VentureHealth Launches Equity Backed Crowd Funding Site

5-20-2013 9-25-31 PM

Online crowd funding site VentureHealth has launched the first equity-backed funding platform designed to seed fund early-stage healthcare startups. The announcement represents a significant step forward for proponents of crowd funding as a launching platform for startups because it provides entrepreneurs more direct access to angel investors and, similarly, provides investors an opportunity secure an equity stake through a crowd funding investment platform.

Crowd funding has excelled in propelling some business-types through the seed funding round, most often success is limited to startups developing consumer electronics. Examples of success stories in this sector include Misfit Shine’s near $900,000 IndieGoGo performance, or the even more impressive Pebble smart watch which netted more than $10 million on Kickstarter. The key to success with these stories was that donors were essentially pre-purchasing the companies flagship product once it raised enough money to start manufacturing units.  For a $50 dollar donation, you will receive a Pebble smart watch once they hit production. In these cases, crowd funding was being used as a form of market validation prior to spending capital on manufacturing and distributing units pre-sale.

For health IT startups, crowd funding capital has not flowed so freely. Without something tangible to give back to donor, like a smart watch, or an activity tracker, even good idea’s have languished among the masses of crowd funding projects that see little traffic or attention.

An equity-backed platform resolves that problem by providing health IT startups something tangible that can be given back to the donor, but instead of a smart watch, the startups can issue equity in the company.

"We love this new approach, VentureHealth is very attractive for companies like ours because it creates new financing options, and makes the whole funding ecosystem less VC dependent. That is a very big deal to entrepreneurs." – said Dan Burnett , Founder of Channel Medsystems.

As an investment platform, VentureHealth is only open to qualified, accredited, investors. The investors will have access to opportunities generally only available to VCs in the past and will provide entrepreneurs exposure typically only available at startup demo days and through networking.

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