Aug 18, 2017

Crowdfunding isn't enough for consumer hardware startups

Crowdfunding websites like Kickstarter and Indiegogo have been successful early sources of funding and customers for consumer hardware startups.

But that's no longer enough, says Kate Whitcomb, a former Target executive who is now program director at hardware accelerator Hax.

Why it matters: Despite the boom in consumer hardware products in recent years, not all have been able to find a market beyond the enthusiasm of their early fans. So it's not surprising that experts are nudging them towards mass retail channels, especially as companies like Amazon try to become friendlier to startups (its Launchpad unit was specifically created to sell products made by startups).

"Crowdfunding is no longer a signal of product-market fit — it's very niche," she said on Wednesday at an event hosted by Amazon Launchpad. Instead, mass consumer channels like Amazon (of course) are a better indicator of whether there's truly a demand for a product.

Not so fast: With that said, Whitcomb also warns startups against going straight to the shelves of a big box retailer. Because of how it works—retailers place big orders that have to be delivered upfront—this can be risky for a nascent company. If the product flops, that could be a lot of wasted resources for a smaller company.

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