Crowdfunding in Biotech: problems and possibilitiesCLAIRE INGRAM, STOCKHOLM SCHOOL OF ECONOMICS

ROBIN TEIGLAND, STOCKHOLM SCHOOL OF ECONOMICS

Crowdfunding in SwedenDr. Robin TeiglandAssociate Professor

Stockholm School of Economics robin.teigland@hhs.se

@robinteigland

Claire IngramPhD StudentStockholm School of Economicsclaire.ingram@hhs.se @Claire_EBI

A true story

That made 2 million GBP for cancer research at Uppsala university

What is crowdfunding?Accumulation of small investments in individual projects by large

number of individuals (the “crowd”) via or with help of Internet and social networks (De Buysere et al., 2012)

Massolution 2013

Globally 470 000

projects via 800+

platforms

SWEDEN37m SEK (Oct 2013)

 Form of Funding Benefits for Funders

Donation-based Donation Intangible benefits.

Reward-based Donation or pre-purchase

Rewards in addition to intangible benefits.

Equity-based Investment

Return on investment if company does well. Rewards sometimes also offered and intangible benefits may

motivate too.

Debt-based LoanRepayment of loan with interest.

Alternatively intangible benefits if loan given interest-free.

Ingram & Teigland, 2013

Money raised: SEK 36,502 / €4,000

Number of investors: 186

Date funded: September 2011

Sector: Food

Stockholm success story: Flippin’ Burgers

Top 5 Best American Restaurants in Europe

Enabled local interaction, involvement

Who are the funders?Educated experts?

85 % of respondents have university degree (vs 16% of women and 22% of men in general population, 2013)

42% had knowledge in same field as project they funded 49 % reported to have been better at judging project quality due to previous experience

The “in-crowd” 47 % of “the crowd” classified themselves as entrepreneurs – compared to only 7 % of

Swedish population (2012) 77 % never bought shares in unlisted company before 41 % risk lovers

Skoglund & Stiernblad 2013

Skoglund & Stiernblad 2013

Equity crowdfunding in SwedenNo EU/EEA country can require a prospectus to be prepared for rounds of less than 100 000 EURFor rounds of 5 million euros or more, an EU prospectus is always requiredIn Sweden the limit is 2.5 million EUR Less than 150 ‘non-qualified’ investors without a prospectus

Benefits of CrowdfundingScreening device for investorsReach investors further afieldReach people with money who don’t have the right “connections”BUT in Equity crowdfunding: Lots of small investors – a problem?

Ingram & Teigland, 2013

Requirements to succeed?Choose the right platform – and crowdfunding type – for your project (keep in mind platform fees)Make the concept easily understoodMake it personal?Ensure that you have initial critical mass (social media, newspapers) – NB in donation- and reward-basedFeed the crowdKeep followers up to date

What’s next?

Thank you!

Image via NewYorker.com

Questions?

Claire IngramStockholm School of Economicsclaire.ingram@hhs.se@Claire_EBI