Crowdfunding For Medical Devices and FDA Approval
The FDA approval process for medical devices is long, expensive and tough. The average cost to get a device approved by the FDA and bring it to the market can be more than $31 million depending on the type of application.
This can be an insurmountable obstacle for many entrepreneurs who have great ideas but don’t have the funds available to take them through this process.
One way around this problem can be crowdfunding — but there are some caveats that need to be considered before starting your campaign.
In this blog, I will briefly shed light on crowdfunding for medical devices so that you are not at a crossroads with no idea of how to move forward.
What is crowdfunding for medical devices?
Crowdfunding refers to the practice of funding a project or venture by raising many small amounts of money from a large number of people.
There are various models that can be used: The first and most familiar is the donation model where the investors do not receive any rewards for their investment.
The second is lending where those who invest in the project get regular interest payments similar to bond financing.
For crowdfunding for medical devices, it usually refers to rewards-based investing whereby investors are given some type of reward, most probably in the form of the medical device itself, in exchange for their investment.
The FDA’s role in the approval process
The FDA is not involved in the actual investment part of crowdfunding so don’t go looking for them on Kickstarter.
However, they are concerned with the product that is being funded and will review the claims that are made in a crowdfunding campaign.
If a person is making unfounded claims about a device, it can be considered to be a false or misleading statement and this is prohibited by federal regulations.
How to get your medical device approved by the FDA?