Ossic, another crowdfunded start-up, fails – leaving thousands of orders unfilled
3D headphone maker Ossic bites the dust, but why?
PHOTO CREDIT: Getty Images
Crowdfunding - the practice of raising small amounts of money from a large number of relative strangers in order to finance a project - is a great way for start-ups to get seed capital. But it can also be a very risky business. Just ask the investors of Ouya, an Android-based gaming device. Or the "iBackback," the "Skarp Laser Razor" or thousands of other great (and not so great) ideas that ultimately met their premature demise.
Now, another start-up has dashed the hopes of their investors. The company is called Ossic and, according to its campaign on the crowdfunding site Kickstarter, its product - the OSSIC X - was to be the world's first headphone that "instantly calibrates to your anatomy for the most accurate and immersive 3D audio." The idea was to match 3D sound - particularly for gaming and music - with virtual reality headsets to "acoustically recreate" the way we heard the world every day.
Although it's not exactly an investment that I would make, tens of thousands of gaming and virtual reality enthusiasts loved the idea. They chipped in their crowdfunded money with the hopes of getting a pair of headphones (or at least a thank you card) from the company. Gizmodo reports that through January 2017 the company received more than 22,000 orders for its headphones and a few months ago announced the shipment of about 80 units, with plans to enter "mass production by late Spring, 2018."
Unfortunately, things didn't turn out that way.
The team at Ossic, in a Kickstarter update this past weekend, said it was out of money. Although about $3 million was raised through a combination of crowdfunding sites (there was also angel investments), the product was never able to reach its full product production capabilities and the founders failed to raise more cash. "We are extremely sorry that we cannot deliver your product," the team wrote. "...and want you to know that the team has done everything possible including investing our own savings and working without salary to exhaust all possibilities."
The company had ambitious plans and, in their defense, offered up very detailed information to would-be investors on their crowdfunding pages and website including product designs, timetables, risks and frequent updates on their blog. But, as TechCrunch columnist Lucas Matney points out, "Ossic appears to have been misguided from the start, and even with $3.2 million in crowdfunding and seed funding, they were left unable to begin large-scale manufacturing."
According to the same TechCrunch article, a bunch of disgruntled investors have formed a Facebook group and are reportedly considering legal action. Do the investors have a case? Aren't these the risks of the crowdfunding game?