Tag: transparency

Food for Thought: Crowd-funding – A Useful Financing Strategy for Healthcare Companies?

Crowd-funding is a widely discussed and disputed financing approach these days. It has proven to work in many industries, including the entertainment sector. But what implications will it have for the healthcare industry? Will it have any impact on healthcare at all?

So far, there are only few examples of crowd-funded healthcare ventures. One of them is the Rare Genomics Institute, a US-based non-profit organization dedicated to providing better and faster diagnostics and therapies for rare diseases. They decided for a personalized approach by putting up individual cases of rare disease sufferers on their website and organizing funding for the diagnosis and treatment of the affected patients. Thereby, Rare Genomics Institute provides treatment opportunities for patients who otherwise would not be able to pay their medical bills, as these kind of therapies (and diagnostics) are usually not funded by healthcare providers.

What seems to work as a fundraising approach for individual cases in the US still has to prove its viability in other regions of the world – and in a larger healthcare context. Could expensive drug development eventually be financed by crowd-funding? According to an article in Genetic Engineering News, there is currently not much evidence that biopharmaceutical companies could benefit from crowd-funding, as their financing requirements are significant and long-term oriented. In fact, there are only very few examples of biopharmaceutical companies which have managed to close a financing by crowd-funding, e.g. cancer immune therapy company Urodelia (France). However, the financing volume has not been disclosed. Others, like AMD Therapy (Germany), a fund dedicated to finance the development of novel therapeutics to combat age-related macular degeneration, or Selexel (France), which is developing cancer therapies based on RNA interference, are still raising funds. Interestingly, AMD Therapy aims to raise as much as EUR 60 million by crowd-funding – much more than other biopharma companies in Europe were able to raise by private equity financing during the past 12 months.

At the end of the day, many questions are still unanswered. Will private sponsors continue to be willing to pay a stranger´s medical bills in the long run? Will start-up healthcare companies financed by crowd-funding eventually have to fulfill strict reporting and transparency requirements?


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Food for Thought: Why Do Private Companies Need IR, Too?

With an increasing number of emerging private equity trading platforms worldwide, it has become obvious that professional investor relations is not just for publicly listed companies. Even though transparency requirements for private companies are still much lower than those for listed companies, there are challenges ahead. While previously targeting a relatively small group of specialized private equity investors, private companies are now facing a very heterogenous audience of private (and, often times, anonymous) investors with very little knowledge about specific industy sectors and business models. Germany´s latest private equity market place, fianc, was launched earlier this week and follows the route of established players in the U.S. like SecondMarket and SharesPost.

It remains to be seen whether the new private equity trading platforms will eventually trigger more stricter regulatory and communication requirements – which, in turn, could mean that being a private company loses its charm. On the other hand, it is an excellent opportunity for private companies to broaden their shareholder base and attract additional capital. According to IR Magazine´s newsletter Inside Investor Relations, some analysts have started to focus entirely on this new market segment. That said, it is obvious that private companies need to re-think and adapt their communication strategies and resources if they want to position themselves successfully on the new trading platforms. Feel free to contact us if you need advice on trading your company´s shares on the private market.