I came across an article entitled “Is crowdfunding a viable option for medical technology startups?” I had no idea what crowdfunding was, but I thought it sounded interesting. I actually had to look up the definition of crowdfunding on Wikipedia. For those of you who are as out of the loop as I am, crowdfunding describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations.
According to Brandon Glenn, for some medtech startups, particularly those with simple medical devices that have already done some research and developed a prototype, crowdfunding could represent a realistic option. A provision of the JOBS Act enables startups to raise as much as $1 million through crowdfunding and award equity to nonaccredited investors, which is likely to make crowdfunding more attractive to medical technology companies.
Is it worth it to have the hassle of having to deal with hundreds or even thousands of investors? “Crowdfunding will be more successful for biomedical companies if they look to raise a fairly small amount of money to help with technology validation or testing after an early prototype has been created. Before looking to crowdfunding, an entrepreneur should first invest in early development and seek grant funding,” Solomon Nabatiyan, a Northwestern University researcher who co-founded recently launched crowdfunding site TechMoola, said.
I checked out TechMoola, which focuses on technology projects. It works like this: People sign up for a TechMoola account, put money in their account, look for projects that they like on the site, and then use money out of their account to fund the projects (starting with as little as $5). I did find a medtech company posted. Cervia Diagnostic Innovations has their cervical cancer test listed. According to the stats, it had a total of $548 pledged so far. From a business owner’s standpoint, it seems to me like trying to fill a gallon jug using a medicine dropper, but I suppose every little bit helps.