre-order fulfillment comes to a close and expanded retail partnerships commence thereafter, Nuheara is well positioned to meet an ever-growing demand for its IQbuds™. There are exciting times ahead for the hearables market.

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