Crowdfunding Healthcare Startups – Medstartr and Indiegogo

I have been seeing more and more activity around the idea of using the crowds to fund various healthcare IT startup companies. This shouldn’t be that surprising to any of us given the success of websites like Kickstarter and Indiegogo. They’ve created a whole new way to raise money for passion projects. Plus, as they’ve grown they’ve shown a new way to see if your customer really wants what you plan to offer.

One challenge is that Kickstarter generally hasn’t approved healthcare startup company projects on their platform. In fact, a whole company was born to try and help solve the problem of making crowdfunding available to healthcare. This company is called MedStartr.

I’ve been keeping an eye on it for quite a while. So far they’ve had some successes with these projects getting funding: Medstartr, The Walking Gallery, Peer-to-Peer Global Support for Rare Disease, and Avado. Plus, Reconstruction Bras for Breast Cancer Survivors and Previvors have met their goal, but are still raising money.

I think the most exciting one is The Walking Gallery since it raised well over twice of the money requested. I’m interested to see how some of my friends like referralMD and My Crisis Records do on Medstartr. Their projects are still open if you want to back them.

I think the biggest challenge with Medstartr right now is that it’s currently a “bring your own crowd” fundraising platform. The platform works to raise money if you already have a built in audience that is willing to pay to support it. So far, Medstartr hasn’t been able to produce a large community of “backers” that can fund a project that gets listed. In fact, I don’t think Medstartr even reached its fundraising goal in its campaign (although, it’s listed as such on the website now).

What is also really interesting is a healthcare project that was posted on Indiegogo for a Asthma Education App. So far it has raised $7125 for Health Nuts Media who wants to create the app. That’s not a bad start for their app with 27 people helping to fund that goal. Although, even that number was influenced by a $5000 commitment from Medicomp Systems makers of Medcin. I’d be interested to know how they landed that backing. That’s a nice one and if they can get more of those, that will be powerful.

The good thing with Indiegogo is that whatever money is raised the project gets. In Kickstarter you have to reach your goal or the project gets $0 of funding. I haven’t heard which model Medstartr has chosen to adopt.

We’re still in the early days of Crowdfunding. Plus, true crowdfunding (ie. small investment for small equity) is still waiting on the official rules to be put out. That could really change how companies get funded. I’m excited about the opportunity, but cautious about the challenge of getting enough people to care about healthcare enough to support those projects.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

3 Comments

  • Hi John,
    Thanks for writing about us!

    Indeed, at MedStartr, like most crowdfunding sites, it is important to bring and engage your own audience. Articles like yours as well as a dozen others in WSJ, Forbes, Techcrunch, Nature: Medicine, and even a mention in October’s Inc Magazine have helped quite a bit in bringing the “Crowd” as well. It is building, but we are no KickStarter yet. On the other hand, medical projects rarely do well on the generalist sites. We also do local events like Healthcare Revolution: San Francisco where we rented a huge nightclub and invite in the Health 2.0 and the public “crowds”. All told though this has only been about 20,000 new people a month, far more than just the MedStartrs brought in, but still not millions.

    We also use the “All or Nothing” model that KickStarter uses but if a company gets outside funds, like MedStartr has, we allow the project to lower the goal and still call it a win. Companies generally raise 3 – 15 times what they do offline as they do online. In total, projects that went on MedStartr since July raised $55,000 online, but 3.8 Million offline. Fourteen new partnerships with organizations like GE, Kaiser, and the US Army were created as well. Healthcare is a partner-driven industry where 99% of the funding in the past came from large organizations. Now those organizations shop for great ideas that people like enough to Back on MedStartr and THAT is the real value.

    Speaking of which, GE, Aetna, and Verizon have sponsored our Healthcare Revolution Party on 10/8 at 7:30 – Midnight. Come on down and Celebrate with us. All the info is here, this also is a fully funded MedStartr Project! http://www.medstartr.com/projects/77-healthcare-revolution-san-francisco

    If you have questions, please call (530) MEDSTARtr anytime.

    Sincerely Yours,
    Alex Fair
    Founder & CEO
    MedStartr.com, FairCareMD.com
    Oranizer: Health 2.0 NYC

  • Alex,
    Thanks for stopping by and sharing more information about Medstartr. I wish you a lot of success and hope you’ll achieve great results. I think healthcare could really use something like this. We just need a larger crowd to make the crowd funding work well.

    The partnership stuff is quite interesting. I’d love to hear more about those stories if you can share. I wish I could attend the party at Health 2.0 as well, but sadly I’m not going to make it to SF this year. I look forward to hearing a report on the event.

  • Another crowdfunding option that will soon be available to healthcare businesses is Investment Crowdfunding. Made possible by the JOBS Act, final rules and regulations for Investment Crowdfunding are expected in 2013. iCrowd is a web-based Investment Crowdfunding site designed to connect small businesses with investors. An overarching goal of iCrowd is to provide an environment that helps entrepreneurs succeed by providing money, advice and networking.

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