Being listed on an equity crowdfunding platform is not that easy as it could seem at a first glance. There are many reasons for this. For example, Capital Cell’s Dr Patrick O’Brien claims in this blog that having a 92% success rate for successfully funded projects requires a very strict evaluation process for them.
By Dr Patrick O’Brien*
At Capital Cell, the crowdfunding platform where I am Investment Manager, we are rightfully proud of our successes. To date, more than £12m has been invested through Capital Cell, with 24 rounds successfully closed.
But there is another statistic – a very different one – that makes me equally proud: for every 100 proposals Capital Cell receives, only three actually end up on the platform.
That’s not because they are not good, necessarily. It is because we have a very strict system of technical, legal and financial evaluation that makes sure that we only publish the very best investment opportunities on Capital Cell. That’s why we have a 92% success rate for successfully funded projects, compared to 36% on Kickstarter (according to Statista).
Our evaluation process starts in house: we analyse your investment opportunity, looking at factors such as the strength of your patents, regulatory strategy and the appeal of your company to future investors.
Capital Cell is Europe’s first equity crowdfunding platform specialised in life sciences and the Capital Cell team has considerable experience in both finance and science. I personally have a PhD in Molecular Biology from King’s College London and I make sure our in-house evaluation process is scientifically robust.
The opportunities that we consider to be satisfactory will then pass to the next stage of evaluation, which is being assessed by the BioExpert Network, an independent group of more than 900 investors, PhD level scientists, IP lawyers, investment consultants and industry professionals.
Their input is key to Capital Cell’s evaluation process. In fact, it is probably fair to say that without the BioExpert Network there would be no Capital Cell, so important are they to what we do. Their huge range of personal experience gives Capital Cell a level of expertise that I would say is almost unparalleled among the investment community.
The BioExpert Network – or BEN – reports back to us on factors such as your record of innovation, the market potential of your investment opportunity, your business model, the potential for return and the suitability of your scientific team. This process is incredibly thorough and takes around two weeks.
No investment opportunity
in the world brings
But that’s not all. Every project we publish on Capital Cell has a lead investor who performs his or her own due diligence. That gives us another level of evaluation and should give you more security, knowing that someone feels confident enough in this particular investment opportunity to put their money where their mouth is.
Finally, Capital Cell does the legal nitty gritty, checking every company in public registries, reviewing Articles of Association and cross checking share structure with relevant filings. We also conduct interviews with every entrepreneur. We are going to be working very closely with them so it is important that we click.
No investment opportunity in the world brings guaranteed success, of course. But these stringent checks mean that I, personally, feel confident in any investment opportunity we publish on Capital Cell. Without this, I simply couldn’t recommend them to our network of investors.
Sometimes I wonder what it would be like if the evaluation process were easier. We would publish more projects on our platform, for sure, and maybe my life would be easier. But then Capital Cell wouldn’t be Capital Cell. We would just be another crowdfunding platform.
At Capital Cell we aim to open the opportunities of life science investment to everyone. What that means is that you may end up considering investing in a company that operates in a hugely complex scientific field, when you only have a single Biology GCSE to your name.
Maybe that sounds scary. But it shouldn’t. Because our evaluation process at Capital Cell means you’re not investing all alone. You have us, the BioExpert Network and a dedicated lead investor in your corner.
*Dr Patrick O’Brien is Capital Cell’s Investment Manager.