“Hearables” is a relatively new term that encompasses a range of digital technology devices designed to enhance listening. Some are aimed at improving the experience of listening to music, while others are designed to fill the role of traditional hearing aids. Some are controlled by smartphone apps, some light up, and some provide active noise cancellation to reduce background noise. The fact is that this industry segment is taking off.
Many of these devices come from start-up companies. Some of them rely on traditional funding sources to get started, such as venture capitalists and angel investors. More and more of them are turning to crowdfunding for their start-up cash, however. Nick Hunn is an industry consultant who has been following the money, and has calculated how much money has been raised for hearables projects using crowdfunding services to get started. According to his research, sites such as Indiegogo and KickStarter accounted for more than $50 million in investments in hearables projects. About two-thirds of this was for earbud devices, and the other third was for headphones.
As Nunn points out, the bulk of these funds are for pre-orders of products, which means that a large portion of the money will have to go to materials and components. Many companies have to turn to traditional funding sources to supplement the crowdfunding dollars. The average campaign raised about $800,000, which is small potatoes compared with the $5 to $10 million required to put a product into production and bring it to market. Still, crowdfunding projects still serve an important role as a way to get a cash infusion and to demonstrate market interest in the product when pitching other investors.