Healthcare cybersecurity startup Patientory recently announced that it raised $7.2 million over 3 days through cryptocurrency crowdfunding – a relatively new fundraising strategy.
The crowdfunding drew in 1,728 contributors, who bought 70 million PTOY currency tokens between May 31 and June 3, according to a company news release. Atlanta-based Patientory floated the tokens on cryptocurrency exchanges including Bittrex, TokenMarket, HitBTC, and ICObazaar.
There appeared to be some hitches to the process. Patientory in a follow-up announcement said it was holding off on releasing the tokens to contributors: “Although we were ready to immediately release them, we have held off because an audit is underway. Once the auditors publicly release their audit (which we expect in a few days or up to 2 weeks), we will release the tokens.” (A company spokesman said smart contract code audits are quickly becoming standard procedure for companies pursuing this crowdfunding model.)
Still, $7.2 million over 3 days is impressive and provides another example of how startups, including those in the medical device industry, are seeking new strategies to raise money versus the traditional venture capital route.
“As Medical Alley’s investment reports have demonstrated, there continues to be significant diversification and creativity in sourcing funding by health technology startups,” said Shaye Mandle, CEO of the Medical Alley Association in Minnesota.
“Patientory’s raise using cryptocurrency crowdfunding certainly takes creativity to the next level,” Mandle said. “While I wouldn’t advise companies today to rush to follow Patientory’s path, we’ll be watching closely to see how this platform and investors perform and mature.”
Patientory plans to use the funds to launch its blockchain-based distributed electronic medical record (EMR) storage computing platform.
Crowdfunding has become a potential vehicle for investment since the U.S. Securities and Exchange Commission started loosening ruled under the Jumpstart Our Business Startups Act of 2012. Add in the fluidity of cryptocurrency tokens such as bitcoin and Ethereum, and one can see some potential.
Patientory’s technology is actually based on the same blockchain-based technology that cryptocurrency exchanges use. Patientory’s EMR storage computing platform is built on private infrastructure on the Ethereum blockchain. It connects what would normally be siloed health provider EMR systems to allow healthcare entities to secure private health information and rent computing power, servers and data centers. They can even provide unused computing resources to other health providers via the infrastructure.
“It’s virtually impossible for a cyber criminal to hack one block in the chain without simultaneously hacking every other block in the chain’s chronology,” said CEO Chrissa McFarlane. “This makes Patientory incredibly appealing to not only store a patient’s entire health history, but determining who should have access to it.”
Cryptocurrencies continue to gain attention, but the cryptocurrency landscape is also rapidly shifting. A new Forbes article, from contributor Laura Shin, notes that the bitcoin community is at war with itself, with some developers building on other token platforms.
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