No need to present the crowdfunding again! We hear about it every day through Kickstarter’s projects or other platforms that abound on the web. But what about biotech’s crowdfunding? Through many French entrepreneur’s interviews who are engaged in crowdfunding’s campaigns, I tried to make my own idea about this new financing tool. And one thing is certain, in this game France leads the way!
The French platform Wiseed has already demonstrated its effectiveness by funding the company Antabio, which aims to improve the effectiveness of antibiotics against resistant bacterial strains. The founder of this start-up chose Wiseed when venture capitalists turn him down. In less than a month, € 300,000 euros were collected from more than 100 investors. After 18 months of research and development, the company was able to raise funds from larger investors who then bought out Wiseed’s shares. Eventually, individuals involved have seen their investment double, a first time for a crowdfunding platform! “With this transaction, Wiseed has been the subject of an article in Nature Biotechnology and Antabio has raised € 4M from Welcome Trust” has told me Thierry Merquiol, founder of Wiseed. Even more impressive, the company Biosantech announced it has raised € 803,000 through the crowdfunding platform Happy Capital to finance the development of its therapeutic vaccine against HIV. The original goal was set at € 500,000. The company has exceeded its initial target of 160% and realized the biggest crowdfunding in France. The funding enabled Biosantech to continue its Phase II clinical trial.
In France, you can feel a real enthusiasm for crowdfunding and many projects are running on different platforms. I met several companies currently fundraising to understand their reasons and issues. The first of these, Acticor Biotech, develops an antibody inhibitor of arterial thrombosis, directed against the glycoprotein 6 (GP6), a new therapeutic target on the surface of platelets. By binding to the target, the GP6 prevent thrombosis by blocking platelet aggregation and thus the formation of arterial thrombus. The interest is to provide a safe, effective treatment without side effects in ischemic stroke (current treatments have hemorrhagic risk and limited effectiveness). “We founded the company in 2013 and we believe that given our status, priority is not to look for big investors that could significantly dilute our capital. In addition, stroke is an issue for everyone (there is one every 4 minutes!) so our project could be really liked by investors who understand the urgency of a treatment. Our strategy is to seek € 500,000 through crowdfunding and € 300,000 from business angels to fund our entry into pre-clinical phase. On the platform Anaxago, we already have more than 400 000 € confirmed” said Philippe Billiald, President of the Strategic Committee Acticor.
NVH Medicinal also wants to convince crowdfunders thanks to its therapeutic product. The Dijon-based company works for 6 years on diseases related to collagen, the most abundant protein in the body. Collagen is used for decades in health, but its origin is animal and therefore ethically and economically unviable for high production rates. Their solution is a collagen-like proteins produced by synthetic biology. The protein, 100 times smaller than the natural collagen molecule, can be injected to stop bleedings (collagen is the first recruiter of platelets during bleeding). Other applications are also possible either in health or in cosmetics since their small molecule penetrates the skin with a higher efficacy and can be more active than natural collagen. “Crowdfunding is very popular because there is a real lack of intermediates in France between seed and venture capital (VC) financing. For 6 years, we have funded via OSEO (now BPI France, the French public investment bank), then we have sought to raise between 500,000 and 1 million euros. But in France very few financing vehicles exist if you don’t want to appeal to venture capital. Our goal today is to raise €420,000 via Happy Capita” told me David Vandroux, CEO of NVH Medicinal.
In another domain, Watchfrog is a company commercializing quality tests for water using an original method. They’re using tadpoles that became fluorescent if there are pollutants in the tested water. They have developed the only technology capable of measuring the hormonal impact of pollutants on a living being (while respecting the ethical issue because tadpoles are not considered as “animals”). The stakes of this crowdfunding is different for Watchfrog. The company exists since 2005, employed 14 people and generates a turnover of €544,000. But their issue is to make the transition from a start-up to an SME. Watchfrog expects to find the solution through crowdfunding, supplemented by a classical fundraising. Watchfrog is looking for €500,000 on Wiseed and supplement this sum by raising funds of up to €2 million to start large-scale commercialization of their technology.
French regulation is certainly the most advanced in terms of crowdfunding. Since last October 1st, a law obliges projects to provide financial documents controlled by the AMF (the French regulation institute of Financial market) to protect investors. In addition, 50% of crowdfunding investments could be deducted from the wealth tax to truly encourage it. Last but not least, in France, it’s easy to get up twice the amount required since BPI France provides the same amount as a loan.
Crowdfunding has benefited many French biotech companies and some others are starting to try it like Anova-Plus. However, this new funding tool is limited to a maximum of 1 million euro in France, which restricts it to seed financing. But that’s not so bad since, as we have seen, the seeding remains a crucial development stage for biotech companies in France and in Europe. Thus, crowdfunding finds its place as a complement to traditional financing. Companies using crowdfunding are often in a phase where venture capital is not possible or not required. Crowdfunding is a useful way for companies to pass through the “valley of death”, a critical step for every European biotech company. France is leading the way and has shown that crowdfunding is working well for biotechs. Let’s see if other European governments will mimic it.
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