As originally asked by Eric Kezirian.

Can medical device startups develop “reward” crowdfunding campaigns? Instead of equity, what rewards can they offer prior to FDA approval (promise of device once approved, T shirt, trial results)?

Simon Sikorski, M.D.
Digital Marketing Director for Competitive Business. Skyrocketing Sales via Digital Lead Gen, SEO, PPC & SoMe Strategy
100% agree – “you have to bring your own crowd to these crowd sourcing sites”

Ben Park, MBA
CEO and Founder at FosmoMed
We ran an Indiegogo campaign and was not very successful, mostly because we were still under the radar. We have recently started again, now with some PR and other means to draw people to the site. No guarantees. We are giving away T-shirts and stuff but mostly, what we are doing is to donate the medical devices to NGOs in their name. I think this could be a decent incentive. We will see.

One lesson, you have to bring your own crowd to these crowd sourcing sites, via word of mouth, PR or ads. There are so many projects going, no one looks at more than a few of them.

Mark Connelly
Emergency Physician at North Memorial Health Care
Some good discussion points thus far….
I think right now is an exciting time for alternative capital raises. What most people need to keep in mind is the term, “Regulation D crowdfunding.” This refers to individual accredited investors, Angels, investment firms. As a physician and entrepreneur, we have co-founded LiifMed (www.liifmed.com) to advance medical innovation and fill the healthcare funding void. We have reviewed hundreds of projects thus far.
There is no capital cap on Reg D funding, rewards, donors.

Nick MacKinnon
Founder, VP Clinical Strategy at eTreatMD
Crowdfunding for equity is possible if your company is based in British Columbia, Canada. I am reposting a link from the Vancouver Angel Network to an article on the subject.
Equity crowdfunding by unaccredited investors is legal in exactly one place in North America
Read more at:
[http://venturebeat.com/2013/05/29/crowdfunding-for-equity-by-unaccredited-investors-is-legal-in-exactly-one-place-in-north-america/|leo://plh/http%3A*3*3venturebeat%2Ecom*32013*305*329*3crowdfunding-for-equity-by-unaccredited-investors-is-legal-in-exactly-one-place-in-north-america*3/3V2k?_t=tracking_disc]

Simon Sikorski, M.D.
Digital Marketing Director for Competitive Business. Skyrocketing Sales via Digital Lead Gen, SEO, PPC & SoMe Strategy
Go to the home page for Medstartr Jerry. There are projects up to $60,000 in the pipeline.

FYI, $5000 can pay for a lot of different things you need to pay for i.e. patent filing, protection, making a professional video or website.

Remember that ONE OF THE KEY PURPOSES of crowdfunding is to demonstrate interest from the public to potential investors. The other one is MARKETING TO INVESTORS. When cash is short and you cannot attend every possible venue to meet investors, sometimes you can go where investors already are regular visitors.

You may not need a fancy website. All you need sometimes is a YouTube video that doesn’t even cost a hundred bucks to produce…. as long as you can get the message across.

Companies have the option of electing what happens if the full asking amount is not met. That should also be an important part of the discussion when crowdfunding is considered.

The other part of crowdfunding is how the project are presented in the first place. Is the video / intro good enough. Is it too long? Too short? Is there too much emotion/not enough emotion? Etc.

But going back to the original question, the ideas for REWARD for crowdfunding can also come directly from the CrowdFUNDERS themselves.

Check to see if you can add additional rewards after launching the project.

Nothing beats feedback from the source… in real time.

Jerrold Shapiro
President and CEO, Fem-Medical LLC
Eric, the true crowdfunding for medical devices will not happen until the SEC releases the final rules, probably in 2014. The early crowdfunding sites, like KickStarter, prohibited raising funds for medical products (see [http://www.kickstarter.com/help/guidelines|leo://plh/http%3A*3*3www%2Ekickstarter%2Ecom*3help*3guidelines/4xVh?_t=tracking_disc]). Medstartr has medical products, but the amounts raised seem to be under $5,000 which is just enough to enroll one half a patient in a clinical trial. Once the SEC final rules issue, companies will be able to sell their stock to people not wealthy enough to be “qualified investors.” The down side is that instead of using their time to keep five angel investors happy, CEOs will have to employ an investor services department to keep a million people happy and up to date.

Simon Sikorski, M.D.
Digital Marketing Director for Competitive Business. Skyrocketing Sales via Digital Lead Gen, SEO, PPC & SoMe Strategy
Medstartr – Healthcare. Indiegogo – across industries and I believe global.

Beau O’Donohue
CEO and Product Designer Actinnovation Pty Ltd
Does anybody know how Medstartr rates against indiegogo?

Jean Bigoney, RAC, CQE
Regulatory Affairs Specialist.
Depending on the device I think it might be considered rewarding to ba a part of something that can save life or improve the quality of life.

Karin Gregory
Partner, FGD, Blue Highway, CTM Ventures
Be careful on the offering of warrants as that is still making an offer of stock, also you are limited due to many fed stark, antikick back , sunshine act laws about what you can and can’t offer to a clinical person who might fund you…

Krzysztof Sitko
Aegle Co-founder
Scandu has done exactly this on indiegogo. Those who are pledging money for the device are in a way preordering the device. But I imagine they are doing so because of Scandu’s claims, which could lead to scrutiny from the FDA as they have not verified those claims.

Eric Kezirian
Sleep Surgeon, Professor of Otolaryngology – Head & Neck Surgery at University of Southern California
Will do. In general, I expected they would be more discouraging than anything because of the uncertainty at the FDA and potential legal issues, but I will reach out and report back.

Simon Sikorski, M.D.
Digital Marketing Director for Competitive Business. Skyrocketing Sales via Digital Lead Gen, SEO, PPC & SoMe Strategy
Eric, just looking at a website is not enough. Get in touch with the people behind Medstartr, like Alex Fair.

We all heard the phrase… “Don’t judge a book by its cover” – Look at the completed projects and ask about the projects in development… or the ones that have been settled off the screen.

Asking directly from the source of crowd-funding companies who do this every day is always the best. Even better when it’s free and on-demand.

Share with the group what you learn.

Eric Kezirian
Sleep Surgeon, Professor of Otolaryngology – Head & Neck Surgery at University of Southern California
Thank you so much for the input. I understand the need to avoid coercion for potential study subjects. I was more interested in what to offer as an incentive to others. I had previously checked on Medstartr, where there was little as of a couple of months ago. There now are at least a few devices listed that are pre-FDA approval. The incentives that I have seen are T-shirts, website listing, and goodwill. Two devices offered the product in the future (pending FDA approval). At least it sounds like the promise of devices or vouchers is legal, which is extremely helpful. Does anyone have experience with something else that either worked well or might be a good incentive, other than equity or something similar like warrants?

Erica Heath, CIP
Retired – available for small human subject protection, informed consent consulting jobs
From the IRB side, you can promise anything you could promise in a non-crowd-sourced situation. It cannot be coercive (if you don’t finish the whole year you don’t get anything) and it cannot be unduly influential (of course, my undue and your undue might be at different points). Some things might more difficult (if everyone were anonymous, sending a t-shirt would be difficult) and some thing easier (if anonymity is not a concern even equity could be offered – but then you have to consider conflict of interest 🙂

Simon Sikorski, M.D.
Digital Marketing Director for Competitive Business. Skyrocketing Sales via Digital Lead Gen, SEO, PPC & SoMe Strategy
Guys, check out Medstartr in New York for all the ideas you need about crowdfunding – [http://www.medstartr.com/|leo://plh/http%3A*3*3www%2Emedstartr%2Ecom*3/C3RI?_t=tracking_disc]

HILARIO CASTILLO
Registered Nurse/Entrepreneur
Great idea! I been asking myself the same question for raising funds for my medical device startup..

Nick Ribaric
President of BEST Ltd. focused on next generation medical instruments for treatment and diagnostics.
warrants to buy certain amount of stock at discounted price, free testing for life or number of years…are few things that come to mind.