Is Crowdfunding The Future For Biomedical Research?
Microryza.com (not the catchiest of names) is a crowdfunding platform for research that raises money over the Internet from individuals who are willing to donate small amounts to fund a specific project. The average donation according to Microryza is $92.
In return for a 5 percent cut of funds raised and a 3 percent credit card processing fee, Microryza provides researchers access to a website where they can solicit money from the public to fund their research. Crowdfunding is typically an all-or-nothing deal, where donors only have to pay their pledged support if the project is fully funded within a defined period of time.
Is this the solution to the reduction in government funding of science?
Crowdfunding has received the endorsement of President Obama. At the White House on June 4, a dozen entrepreneurs who used crowdfunding for start-ups and innovative projects were recognized as “Champions of Change.”
As Thomas Kalil, Deputy Director for Technology and Innovation for the White House Office of Science and Technology Policy, noted in the event’s press release, “Crowdfunding is the 21st century equivalent of barn-raising. We can use it to help our neighbors and fellow citizens start a business, enrich our culture, and apply grassroots creativity and imagination to challenges big and small.”
It’s relatively easy to decide whether to fund an experienced radio journalist such as Andrea Seabrook, who raised more than $100,000 to fund Decode DC, a podcast and public radio show, but does crowdfunding work for science projects?
One young researcher hoping it does is Atif Syed from the Department of Electronics at the University of York who, along with his colleague Zakareya Hussein, is seeking to raise $3,000 to fund initial research into a novel drug-delivery patch (Nanject), which uses magnetic nanoparticles. As of the morning of July 10, they were still a long way off, with only $308 pledged to date.
While I don’t have the scientific knowledge of nanotechnology to make a judgment on the value of their project, or the potential of Nanject, I do admire their entrepreneurial spirit.
According to Microryza, research projects have to meet three criteria to be listed:
1. The projects seek to answer a scientific question.
2. The project goals are within the capabilities of the researcher.
3. We can verify the researcher’s identity.
The weakness in this approach is that Microryza makes no determination of the merits of the scientific project. That is left to individual funders and the wisdom of crowds. If you would like to make a charitable contribution of $50 to a young researcher, how do you decide which project to potentially fund?
One way is to look at the institution the researchers are associated with, but I’m not convinced that is a great differentiator unless you are an alumni looking to support your alma mater.
Microryza provides no links to research papers, but instead offers a short summary of the project goals, why the research is important and how funds will be used.
The site encourages the production of a video pitch where the researcher tells you about the project and why you should fund it, but these are of variable quality.
What I was after was an independent third-party endorsement, someone whose reputation I would trust who might say, ‘yes, what Atif Syed is trying to do with nanoparticles is worthy of support’. Science is typically funded by peer-reviewed grants, so placing the burden on the public to assess the merit of a project is not necessarily the approach I would adopt.
The risk is the public will more readily fund projects that are around themes or topics they can more readily understand, e.g. research into Alzheimer’s disease, while more esoteric projects may be ignored. Science funding should not be a beauty contest.
Crowdfunding of scientific research also needs to be fun and engaging, and for me Microryza misses this element — just receiving a report at end of a project isn’t enough when there’s a lot of competition for my donation. The popular crowdfunding site, Kickstarter, does a good job of building in different levels of donor recognition based on how much money a person contributes. While I was not looking for a T-shirt or a coffee mug, more engagement with the researchers might have been one way to achieve this.
Despite the inherent limitations in the model, there are many projects on Microryza that look worthy of funding, including the nanoparticle project from Atif Syed that I encourage you to check out, but ultimately I’m not convinced this is the right way to fund science.
However, what the experience of trying to raise money by crowdfunding may do is help scientists become more entrepreneurial in focus, and stimulate them to setup companies in the future. What they are learning to do on sites such as Microryza is sell science to investors. That may be a skill well worth learning.
In the United States, the Jumpstart our Business Startups or JOBS Act, signed into law by President Obama in April 2012, will allow businesses to raise small amounts of capital from private individuals through crowdfunding without the need to have an initial public offering (IPO). This means that instead of funding a project, an entrepreneurial scientist could use crowdfunding to startup a company to commercialize their research.
Before equity crowdfunding can take place, the Securities and Exchange Commission (SEC) must issue new rules. Once the rules are in place, I would not be surprised if we saw a start-up biotech company get some of that kind of equity investment.
Crowdfunding may not be a panacea for the cutbacks in government funding of biomedical research, but it could, along with angel investing and venture capital, become a new component in how startup companies are funded. The prospect that this could stimulate biomedical innovation is one that excites me.