Crowdfunding in Biotech

Question 1

What is crowdfunding?

Answer 1

Raising small amounts of money from a large number of people, typically via the internet, to fund a project or venture.

Question 2

How did the JOBS Act impact crowdfunding?

Answer 2

Title II (2013): Allowed public solicitation but limited to accredited investors.
Title III (2016): Allowed non-accredited investors but capped funding at $1 million per year per company.

Question 3

What are the four main types of crowdfunding?

Answer 3

1. Donation-Based: No financial return (charity, research).
2. Reward-Based: Backers get a product/service.
3. Lending-Based (Debt Crowdfunding): Loan with interest.
4. Equity-Based: Investors get company shares.

Question 4

How does crowdfunding differ from traditional stock markets?

Answer 4

Crowdfunding lacks liquidity, allows smaller investors, and does not require an IPO, unlike traditional stock markets.

Question 5

What are the benefits of crowdfunding for biotech companies?

Answer 5

✅ Quick access to funds
✅ Public awareness & engagement
✅ Potential for future investment
✅ Democratises biotech funding

Question 6

What are the challenges biotech companies face in crowdfunding?

Answer 6

❌ Regulatory burdens
❌ Loss of confidentiality
❌ High platform fees
❌ Managing many small investors

Question 7

What are the benefits of biotech crowdfunding for investors?

Answer 7

✅ Social proof (validates promising ideas)
✅ Tax benefits (varies by country)
✅ Lower entry costs for investment

Question 8

What are the risks of investing in biotech crowdfunding?

Answer 8

❌ High-risk investments with limited returns
❌ Potential fraud on unreliable platforms
❌ Lack of due diligence compared to VC investments

Question 9

How is crowdfunding currently used in biotech?

Answer 9

Used for therapeutics, diagnostics, and neglected diseases, but not yet mainstream due to long development cycles and high risk.

Question 10

What are key barriers to biotech crowdfunding?

Answer 10

1. High-risk industry.
2. Long development cycles.
3. Investor preference for quick returns.
4. Complex regulations.

Question 11

What are the key steps in launching a biotech crowdfunding campaign?

Answer 11

1. Define the project (clear goals).
2. Set a funding goal (budgeting).
3. Create rewards (for reward-based crowdfunding).
4. Make a compelling video (storytelling).
5. Promote the campaign (social media, biotech communities).
6. Provide updates (progress reports).
7. Fulfill rewards (deliver promises to backers).

Question 12

What are some biotech crowdfunding platforms?

Answer 12

Experiment.com (science research), GoFundMe (medical/personal), Kickstarter (general), Indiegogo (general), Wefunder (equity crowdfunding).

Question 13

What are the key opportunities for biotech crowdfunding?

Answer 13

✅ Funding neglected diseases
✅ Bridging early-stage funding gaps
✅ Public & patient-driven investment models

Question 14

What are key barriers to the future success of biotech crowdfunding?

Answer 14

❌ Regulatory constraints
❌ Investor reluctance due to biotech risk
❌ Lack of biotech-specific crowdfunding platforms

Question 15

What are the five key takeaways on biotech crowdfunding?

Answer 15

1. Crowdfunding democratizes biotech funding but faces regulatory challenges.
2. Reward-based & equity crowdfunding have different advantages.
3. Crowdfunding can benefit neglected diseases.
4. Well-structured campaigns attract backers.
5. Future biotech crowdfunding models could reshape early-stage R&D financing.