Tech company that raised millions through crowdfunding shuts down, with most backers receiving nothing

A person wearing headphones.
(Image credit: Ian Waldie/Getty Images)

A tech company that received more than $3 million from supporters through Kickstarter and Indiegogo announced this weekend that it has run out of money, and thousands of people who pre-ordered their product — headphones with surround sound used for virtual reality — are out of luck.

Ossic sold 22,000 pre-orders for its OSSIC X headphones, which cost between $200 and $300, but only 250 backers ever received a pair. The headphones were an "ambitious and expensive product to develop," Ossic said, and "what made this project so exciting, and ultimately ended up being its Achilles heel, was the complexity and scope." Over the last six months, "dedicated" employees worked for free, "doing anything they could to try and make the company succeed," Ossic said, but it wasn't enough.

The company, which also received millions of dollars from angel investors, said it would need more than $2 million in additional funds to be able to deliver headphones to everyone who placed a pre-order. "Inventing something new while also developing complex hardware is expensive," Ossic said, adding that the "unknowns that come from ground-up development with so many new features ultimately stacked up to create delays and cost overruns." In 2016, Ossic said these headphones of the future would be able to sense ear shapes and customize sound for each person, Business Insider reports.

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Catherine Garcia, The Week US

Catherine Garcia has worked as a senior writer at The Week since 2014. Her writing and reporting have appeared in Entertainment Weekly, The New York Times, Wirecutter, NBC News and "The Book of Jezebel," among others. She's a graduate of the University of Redlands and the Columbia University Graduate School of Journalism.