Due Diligence For

CROWDFUNDING

Company Overview-

CrowdMed is revolutionizing healthcare by harnessing ‘the wisdom of crowds’ to help solve even the world’s most difficult medical cases quickly and accurately online. Their goal is to be relied upon by millions of patients as a trusted source of medical answers. They combine the collective knowledge of human diagnosticians with the speed and convenience of the Internet.
*Souce: Crunchbase

Company

Investment

Name: CrowdMed

Minimum Raise: $200K

CEO: Jared Heyman

Maximum Raise: $1M

Company Founded: 2012

Structure of Raise: Convertible Note – 20% Discount – 2% Interest

Location: San Francisco, CA

Valuation: 18M Valuation Cap

Crowdfunding Portal: Wefunder

Minimum Investment: $100

Crowdfunding Link: https://wefunder.com/crowdmed

 

Website: https://www.crowdmed.com/

 

Review Overview

Positives Risks and Reservations
Ycombinator alumni Net loss of $803,014 in 2015
Well known previous investors Liability risks unclear/untested with providing health guidance
Disruptive product/business model Future growth heavily reliant upon large scale acceptance by health insurance companies
Note converts to preferred stock and includes 2% interest Getting patients to overcome the stigma of completing health research online

Problem

A patient with uncommon symptoms must go from specialist to specialist whose diagnoses may differ from one to another—before they can even begin treatment.

Solution

Current:
CrowdMed has created a site where a patient with medical condition that is difficult to diagnose or difficult to resolve, can post their case. There is a community of thousands of medical experts—medical detectives—from all over the world who collaborate on their platform to solve the patient’s case.

Long Term:
CrowdMed is ready to partner with healthplans to gain access to their members.

Business Model

CrowdMed generates a profit in two ways. They charge patients a monthly subscription fee to activate their case, the packages start at $149 per month and average $500 to $600. They also charge employers or health plans on a per case basis or a per member per month (PMPM) basis. Per case fees start at $300 and PMPM start at $1.25. For every dollar paid by a patient, CrowdMed receives over half as a gross margin. The average cash reward for detectives is $400 per successful case and is awarded to the detective or detectives who performed the best on the case.

Traction

  • 20,000+ medical detectives have registered for CrowdMed
  • 1500+ medical cases have been resolved on CrowdMed
  • 3 paid pilots with major U.S. health plans
    *Source: Company provided on crowdfunding campaign website

Senior Management Team

 

Jared Heyman

Tricia Ismail

Mark Belongie

Position:

CEO Communications Director

VP Strategic Alliance

Ownership Percent:

80% N/A

N/A

Linkedin:

https://www.linkedin.com/in/jaredheyman

https://www.linkedin.com/in/triciaismail

https://www.linkedin.com/in/markbelongie

Advisors:

  • Jessica Greenwalt
  • Greg Swayne
  • Greg Denari

Summary:
CEO Jared Heyman has previous startup founder success. Jared is backed by Mark Belongie as the VP of Strategic Alliance who adds the needed experience in the health plan industry.

Market Analysis

Industry: Healthcare industry

Market Size: ~6% of the general population

Industry Opinion:
I think the healthcare industry is in dire need of technological innovation when it comes to patient care and diagnostics. Only a select few startups have attempted to enter the somewhat difficult market. I believe to see large scale growth in this industry, a startup will certainly need to be well funded.

Financials

Revenue to date: $407,843

Revenue most recent fiscal year: $282,981 (2015)

Previous funds raised:

  • $2,40,000, convertible note, February 2013
  • $100,000, convertible note, April 2013
  • $800,000, convertible note, September 2015
    *Source: Crunchbase

Use of Funds

  • If $200,000 is raised they will begin execution of the 4 current health plan pilots.
  • If $500,00 they will have sufficient time and experience to convert some of the current health plan pilots into full-scale engagements.
  • If $1,000,000 is raised they will be able to launch additional health plan pilots and convert them into full-scale engagements.

Exit Opportunities

There are limited exits that can be compared to CrowdMed as they are truly innovating the space. I could see possible exit opportunities to one of the major health insurance providers looking for a competitive advantage that CrowdMed could offer.

Recent Acquisitions in the Field

Date Company Acquired Acquired By Amount
Aug. 9, 2016 anydooR Rozetta Corp $14M
Sept. 17, 2014 Darjeelin Voyage Prive Unknown
Sept. 18, 2012 Crowdcase Spigit Unknown

Expert Opinion Summary

I think the public is looking for and hoping for a company like CrowdMed to make needed technological advances in the healthcare industry. CrowdMed has essentially completed a large scale MVP up until this point by utilizing a direct to consumer model. The use of funds from this offering will be to execute pilot programs with four health plan providers. In the offering document CrowdMed indicates that a minimum raise of $500,000 is necessary to fully execute the pilots with the four providers.

The decision to fundraise through Reg CF at their stage leads me to believe that previous investors are wanting to see if CrowdMed can successfully sign the health plan providers before committing additional follow-on investments. If CrowdMed is successfully able to execute the pilots with the health plan providers and retain them as clients, they should be an exciting company to watch in the future.

AngelList: https://angel.co/crowdmed
Crunchbase: https://www.crunchbase.com/organization/crowdmed

Disclaimer

Crowdfund Research and its authors do not offer investment advice, nor do we endorse or recommend investments in any company or the suitability of an investment for any particular investor. Crowdfund Research is not registered as a broker-dealer or financial or investment advisor and does not provide any services requiring such registration. The information in this report or on our website regarding any company is based on publicly available information or directly from the subject company.  Crowdfund Research makes no representation or warrant as to the adequacy, accuracy or completeness of such information. Any opinions or forecasts expressed herein are our own, are not intended as investment advice and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation of an offer to buy or an offer to sell any security.
This report or the posting of information on our website regarding any company, including any links to information on our website, should not be construed as an endorsement or recommendation of that company for any purpose whatsoever.  This report does not take into account the investment objectives, financial situation or needs of any particular investor, and each investor should consider whether any investment opportunity is appropriate given their investment objectives and current financial circumstances. Any person considering any investment in any equity crowdfunding investment whatsoever is encouraged to consult with their own investment or financial advisor, tax advisor and/or attorney beforehand.
All investments entail risk. The companies on our site are generally small or early stage companies and are subject to risks inherent in investing in any small or early stage company as well as other risks specific to their business and operations. In addition, securities of these companies may be highly illiquid, requiring that they be held for an indefinite period of time or have a limited market for resale. Therefore, no one should invest in any of these companies unless they have no need for liquidity of their investment and can sustain a total loss of their investment.  You should only invest an amount of money that you can afford to lose without changing your lifestyle.
You should thoroughly review the complete offering materials for any investment opportunity, particularly all risk factors, prior to investing in any offering and become familiar with the investor requirements, investment limits and your ability to resell the investment.

 

 

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Jake Fisher
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Jake Fisher

Entrepreneur and Angel Investor. Along with founding Crowdfund Research, Jake is the Managing Partner at Venture Formations.
Jake Fisher
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