Crowdfunding has become a popular funding source for many industries, though biotech-related projects are still relatively new to the scene. That seems to be changing, as the Scanadu Scout recently became the highest grossing Indiegogo campaign ever, raising over $1.6 million.
Scanadu Scout is a device that measures and records a person’s blood pressure, heart rate, temperature and emotional stress when pressed to your forehead for 10 seconds. The success of the Scanadu Scout shows the potential for crowdfunding in biotech, but there are a few important things startups should consider before launching a campaign.
First, is your product fully developed or is it in the very early research stages? Most crowdfunding campaigns center on tech products that have a relatively short 6-12 month R&D phase, unlike biotech products that can take years.
For projects that are in the very early stages, there are options like Microryza, a crowdfunding site dedicated to fundamental early-stage science research. Projects on Microryza appeal to contributors who want to help advance a scientific discovery as opposed to receiving a tangible reward.
Campaigns for products that are too early stage, like this unfunded project for an artificial pancreas that was posted on Medstartr can run the risk of not meeting their funding goals. Funders can have difficulties understanding the importance of the research needed to get to the final product if a project is to early-stage. It is important to seek crowdfunding at an appropriate point within the development cycle.
Second, does your product have relevant regulatory approvals? Products that have regulatory approval, like Biocysan, a dietary supplement for kidney health, and Theradome, a restorative laser hair treatment, can easily offer the product itself as a reward since development is complete and they have all necessary approvals.
There are also projects for devices that do not have approval like the uCheck Universal which is raising money to finance the regulatory process and has stated that they will not ship the device to contributors until after regulatory approval.
The Scanadu Scout also does not have regulatory approval and makes it clear in their campaign. Despite this, they are still offering the device as a contribution perk along with an invitation to join an official clinical study. Patient recruitment for a clinical study is often a large hurdle so this is a creative way to attract volunteers. Regardless of regulatory approval status, it seems that there are a few ways to make crowdfunding work but you need to make sure you are clear either way.
Finally, is your product for a specific ailment or is a general consumer health product? For biotech products that are for a specific ailment, if you are offering the product as a reward, you are limited in your target audience to those that have the ailment or have family or friends with it. This is the case for Biocysan and the Theradome mentioned earlier. This is not necessarily a bad thing as you may find a targeted audience that has a high willingness to fund the project, but you do also want to make sure that your online crowdfunding campaign will reach these individuals.
There are also products that are mass consumer health products and the Scanadu Scout is a great example. The fact that is the highest-grossing Indiegogo campaign shows the demand for at-home equipment that allows consumers to be more in control of their health. Making sure your campaign is targeted to the right audience is very important.
Overall, crowdfunding is gaining traction within the market place as a legitimate way to raise capital to move a startup forward. It seems that there are a few nuances in using crowdfunding for biotech projects, but many are already finding ways to make their campaigns successful.