This was after taking tens of thousands of crowd-funding pre-orders for a high-end pair of “3D sound”..
It successfully shipped on;ly 250 of developer-oriented units in January despite having received a whooping 22,000 pre-orders, pinning the failure to mainly lack of funds to mass-produce the devices for most listeners. There’s no mention of customers getting refunds, although that’s typical for crowdfunding efforts given that contributions are considered investments rather than guaranteed purchases.
The company pinned the funding shortage on both a “slow start” for VR and a “number of high profile hardware startup failures” that prevented it from getting additional seed funding. There was no shortage of cash early on, though. The company raised $2.7 million on Kickstarter and $3.2 million on Indiegogo for their Ossic X headphones which they pitched as a pair of high-end head-tracking headphones that would be perfect for listening to 3D audio, especially in a VR environment. While the company also raised a “substantial seed investment,” in a letter on the Ossic website, the company blamed the slow adoption of virtual reality alongside their crowdfunding campaign stretch goals which bogged down their R&D team
A letter on the company’s website stated hat it would require “more than 2 million additional dollars” to ship headphones to all its backers. Staff reportedly worked without pay and dipped into their savings to keep Ossic going.
“This was obviously not our desired outcome. The team worked exceptionally hard and created a production-ready product that is a technological and performance breakthrough. To fail at the 5 yard-line is a tragedy. We are extremely sorry that we cannot deliver your product 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.”
Crowdfunding campaign failures for hardware products are rarely shocking, but often the collapse comes from the company not being able to acquire additional funding from outside investors.
The company said in their letter, that it would likely take more than $2 million in additional funding to deliver the existing backlog of pre-orders.