This article initially appeared on TechCrunch.
There may be debating when the wearable first came into being or what industries will be most impacted by the technology but there is no debating that startup activity in the wearable space has accelerated; if Apple moving into a category is one sure sign of anything, it’s that. Between consumer interest and investor attention, the wearable category is exploding. In fact, it is exploding so much so that a deep dive look can help determine exactly what is driving growth in the space.
What Consumers Are Buying
Probably the best proxies for gauging consumer interest in startup wearable devices are crowdfunding sites. Of the 443 crowdfunded projects previously analyzed, 64 were what one would call a wearable device. The category, as a whole, was among the most dominate when it came to consumer appetite: although wearables only accounted for 14% of all projects, with $41.0M they accounted for 22% of all dollars raised by consumers in hardware projects.
Of these 64 wearables, 53% were worn on the wrist/hand, 25% were worn on the head and 14% were worn on the body. It seems that consumer interest is highest in the wrist/hand wearable category, specifically with connected watch projects like Pebble, Kreyos and Omate each preselling north of $1M of product. Clearly the idea of a watch as a third screen is resonating with the crowd.
What Investors Are Backing
Consumers aren’t the only group whose interest in wearable technology has grown over the years. Investors also are increasingly attracted to the category. In order to get a view into how exactly the venture capital community is thinking about wearables, data from Mattermark and Crunchbase was used to see how much money various wearable startups have raised.
Viewing wearables through the eyes of where investors are putting money paints a different picture. While the crowd spent $41.0M on wearable devices between 2008 and today, investors put an impressive $463.0M to work in the category across 82 companies. That means that for every dollar of product consumers spent on a crowdfunding site, investors plowed in another $11. Surprisingly the majority of dollars, 58%, went into companies that did not take the crowdfunding route prior to raising money. Equally surprising is that only a total of 19 projects in the wearable category that crowdfunded their way to $100,000 or more went on to raise venture money. On a percentage basis, this means that only 23% of wearable projects that raised venture capital since 2008 had their start on a crowdfunding site, suggesting investors are using crowdfunding success as one indicator of potential but not the only one.
From a category view, if investors speak with where they put their dollars they are most bullish about wearable plays involving wrist/hand devices: these took 32% of dollars invested and appears to mirror consumer excitement in the category. In contrast to consumer interest, however, was the body wearable category: here consumers only spent nine percent of their dollars yet the category accumulated 26% of investor dollars. Also different is the addition of a “software” category to capture software intended to augment or enhance wearable devices – something that the crowdfunding world has not contributed to.
The Wearable Future
If the data shows anything it shows that both consumer and investor interest in the wearable space is high and continues to grow. Six years ago the number of wearable companies of any significance could have been counted on two hands; now you’d need 15. The area of overlapping interest between the crowd and investors is strongest in devices either worn on the hand or on the wrist, demonstrating a shared vision of the future.
This overlap suggests something unique. While consumers back products on crowdfunding sites, investors back visions. The convergence of consumer and investor interest in connected watches specifically suggests that there are compelling individual products available today and that there is an inspiring vision for these products in the future; something Apple has keyed into. No matter if you’re a consumer or an investor, that’s something everyone can get excited about.
For access to all the data used to generate this report, check out the full document here.