FORTUNE — The first time Eric Migicovsky saw his watch in the wild was at Toronto’s Pearson Airport last February. Disembarking a late-night flight, he ran into someone sporting a Pebble on his wrist. “The guy saw me and was like, ‘Good work. I just got mine the other day,’” recounts Migicovsky, laughing. “It was just the weirdest thing.”
Given its initial success, Migicovsky may want to get used to such encounters. His device, the Pebble smartwatch, became an overnight media sensation last year when it snagged almost $10.3 million in funding on Kickstarter — over 100 times the original amount Migicovsky hoped to raise. (The Pebble also quickly became exhibit A for the crowdfunding site’s power.) The firm’s 11 full-time employees have shipped 25,000 watches to date, priced at $99 for early supporters and $150 retail. They expect to ship another 50,000 this month.
If brisk sales continue, the Pebble is poised to become a significant player in the emerging wearable computing market, which Google (GOOG) will enter later this year with its augmented reality eyeglasses, Google Glass. Even Apple (APPL) may have a smartwatch of its own coming — if rumors are to be believed. Gartner Research analyst Michael Gartenberg estimates wearable will become a whopping $10 billion industry by 2015.
The sudden swell in backing came as a surprise to Migicovsky, a University of Waterloo graduate with an engineering degree, who first dreamed up the idea of a watch that connected wirelessly with a smartphone while he was out cycling one day. “I thought, wouldn’t it be cool to see text messages, caller ID, and that kind of thing right there on your watch instead of having to take out your phone?” he recalls.
Not everyone shared Migicovsky’s enthusiasm for wearable computing then. Early on, Micicovsky had trouble generating interest from many venture capitalists who were reluctant to invest in a hardware company with the exception of $375,000 raised from four angel investors, including Tim Draper, co-founder of the Menlo Park, Calif.-based venture capital firm Draper Fisher Jurvetson. “I was thinking, ‘what happens in a post-Apple world,’ and I decided it was watches and glasses,” Draper explains. And while Pebble first passed through Paul Graham’s famed YCombinator, the same startup incubator that yielded Airbnb and Dropbox, it wasn’t until Kickstarter that Pebble really found its footing.
Although so-called smartwatches have been tried by other companies like Sony (SNE) and Motorola, the Pebble earned a slew of mostly positive reviews that applauded its sleek waterproof design, including that outdoors-friendly 1.26-inch power-sipping screen that was designed with subtlety in mind. Thanks to a 10-month design process that involved over 50 different prototype designs and 3-D-printed mock-ups, the Pebble looks less like those chunky watches favored by Dick Tracey and more like a contemporary timepiece. It also works largely as advertised. So long as users have an iPhone or Android device with Bluetooth, Pebble owners can screen calls, check email and other messages. (The Pebble vibrates for every incoming email and text received.)
“Pebble hit the ‘G-spot’ of the Internet: It works with Android, it’s open-source, and it came from Kickstarter,” explains Sarah Rotman Epps, a Forrester Research analyst. Despite its early success, Epps is taking a wait-and-see approach with Pebble. Just because it’s managed to spur the imaginations of some developers and early tech adopters doesn’t guarantee Pebble broader, mass-market success.
As promising as Pebble may be, critics point out that it could do more. “The key with wearable devices such as smartwatches will be understanding the role technology and fashion play for consumers, provide standalone functionality that provides value beyond what consumers can get from other devices such as their smartphones, and at the same time connect into larger ecosystems to extend functionality,” notes Gartenberg. Because Pebble has a built-in accelerometer — roughly the same kind of device found in Nintendo’s (NTDOY) Wii Remote — the smartwatch could one day supplant bracelets that track steps taken and calories burned like Jawbone’s UP or Nike’s (NKE) popular Fuel Band.
Migicovsky acknowledges the feedback and says he is working around the clock on software development tools for third-party developers. Sometime soon Pebble users, like the one at Pearson Airport, will be able to do just that.