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Finance & Business Development Third, as previously mentioned, the aggregate amount sold to equity investors through a crowdfunding portal in any 12-month period cannot exceed $1 million. Individual investors will also have caps placed on equity investments made through equity crowdfunding portals. Consequently, it is not clear whether or not equity-based crowdfunding will be able to provide earlystage biotech/devices companies with the required amounts of capital they need. Finally, concerns have been raised about the high fees that may be associated with equity-based crowdfunding portals. Some experts believe that usage fees may be upwards of 10 to 20 percent because of broker/portal registration costs and exhaustive due diligence that must be conducted before company offerings can be posted to the portal. Also, the larger than normal number of shareholders who are likely to invest in a company that uses a crowdfunding portal may interfere with raising additional rounds of capital. In many states, corporate law stipulates that shareholder approval is required before a company can accept additional funding. Getting large number of shareholders to agree to and approve subsequent rounds of funding may be difficult and ultimately interfere with the long- term financial viability of a company. WHAT DOES THE FUTURE HOLD? Many venture capital and private equity professionals, such as Seth Yakatan of Katan Associates, believe that crowdfunding will be good for the life sciences industry. "It has the ability to broaden the audience of potential investors and provides a really great venue for smaller projects and earlier-stage companies to leverage the power of social media and mass appeal for a cause," said Yakatan. Likewise, Steve Burrill believes that crowdsourcing will continue to promote innovation and ultimately play a role in life sciences fundraising. Burrill said, "Crowdfunding will not solve early-stage capital demand, but it will make a contribution to the life sciences sector." While it is too early to determine if crowdfunding will have an impact on the life sciences industry, Medstartr's Fair offered an insightful comment about the potential of crowdfunding. "If you want to go fast, then do it by yourself, but if you want to go far, then go with the crowd." On the other hand, Burrill quipped, "We live in a world where everyone wants to push buttons, but life sciences fundraising is still a contact sport!" November 2013 LifeScienceLeader.com 53