LONDON--Against the backdrop of a surge in venture investing in biotech, there's been a significant amount of curiosity in the startup field about whether crowdfunding can ever play a significant role in seeding new operations. Today, the Financial Times trumpets the case of the Welsh biotech Cell Therapy, which managed to raise a little more than $1 million from a crowdfunding project to back its work on a cell therapy to repair heart damage. That's a record for the U.K. industry.
Cell Therapy has a lot going for it. It was founded by Nobel laureate Sir Martin Evans and touts the involvement of the former U.K. trade minister Lord Digby Jones, reports the FT's life sciences correspondent. And their sterling reputations encouraged about 300 people to contribute to the campaign on Crowdcube.
The stem cell company says it wanted to try an alternative to venture capital, trading less than 1% of its equity for the crowd cash. And there was some public excitement to tap in on. "Regenerative medicine of the kind we are working on is going to change medicine for everyone and this provides a way for anyone to take a stake in it," co-founder Ajan Reginald tells Andrew Ward.
Stem cell therapies and regenerative medicine caught the attention of the world's press years ago with its enormous promise for providing cures for lethal diseases. Editors love to use the word "cure" in a headline. The miracle popped into public view, then faded as the pitfalls involved became more apparent. California's CIRM invested more than $2 billion into the field, and has precious little to show for it by way of clinical-stage programs. This is radical, complex science, and complex science takes a lot of time and a lot of money to make its uncertain way through the clinic. That's not the kind of trip many VCs are signing up for these days.
So it's no wonder that companies that find it hard or impossible to garner money from VCs turn to microfinancing outlets like crowdfunding, appealing to individuals with little sophisticated understanding of the science or the budgets needed to do this work. Crowdfunding may be a great way to finance a software app or some individual tech project. But this news says a lot about the tough road that stem cell research is on and the likelihood that crowdfunding will never amount to more than a curiosity in biotech. -- John Carroll, editor-in-chief (email | Twitter)