A year has passed since President Barack Obama enacted a law intended to spark business growth by encouraging “crowdfunding” of startups. Much of the law remains to be implemented, but that hasn’t stopped crowdfunding sites Poliwogg and Microryza from employing different models toward raising money for biopharmas and researchers, respectively.
This month, Poliwogg is launching its platform, focusing on helping fund small- and mid-sized companies in biopharma and other healthcare specialties, as well as in community-based businesses and projects, and portfolios of high-yielding investment-grade assets.
Gregory C. Simon, Poliwogg’s CEO, told GEN the crowdfunder is not about raising money from individuals, but seeking out investors willing in return to hold equity stakes in companies looking to raise between $2 million and $10 million.
Poliwogg envisions crowdfunding part of what a company seeks, then persuading venture capitalists to fund the remainder after conducting its own due-diligence review. It’s hard, Simon said, to predict how the percentages will ultimately shake out.
If an organization raises the funds sought, Poliwogg collects a 5% or 6% fee from what it raises.
“We fund these companies; they get across the ‘valley of death’ one way or another. They either fail, which is highly possible, or they succeed. They get a proof of concept. They get a critical clinical trial done. All of a sudden, they’re interesting to a biopharma company or a VC,” Simon said. “Think of this as a feeder for biopharma and VC funds. Neither VCs nor companies get into that level. But if you don’t grow companies at that level, you’re not going to get the companies at the bigger level. That’s why we’re called Poliwogg: You’re not going to get a frog if you don’t invest in the poliwogg.”
But will VCs, already gun-shy about early-stage biopharma, stick their necks out to invest in Poliwogg’s startups? “The smart ones will,” Simon predicted.
Taking a different approach is Microryza, which a year ago this month began crowdfunding projects in biopharma and other sciences. Unlike Poliwogg, Microryza applies the more traditional crowdfunding approach, presenting on its website projects by mostly individual researchers seeking thousands or tens of thousands of dollars.
A glance at the Microryza site on April 12 found 48 projects in the “biology” category that includes biopharma research. Elizabeth Iorns, Ph.D., is seeking $15,000 toward a mouse model of a noninvasive method of preventing transmission of the BRCA gene mutation to offspring by selectively targeting sperm that carry it. Dr. Iorns is co-founder and CEO of Science Exchange, a community marketplace for scientists seeking services from research institutions worldwide.
“The fundamental question I am trying to answer is whether PARP inhibitors can be used to prevent the production of BRCA mutant gametes,” Dr. Iorns stated on Microryza. “If that is successful, we can move quickly to testing with male BRCA carriers.”
The research entails treating male BRCA1+/- heterozygous mutant mice with a PARP inhibitor (olaparib) or a control and bred with wild-type female mice. Mice pups will be genotyped to determine whether PARP led to fewer BRCA1 mutant carrier pups being born than the 50% expected to carry the mutation. As of April 12, Dr. Iorns had won $3,456 in pledges, 24% of her goal.
Wormfree World Institute, a nonprofit research center, has exceeded its $15,000 goal as backers agreed to help fund the screening of 1,000 potential drug compounds directly on human intestinal hookworms. The institute’s founder and chairman is Raffi V. Aroian, Ph.D., a professor at University of California, San Diego.
“The impact of experimental compounds will be assessed based on parasite motility, size, and coloration. Post-screening, we anticipate designing an in-depth drug development effort around our best lead compound(s),” the institute stated at Microryza.
Microryza takes a 5% transaction fee if a project reaches or surpasses its goal. The site also charges a credit card processing fee of roughly 3%. Over five weeks ending the week of March 19, the site doubled week-over-week its numbers of transactions, projects, and users, founder Cindy Wu says in a video clip posted on the crowdfunding platform’s website.
“At Microryza, we’ve created a Kickstarter for research,” Wu declared, referring to the pioneer crowdfunding site focused on cultural projects. “Today, research funding is broken. The funders are so conservative that they only fund the most obvious ideas. We fund the long tail of ideas, the ideas that they won’t fund, and the outliers that matter.”