Crowdfunding platform OurCrowd has tipped $1.5 million into the coffers of a Melbourne-based health tech company with ambitions to be Australia’s next ResMed or Cochlear.
The funds will support Global Kinetics’ push into the US, following Food and Drug Administration approval of the company’s Parkinson’s disease management technology, and also to explore the appification of the company’s intellectual property, potentially creating an app for wearables such as the Apple Watch, that could monitor Parkinson’s sufferers and even provide early alerts of disease onset.
Managing director, Andrew Maxwell, said that the company was currently evaluating hardware platforms and potential partners able to create an app.
At present the system works on the company’s specially developed Parkinson’s KinetiGraph movement recording datalogger. Worn on the wrist this collects six days’ worth of data that can be analysed to provide insights about the progress and treatment of Parkinson’s disease. Once the data is downloaded a clinical report is generated in ten minutes.
Developed specifically for Parkinson’s patients, harnessing IP originally conceived at the Florey Institute of Neuroscience and Mental Health, Maxwell said it might be possible to expand application to other areas of neuro-degenerative conditions which include conditions such as Huntington’s, disease, Multiple Sclerosis and Alzheimer’s.
Potentially the technology could also provide early warning of disease onset. Maxwell said the algorithms Global Kinetics had devised could diagnose Parkinson’s at a similar stage to clinicians.
Although the technology is being used by around 120 clinics in 15 countries, with a potential reach of 60,000 Parkinson’s patients, cashflow alone would not support the growth needed to “be the next little ResMed, the next little Cochlear,” according to Maxwell. Revenues are currently less than $5 million a year and the company has yet to turn a profit.
While it has already had several rounds of venture funding, Global Kinetics this time turned to crowdfunding.
Maxwell previously ran the Smorgon family’s venture capital business Escor Ventures and is keenly aware of the challenges associated with capital raising.
“Anyone who has been the CEO of an unlisted pre-profit bio-focussed organisation in Australia knows that the greatest proportion of time is spent on the pursuit of capital. It is very time consuming and there is no guarantee of a result,” said Maxwell. He said the opportunity to tap into a community of sophisticated investors through a crowd-funding platform such as OurCrowd was a game-changer.
“It will be easier to raise large amounts in the future as the platforms become more accepted. Rather than talk to 15 different venture capital firms who all want to control the business and have their own terms you can have that discussion once with the crowd funding organisation.”
The $1.5 million investment is the first major deal brokered by OurCrowd Australia, which launched in February 2014. About half of the Global Kinetics funds came from Australian investors, the remainder from global members of the crowdfunding group.
Because of the strict rules currently surrounding equity crowdfunding in Australia, membership of OurCrowd is limited to sophisticated investors. Dan Bennett, OurCrowd Australia managing director said that internationally 68 investments worth $150 million had been made – $25 million of which had been sourced from the almost 800 Australian members of the international crowdfunding platform.
While crowdfunding has made life easier for Maxwell, Bennett warned that most applications for crowdfunds were winnowed out early. “The funnel is very severe. We review 300-400 (requests) a month and invest in two or three.”
Access to equity crowdfunding investment opportunities has been limited to sophisticated investors locally, but in last week’s budget the Treasurer Joe Hockey signalled a change saying that; “To help small business grow we are facilitating new opportunities for crowd-sourced funding, making it easier for small investors to marry up with growing small businesses.”
The devil will be in the detail of the legislation, but Bennett said if it modelled European regimes which demanded 10 per cent of investors be classed as sophisticated it would help protect less seasoned retail investors, as long as proper regulatory oversight was retained.