The State Of Healthcare Funding In RegCF - KingsCrowd

July 31, 2019

The State Of Healthcare Funding In RegCF

 

I spent some time in the ER last Wednesday night (big shout out to the ER doctors and nurses at the University of Michigan for taking care of me) for a finger injury I got playing some rec league softball. My night in the ER served as my inspiration to take a look at the companies raising funds through Reg CF in the Medical industry (and because I had already taken a look at Sports). The Medical, Health, and Well-Being Industry has been a heavy focus on KingsCrowd’s Top Deals, and has held down spots in the Top 3 of commitment dollars in 2017 and 2018. Medical startups have clearly taken a shine to crowdfunding, so it’s time to shine a light on some of those offerings.

In the past 2 months, KingsCrowd has focused on two of these companies as their Top Deals (Respirix – though this was a Reg D offering – and Innamed) and two as Deals to Watch (Oncostemyx and Gali Health). Innamed maxed out its offering at $1.07M, Respirix raised over $1M, and Gali Health has raised $240K in just over a month (I don’t have information on Oncostemyx). So we see from just this small sample that these offerings are attracting significant attention from investors. But what about the rest of the sample?

In my sample data, there are 88 offerings that have been identified as falling into the “Medical, Health, and Well-Being” category. This represents about 9% of the total population of offerings. Of these offerings, the majority (71%) are listed on one of either StartEngine, Wefunder, or NetCapital. 

These offerings are, more often than not, successful. Offerings in this category hit their target minimum around 70% of the time. And they are not just hitting low target minimums (frequent readers of these posts will know that minimums are on their way down) and boosting their stats. On average, these companies are asking for $61,000, over $20K more than the population as a whole. And they are clearing this even higher hurdle by a good amount, netting $213K on average, with 8 of these companies crossing the $1M hurdle (a not insignificant feat). On top of that, most of these firms are raising at least $25K in their first 3 days.

And while these companies don’t have the valuations of some of the Tech Unicorns we are familiar with hearing about, the valuations of these companies do check in at a healthy $14.7M, which is $2.7M more than the population as a whole, and well above the median of $6M. So these offerings pose an attractive return to their investors, who are investing on average nearly $900 per investment. 

If you’re interested in getting into the Medical game, there are a number of offerings live right now (12 in my sample, to be exact), with plenty of room for new investors, and many having already hit their target minimum, so you’ll be jumping right in knowing that your investment will go to fund what the company is looking to do.


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About: John Aland

John is an Accounting PhD candidate at the University of Michigan’s Ross School of Business. His research interests include crowdfunding, disclosure, and debt contracting. Prior to Michigan, he worked as an auditor at KPMG in Philadelphia for seven years, leaving the firm as an audit manager. John has a BS in Accountancy from the University of Notre Dame. He can be reached at alandj@umich.edu.

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