TechCrunch | Christine Magee | Mar 27, 2015

The venture world is hunting for the next batch of billion dollar unicorns in the hardware market, and investors are turning to the crowd to source their deals.

VCs have already committed $516 million in funding for hardware companies this year, according to CrunchBase data — a significant jump from the $398 million captured in Q1 of 2014.

Projects that win over consumers on crowdfunding sites have proven able to reproduce that success in shopping centers and malls — Misfit raised $55 million in venture funding after its Indiegogo debut, and Pebble, Kickstarter’s most funded project to date, is holding its own against Apple in the smart watch race.

View:

• 8 Things About Hardware Crowdfunding We Learned From 20 Campaigns

• Canadian Crowdfunding Directory

With big exits like Oculus VR, Nest, Beats, GoPro and Square, it’s no wonder that angel investors like Gil Penchina are now developing investment theses around the crowdfunding campaigns that give many of these hardware companies their initial boost.

Penchina has partnered with Indiegogo to launch a new syndicate on AngelList dedicated to investing in successful campaigns. His previous fifteen syndicates have been backed by over two thousand people and put $12 million dollars to work in deals alongside traditional firms like Battery and Bessemer.

The Indiegogo investment platform went live on AngelList yesterday and saw $75k in capital committed in the first five hours. They’re hitting the ground running and closing a deal today for Bluesmart, the YC-backed smart luggage startup that raised over $2 million in its December 2014 campaign.

Indiegogo has a good track record for identifying startup winners, which include social robot Jibo, home security system Canary, and the Misfit Shine. Since 2013, successful Indiegogo campaigns have raised a combined $210 million in follow-on venture funding.

“On a high level, it’s something like a 10 to 1 multiple — whatever you raise on Indiegogo you can raise ten times more in VC funds following,” says Indiegogo founder Slava Rubin.

“Companies are able to validate a product, test marketing, and prove that they can bring these things to market — this makes the conversation with VCs very different,” says Rubin.

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