A company that raised over $5 million through crowdfunding has shut down, and nearly everyone who paid for its $200 headphones lost their money

Ossic KickstarterKickstarter

  • A high-tech headphone company, Ossic, raised nearly $6 million on Kickstarter and Indiegogo to build headphones with surround sound. 
  • It sold 22,000 preorders for the headphones, which cost between $200 and $300. 
  • The company announced over the weekend that it was out of money and shutting down. 
  • It only shipped 250 headphones, the company said. Backers are not getting refunds. 

Every time you back a crowdfunded project with your hard-earned dollars, you're taking a risk. There's always the chance that the project doesn't work out.

The latest example of a Kickstarter failure is Ossic, a company making programmable "3D" headphones. It had raised $2.7 million on Kickstarter and $3.2 million on Indiegogo, selling 22,000 pre-orders for its high-tech headphones which cost between $199 and $299.

Now the company is shutting down and will not deliver any additional headphones, it announced on its website. Backers will not receive refunds.

"We were not able to secure additional funding, and are out of money," the company's founders wrote on Ossic.com.

Ossic XA Ossic X prototype from 2016.Tech Insider

"The company is shutting down effective immediately," the note continued. "We have a very dedicated team up [sic] folks who have remained for the last 6 months, working for free, doing anything they could to try and make the company succeed." 

The note mentioned that San Diego-based Ossic had also taken millions of dollars in seed funding from other sources. 

Ossic only ended up building 250 pairs of headphones, mostly pricey $999 "developer units," according to the company.  

Ossic was founded to design a pair of headphones for virtual reality that could deliver surround sound. That meant they were somewhat more advanced than normal headphones - they had more sensors, more chips, and more software. 

When Tech Insider covered the Kickstarter in 2016, the company was promising headphones that would sense the shape of your ears and head and customize the sound profile for each individual user. 

Tech Insider was even able to try a prototype of the Ossic X headphones. "It's like virtual reality for audio," Tony Villas-Boas wrote. 

The headphones were also able to track head position, which could have been exciting if it had gone mainstream and virtual reality apps could build that functionality into their experiences. 

Tech Insider wasn't the only outlet to cover these cans. They were featured in Popular Science, Mashable, Game Informer, and other gaming and tech magazines and websites. 

Ossic Founding TeamOssic Founders: Jason Riggs - CEO, David Carr - CPO, Jose Arjol Acebal - COO, Joy Lyons, CTOIndiegogo

Creating new hardware remains a very difficult challenge - companies need to master the complexities of Asian manufacturing and often need to plunk down millions of dollars in deposits just to secure factory time. That's while developing a new product that hasn't been done before. 

At the end of the day, those challenges were too much for the Ossic team. A Facebook group of angry backers has accumulated 1,800 members in 48 hours, according to the group's administrator. 

"I appreciate your participation in this group and I really hope we'll achieve our goals - getting a significant refund from these a------s," one admin of the group wrote

Ossic IndiegogoIndiegogo

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