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Crowdfunding the Future of Hardware: Small Volume, Big Impact

While there is plenty of buzz around huge crowdfunding successes like Pebble and Oculus Rift, equally interesting are the large numbers of funded small volume hardware projects. The cumulative impact of these projects is growing, increasing the mix of components being purchased, changing the methods of assembly, and altering challenges faced in purchasing and manufacturing.

The volume of crowd-funded hardware is growing exponentially. In 2013, hardware projects raised $46.6 million on Kickstarter, up from $2.5 million in 2011. Indiegogo, a crowdfunding site whose projects tend to skew towards hardware is not public with funding stats but claims to have grown 10x in the past two years. Demand for niche hardware products exists, and is growing fast.

As an example of this phenomenon, take a look at The Public Radio, a radio in a mason jar whose tuning is fixed to your local public radio station. The brainchild of two hardware hackers from Brooklyn, it raised $88,072 on Kickstarter to produce about 1800 radios. Another example is OpenPCR, an open source instrument for sequencing DNA which raised $12,121 to build 13 sequencers housed in laser cut wood back in 2010. An updated model, Open qPCR has a currently running campaign that already met its $50,000 goal. Or check out QuadStick, a video game controller for Quadriplegics, which raised $27,905 to build 21 devices.

For electronic component purchasing, projects at this scale typically turn to well known online component distributors like Digi-Key, Mouser, and Newark, which specialize in low volume, high mix, and quick shipping. Without huge economies of scale, volume pricing may or may not be available, but in general, these higher costs are happily absorbed by price insensitive enthusiasts.

Low volume producers often turn to local, quick turn contract manufacturers for the convenience of being able to oversee production and maintain a closer relationship with their manufacturing partner. If assembly cost is not a major point of optimization, the benefit of a local partner can be huge. From our informal conversations with quick turn CMs, they are a seeing an uptick in projects like these. Their systems are optimized to quickly change jobs and help designers who might have less experience than engineers at large companies doing large volume runs.

It's not just the large numbers of low volume projects that should be getting the attention of industry players. Projects that may appear to have small audiences can quickly attract the interest of the mainstream and generate opportunities for large volume sales. An example of this is 3Doodler, a pen that uses 3D printer technology to allow the user to “draw” in three dimensions. With a crowdfunding target of $30,000, they ended up raising over $2.3 million and moving many tens of thousands of units. 3Doodler is now a successful standalone company.

The fruition of projects like these creates a virtuous cycle to help product designers iterate quickly and streamline production. Squink, a combination of a PCB printer and pick and place machine raised $100,380 on Kickstarter to fund R&D and their initial production run of printers. Tempo Automation is building a desktop pick and place machine so that product developers can assemble PCBs at their desk while taking a coffee break. Their machine prototypes are well developed and will likely be available soon. The goal with both of these machines is to reduce the turnaround time for PCB fabrication and assembly from at least a week, to at most a day or two, or less. As projects like these make small volume hardware manufacturing faster and easier, I expect that we'll see this cycle of small volume hardware crowdfunding continue.

If you want to know where the future of manufacturing is going, keep an eye on the low volume space. That's where crowdfunding is driving innovation in manufacturing.

3 comments on “Crowdfunding the Future of Hardware: Small Volume, Big Impact

  1. SunitaT
    November 17, 2014

    The author has fully furnished us with the complete guide to having a kickstarter campaign. I would also like to add that most kickstarter campaigns are losing traction even after launch because the developers aren't showing any signs of updating/renewing experiences for customers. “If it ain't broke, don't fix it” mentality will not work in such a competitive market.

  2. SP
    November 18, 2014

    These apps would be quite useful in IOT market. There are going to be many many startups.

  3. t.alex
    November 29, 2014

    Kickstarter is a great tool for brilliant business ideas to shine. Its important for companies to have a wide network before they actually start the campain. 

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