UPDATED 12:07 EDT / MAY 21 2018


Virtual reality headphones startup Ossic closes after four years and $3.2M in crowdfunding

Virtual reality 3-D headphones startup Ossic closed its doors Saturday in spite of raising almost $3.2 million from crowdfunding.

After four years of working to develop its product, the company announced that it was unable to keep up with production costs and posted an apology statement on its Kickstarter blog and website. The company behind the Ossic X 3-D audio headphones designed for virtual reality and augmented reality said it cannot achieve its commitments and has shut down effective immediately.

In the VR ecosystem, audio does not receive quite as much fanfare as video, but it is a very important part of immersive 3-D experiences and comfort for users. When the company first launched in 2014, Ossic, formerly Sonic VR, sought to produce fully immersive over-the-ear headphones for use with VR headsets with features including six sensors, head position tracking and a 32-core onboard processor.

The company blamed overwhelming production costs, unexpected delays and cost overruns coupled with the ever-changing VR audio ecosystem. The company’s statement claimed its researchers were unable to keep up with changing needs and demands to make the headphones compatible with upcoming devices.

“The OSSIC X was an ambitious and expensive product to develop,” the Ossic Team wrote on the company’s Kickstarter blog. “With funds from the crowdfunding campaign, along with angel investment, we were able to develop the product and ship the initial units. However, the product still requires significantly more capital to ramp to full mass production, and the company is out of money.”

During 2016, the company raised $2.7 million from Kickstarter – which tremendously exceeded its comparatively humble original goal of $100,000 — and an additional $515,000 from Indiegogo. It’s also reported that the company raised an almost equal amount from angel investors, but no details are available on private seed funding.

Most backers seeking to receive a pair of these headphones would have paid $199 at a minimum and now will not receive a headset. The first wave of headsets, offered to those backers investing $999 or more for “Innovator/Developer” units should have shipped near the end of 2016, but delays continued to pile up until today’s announcement.

In noting that the company cannot ship its remaining units, Ossic’s statement claimed that the company would need to raise “more than two million additional dollars to complete mass production of the remaining backlog” in order to satisfy backers.

In response, backers who had joined the initial crowdfunding efforts two years ago created a Facebook group for legal action against Ossic named “OSSIC X Class Action Lawsuit.” Many of the comments on the Kickstarter closure blog post direct readers to join the Facebook group to discuss the possibility of seeking recompense from the now-shuttered company.

“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,” the company said in its statement. “We sincerely apologize that we could not deliver all of the headphones.”

Failed Kickstarter and crowdfunding efforts are not unknown in the technology industry. For example, the Zano minidrone, an adorable tiny flying robot, raised more than $3.5 million and then the company that developed it went bankrupt. Upon shipment, it was discovered that although the Zano was popular on paper, in reality it was a terrible product. Its failure even led Kickstarter to hire an investigative journalist to examine what happened so that similar future projects destined to succumb to bankruptcy or closure could be avoided.

Although crowdfunding websites cannot make guarantees about the capability and accountability of well-funded projects after the fact, there have been some in the past where backers successfully obtained legal settlements.

Kickstarter itself frowns on big investments failing, even years after successful funding, and in its own terms of use document calls upon projects to “make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers.”

(Ed note: SiliconANGLE was contacted by an agent representing Indigogo, who explained that the amount of $3.2M listed on its site also included the amount raised from Kickstarter, this makes the total crowdfunding raised closer to $3.2M and not $6M as previously reported.)

Image: Ossic

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