Venture Firm InCube Builds a Crowdfunding Site of its Own

Mir Imran, chief executive of InCube Ventures and InCube Labs.

Mir Imran, chief executive of InCube Ventures and InCube Labs.

In what may be an industry first (in finance) venture firm InCube Ventures has unveiled a crowdfunding site of its own dubbed VentureHealth.

The new platform will differentiate itself from “rewards-based” crowdfunding sites like Kickstarter, or sites that help consumer technology startups raise seed money, like AngelList, Microventures or Crowdfunder, by focusing on health startups exclusively.

InCube
Mir Imran, chief executive of InCube Ventures and InCube Labs.
At least two other equity-crowdfunding sites, Medstartr and Healthfundr, help health-tech ventures raise funding in the U.S., but they are not affiliated with any institutional venture funds.

Myriad other sites like Watsi.org, GoFundMe.com, Samahope.org, and Kangu.org help people raise funding for health-related community projects, or to cover a patient’s medical treatments.

InCube Ventures’ managing director and founder, Mir Imran, a prolific inventor and serial medical-tech entrepreneur himself, said: “Regulatory risks, clinical trials and many other challenges make equity fundraising in life sciences feel very nearly impossible these days. We know several [venture] funds that have stopped doing funding for life sciences, or had trouble raising funds.”

Imran is best known for his work developing the first Food and Drug Administration-approved, automatic implantable cardioverter defibrillator. He also holds more than 200 patents and has started more than 20 life-sciences businesses, including a sister company to InCube Ventures called InCube Labs, which develops new health tech.

According to Dow Jones VentureSource data, equity investments into U.S. life-sciences companies totaled $6.2 billion across 551 deals during 2012, representing a 19% decrease in dollars and 12% decrease in deals from the prior year.

Government grant funding for life sciences is still available, but the number is not growing enough to make up for declines in venture investments, says another co-founder and managing director at InCube Ventures, Andrew Farquharson.

He hopes VentureHealth will help startups get to a more mature stage of business, where they can attract institutional investors in this highly competitive market.

Farquharson adds that VentureHealth will offer more than seed-stage deals. The platform allows angel investors who are not limited partners with InCube Ventures to co-invest alongside the firm into later-stage medical-tech startups. The firm, which was previously part of the Draper Fisher Jurvetson network of funds, closed its first fund as a standalone firm last year, according to regulatory filings.

Operating in a beta phase with select startups and fewer than 50 angel investors participating, earlier this month VentureHealth helped Channel Medsystems raise an $875,000 portion of its $9.7 million Series B round.

Channel Medsystems is developing “next generation cryoablation technologies” that can, for example, stop heavy menstrual bleeding without heat or a need for anesthesia.

InCube Ventures plans to eventually spin out its crowdfunding business as a standalone company, Farquharson said.

To build momentum, VentureHealth plans to partner with alumni networks at medical schools, large group practices, or other organizations that can encourage medical professionals–from physicians and researchers to administrators and investors with a taste for life sciences–to get involved in angel investing.

Venture firms have invested in equity-crowdfunding platforms, including CircleUp Network, and SecondMarket Holdings, but will they run crowdfunding sites of their own?

Imran says: “It’s hard to predict, but [investors] are looking very seriously at this new, funding vehicle. They are definitely watching crowdfunding carefully, and intrigued by its potential.”

Write to Lora Kolodny at lora.kolodny@dowjones.com. Follow her on Twitter at @lorakolodny

Source: Wall Street Journal – By Lora Kolodny

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