Crowdfunding in Biotech Flashcards
What is crowdfunding?
Raising small amounts of money from a large number of people, typically via the internet, to fund a project or venture.
What are the main sources of biotech funding?
Government grants, private foundations, angel investors, venture capital (VC), corporate partnerships, crowdfunding (emerging method).
What is the “Valley of Death” in biotech funding?
The funding gap between basic research and applied research & innovation, making it difficult for startups to progress.
How did the JOBS Act impact crowdfunding?
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.
What are the four main types of crowdfunding?
- Donation-Based: No financial return (charity, research).
- Reward-Based: Backers get a product/service.
- Lending-Based (Debt Crowdfunding): Loan with interest.
- Equity-Based: Investors get company shares.
How does crowdfunding differ from traditional stock markets?
Crowdfunding lacks liquidity, allows smaller investors, and does not require an IPO, unlike traditional stock markets.
What are the benefits of crowdfunding for biotech companies?
✅ Quick access to funds
✅ Public awareness & engagement
✅ Potential for future investment
✅ Democratizes biotech funding
What are the challenges biotech companies face in crowdfunding?
❌ Regulatory burdens
❌ Loss of confidentiality
❌ High platform fees
❌ Managing many small investors
What are the benefits of biotech crowdfunding for investors?
✅ Social proof (validates promising ideas)
✅ Tax benefits (varies by country)
✅ Lower entry costs for investment
What are the risks of investing in biotech crowdfunding?
❌ High-risk investments with limited returns
❌ Potential fraud on unreliable platforms
❌ Lack of due diligence compared to VC investments
How is crowdfunding currently used in biotech?
Used for therapeutics, diagnostics, and neglected diseases, but not yet mainstream due to long development cycles and high risk.
What are key barriers to biotech crowdfunding?
- High-risk industry.
- Long development cycles.
- Investor preference for quick returns.
- Complex regulations.
How could crowdfunding help AD research?
If 5 million patients invested $100/month, it could generate $6 billion/year, providing a new funding model for underfunded diseases.
What are the key steps in launching a biotech crowdfunding campaign?
- Define the project (clear goals).
- Set a funding goal (budgeting).
- Create rewards (for reward-based crowdfunding).
- Make a compelling video (storytelling).
- Promote the campaign (social media, biotech communities).
- Provide updates (progress reports).
- Fulfill rewards (deliver promises to backers).
What are some biotech crowdfunding platforms?
Experiment.com (science research), GoFundMe (medical/personal), Kickstarter (general), Indiegogo (general), Wefunder (equity crowdfunding).
What are the key opportunities for biotech crowdfunding?
✅ Funding neglected diseases
✅ Bridging early-stage funding gaps
✅ Public & patient-driven investment models
What are key barriers to the future success of biotech crowdfunding?
❌ Regulatory constraints
❌ Investor reluctance due to biotech risk
❌ Lack of biotech-specific crowdfunding platforms
What are the five key takeaways on biotech crowdfunding?
- Crowdfunding democratizes biotech funding but faces regulatory challenges.
- Reward-based & equity crowdfunding have different advantages.
- Crowdfunding can benefit neglected diseases.
- Well-structured campaigns attract backers.
- Future biotech crowdfunding models could reshape early-stage R&D financing.
