Healthcare // Leadership
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4/7/2014
09:06 AM
Alison Diana
Alison Diana
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Crowdfunding The Next Healthcare Hit

Crowdfunding adds a new route for small entrepreneurs to raise money to develop healthcare inventions and bring them to market. Here are 10 promising products looking to raise money.
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(Image: Tax Credits via photopin cc)
(Image: Tax Credits via photopin cc)

While venture capitalists eye the next healthcare moneymaker, and healthcare startups rush to release new apps and services, another sector is finding a way to bring products to market. Individual entrepreneurs and small developers are flocking to crowdfunding sites to subsidize their new healthcare technologies.

These entrepreneurial doctors, technically savvy nurses, and healthcare-oriented coders want to enter a market expected to generate almost $57 billion by 2017. Crowdfunding sites offer access to money, mindshare, and an immediate barometer of marketability. It's little surprise then that crowdfunding -- which last year alone raised more than $5 billion -- attracts apps, devices, and more designed for healthcare.

In the past, inventors used personal funds, credit cards, and friends to finance their technology dreams. Today, they can mix approaches. "So far, the project has been funded by working extra shifts," said Dr. Charles Rocamboli, founder of startup CureCrowd, in an interview. "We've recently started crowdfunding on Indiegogo, which we think will help twofold. It helps get the word out about the site, and helps us raise money for ongoing development."

"Being a public resource, we hope that crowdfunding and donations will help us as we continue to develop," he added.

If a mere 1% of all the United States' long-term investments transferred to crowdfunding, it would account for $300 billion, Forbes reported. That's 10 times more than all the money venture capitalists poured into deals in 2011, the publication wrote.

Crowdfunders -- the individuals pitching in to support the ventures -- often feel a connection to their investments: Consider the resentment some Kickstarter backers of Oculus voiced when Facebook acquired the virtual reality firm in March. Feelings became so heated that some Oculus employees reported receiving death threats.

But usually, crowdfunding recipients just have to worry about getting funded, and paying a nominal charge to the site. Sites typically charge a fee, such as 4% of the fund, in addition to any credit card or PayPal charge. Crowdfunding sites including Kickstarter, Indiegogo, Appbackr, RocketHub, FunderHut, and GoFundMe each have their own rules.

Some crowdfunding sites, including MedStartr and HealthTechHatch (in partnership with Indiegogo), focus exclusively on healthcare. MedStartr's average successful project raises more than $13,000 immediately and $405,000-plus in the following six months, the company said. Indiegogo doesn't share project data publicly, but written reports suggest about 9.3% of the 142,301 projects completed by August 2013 raised 100% of funds or more. (Indiegogo participants may keep donations, even if a project doesn't get fully funded, if they use the flexible funding option.)

Crowdfunding has become so popular that choosing a site or finding a project to support has become complex. CrowdFunding4All -- aka CF4All -- includes projects from multiple platforms. Registered users amass "CrowdCredits" through various actions, then spend them to endorse projects.

Entrepreneurs can tap the crowd's power for more than money and social support. This is hardly a new concept: Since 1964, SCORE mentors have provided free business planning, mentoring, and other advice to more than 10 million small and midsize businesses (SMBs).

CrowdIt last month added a "Suits" portal for networking, mentorship, and other business services. Accredited professionals, such as attorneys and accountants, create LinkedIn-like profiles to attract entrepreneurs, the company said. Lack of funding is only one reason businesses fail. Other causes include incompetence (46%); lack of experience (30%); insufficient services knowledge (11%); and neglect, fraud, or disaster (1%), CrowdIt says. Some businesses fail because of a poor product or unwanted service, and crowdfunding doesn't make a dumb business idea any better.

We've picked 10 crowdfunded healthcare products we think look like winners. Click through our slideshow to see if you agree and tell us which ones impress you the most in the Comments section below. Would your company consider buying any of these products or services if they come to market?

Alison Diana has written about technology and business for more than 20 years. She was editor, contributors, at Internet Evolution; editor-in-chief of 21st Century IT; and managing editor, sections, at CRN. She has also written for eWeek, Baseline Magazine, Redmond Channel ... View Full Bio

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Alex Fair of MedStartr
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Alex Fair of MedStartr,
User Rank: Apprentice
4/15/2014 | 2:19:05 PM
Re: Crowdfunding mostly for consumer digital health tech?
Anything that requires a prescription is a little tricky but we talked to the FDA about it when we started and stay within their guidelines for pre-market products and formulations.  That stated, most people mistake crowdfunding as being about direct funding in healthcare.  It isn't really.  Healthcare is an extremely partner-driven industry and crowdfunding merely serves as an indicator of which products and services will be successful based upon adoption by the relevant customers and partners.  Yes, consumer-focused products do pretty well on consumer-focused sites, but if you want to get anywhere in healthcare you need the healthcare crowd, which is our focus.  Our clients on average get over 2 partnerships per successful campaign and twenty times more funding off the site than on.  This is why we call it crowdVetting rather than crowdfunding and it works pretty well even withot our equity online components launch yet (stay tuned!) 
Alison_Diana
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Alison_Diana,
User Rank: Author
4/15/2014 | 10:07:51 AM
Re: Crowdfunding mostly for consumer digital health tech?
It is going to be more challenging for entrepreneurs to raise funds via crowdfunding as these sites become, well, more crowded. I think it's interesting we're already seeing specialists -- Medstartr and the Indiegogo-backed healthcare-oriented site. And I'd imagine we'll see more, related to healthcare and other verticals. 
Alison_Diana
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Alison_Diana,
User Rank: Author
4/15/2014 | 10:03:52 AM
Re: Crowdfunding mostly for consumer digital health tech?
@Alex: Medstartr has some fascinating crowdfunding projects, but I wonder about raising funds to develop new medicines. How does that work, given the scrutiny and (I'd imagine) additional rules regarding medication vs. trips or health-monitoring devices, etc.?
Alison_Diana
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Alison_Diana,
User Rank: Author
4/15/2014 | 10:02:17 AM
Re: hi from rufuslabs
Interesting to hear about the additional areas Rufus Cuff is looking to target. It sounds smart: Many technologies suitable for healthcare should adapt to other verticals where professionals need hands-free access to data input and analytics. Good luck!
Alex Fair of MedStartr
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Alex Fair of MedStartr,
User Rank: Apprentice
4/14/2014 | 12:06:31 PM
Re: Crowdfunding mostly for consumer digital health tech?
While a good number of projects are digital health tech consumer devices, especially on the mainstream sites like Indiegogo and Kickstarter, on MedStartr we have had everything from medical missions to Africa to new drugs.  People do love gadgets and there is a new trend of make the internet of things come to healthcare and this is fantastic, but for the more medically focused ideas, check out MedStartr.com if you are interested.  Thanks!

Alex Fair

Chief Crowdologist

MedStartr
rufuslabs
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rufuslabs,
User Rank: Apprentice
4/12/2014 | 12:55:19 PM
hi from rufuslabs
Great article with some very valid points! We appreciate your mention of the Rufus Cuff. While we've designed it with a consumer focus, there are several additional niche markets that interest the team at rufuslabs. We have several close friends and family in the healthcare industry and have engaged in many discussions of how the Rufus Cuff could be useful. Rest assured we are working on something great that we think can be of use in healthcare as well as education and IT. The Rufus Cuff provides the first real alternative for professionals in many fields to have their hands free and have a usable device with software that can make patient management and all sorts of tasks much easier. We love hearing feedback from our community of suporrters. Thanks! - Team Rufus
Alison_Diana
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Alison_Diana,
User Rank: Author
4/11/2014 | 10:28:56 AM
Re: Crowdfunding mostly for consumer digital health tech?
I completely agree, Laurie. Too many crowdfunded products appear to be next-generation fitness bands but we're only at the beginning of the app revolution, of medical devices, of home health, and who knows what else! Now ordinary entrepreneurs have the chance to more easily finance their innovation, there's no excuse to let that dream fester.
Laurianne
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Laurianne,
User Rank: Author
4/7/2014 | 2:29:53 PM
Re: Crowdfunding mostly for consumer digital health tech?
There are so many ideas we need in addition to Fitbit-genre devices. I hope the industry doesn't get obsessed with fitness bands when there are other medical device areas where patients would love for costs to be driven down.
Alison_Diana
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Alison_Diana,
User Rank: Author
4/7/2014 | 12:58:42 PM
Re: Crowdfunding mostly for consumer digital health tech?
Yes, the person or group behind a crowdfunded healthcare tech needs to really explain and show what their product can do for healthcare or a segment of healthcare in a way that sparks excitement and hope from would-be investors, yet also demonstrates why this group of people can make it happen. Because when you crowdfund, you're really investing in someone else's dream! Many healthcare ideas I've seen have been some variation on Fitbit et al, which is okay but there has to be more than that out there! What I love about the whole crowdfunding concept is that anyone, with a great idea and a willingness to invest time on marketing as well as inventing, can at least try to get startup funds nowadays. It's not as seemingly impossible as it once was, if you're a doctor, nurse, or administrator with a great idea to actually become a successful developer, too.
danielcawrey
IW Pick
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danielcawrey,
User Rank: Ninja
4/7/2014 | 12:29:55 PM
Re: Crowdfunding mostly for consumer digital health tech?
I think that healthcare is going to attract a different subset of people looking to help crowdfund a project. Remember the Oculus example? That was clearly funded by people who fervently believed in VR.

In the healthcare sector, it may be harder for people to visualize the potential of a complex technology. Sure, promoting the ability for a healthcare project to save or improve lives is important.

The big picture, I think, is going to be key for raising money in this way for healthcare hits. 
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