Crowdfunding site wants to back health IT startups

A new "crowdfunding" website called MedStartr will be focused on innovative healthcare startups, according to a recent MedCity News article. Launched by Alex Fair, whom the publication calls a "serial entrepreneur," MedStartr initially will solicit "charity-based" and "reward-based" investments in startup firms.

Equity investments via crowdfunding will be legally dicey until the U.S. Securities and Exchange Commission finishes writing regulations for the federal JOBS Act, which President Obama signed into law last April. The JOBS Act, designed to make it easier for new companies to start up, would allow small investors to buy equity shares in startups. Currently, the sale of equity investments in private companies is limited to "accredited investors" who have a net worth of $1 million or at least $200,000 in annual income.

Nevertheless, crowdfunding sites such as Kickstarter and RocketHub have managed to raise money for a variety of ventures, many of them in arts-related. MedStartr, in contrast, is aimed squarely at the healthcare industry. Although the site is not actually open to the public yet, Fair told MedCity News that he already has lined up some companies that seek to market software applications

One of these firms, EndoGoddess, is trying to raise money for a clinical trial of a diabetes management app. Another company, Avado, makes a "physician-patient communication platform" that helps doctors meet the patient engagement requirements of Meaningful Use.

"Crowdfunding" can be applied to many kinds of projects, some of them profit-making and others charitable. According to one definition that dates back to 2006, the term "can be used to encompass the act of informally generating and distributing funds, usually online, by groups of people for specific social, personal, entertainment or other purposes."

While this description may sound a bit wishy-washy, consider this: Forbes earlier this year reported that the value of the crowd-funding market has jumped from $32 million to $123 million in the past two years.

To learn more:
- read the MedCity News story
- here's the SEC definition of an "accredited investor"
- check out a BostInno article about crowdfunding
- see the Forbes article


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