Published October 5, 2021 by WC Team

Proven Ways to Fund a Small Biotech Business

Proven Ways to Fund a Small Biotech Business

For those of you who do not know this, it seems like now is the perfect time to launch your own biotech company. According to some reports, a lot of money goes into the corporations in the United States from venture capitalists. 

Namely, many reports have shown that in Q2 2018, investors have spent around twenty-three billion US dollars precisely on startups. So if you are interested in blasting off your own biotech business, you are probably wondering if the VC option is the best one for the time being?

Not necessarily. It’s because it takes a lot of time to receive funding from a venture fund especially when it comes to biotech. So what are your other options then? Below, you can uncover the answer.

Great Options For Financing A Biotech Startup

Grants And Public Funding From Corporate, Research And Government Organizations

Even though this may come as a surprise, you’ll be happy to hear that there is lots of grant funding at your disposal for biotech startups. This is especially exciting for companies that are in their early stages, in R&D phases, and require foundational capital to launch their firms.

Depending on your specific research route, you can potentially receive grants from government agencies, such as the National Science Foundation, the U.S. Department of Agriculture, the National Institute of Health, and the Department of Energy.

Bear in mind, that every single grant has different eligibility, different awards, and different submission requirements. Furthermore, grants are not eminent only, but also a spectacular stimulant for your business, plus you are not going to be obligated to pay back interest or give up equity.

Moreover, if you pay close attention, you will notice that a plethora of reputable biotech corporations, such as Pfizer, sponsor various size grants precisely for biotech startups. A lot of them are just for post-docs and post-graduates, however, some of them are intended for health professionals as well. 

You just have to be very thorough and conduct research in order to find the one that’s best for you. Remember that grants are generally very competitive, so ensure you are qualified for the one you’re applying for. 

Private Investments From Experienced Biotech Pros

This is a great strategy for anyone who is in their early stages. That’s the perfect moment to contact biotech experts to see if they are “in the mood” to invest in your start-up. Do it now before you start to have lots of hard data and you need way more money to support R&D.

What are you going to do if they want to know more about your plans regarding your future company? You can always tell them a few details concerning the services you are planning on offering such as downstream processing services, protein expression services, and many others. This way, you will earn their trust because they will realize how serious you are about it.

What Are Your Other Options?

Organic Growth

This is a very common option for a biotech start-up, especially if you handle non-FDA products. It normally involves research tools that you are going to sell to individuals in academia or maybe in the research industry.

At times, a business is able to prove its margins and consumers as they go by utilizing a "sell as you go" strategy. Furthermore, this enables you to keep full ownership of your corporation, however, this strategy is only recommendable for some types of services and/or products.

How come? Well, when you are relying only on organic growth/sales, you are at constant risk of not having enough money which leads to the "chicken and the egg" thing. There are many things that must be figured out before you proceed.

Just think, how are you going to pay manufacturers or others that are working for/with you if you are not able to expand your sales? And on the other hand, ask yourself, are you going to be able to expand sales if you cannot bring on more people who are going to help you with manufacturing?

Equity Investments (Venture Capital Investors And Angel Investors)

Another great way to get financial support for your biotech company is through equity investments. What does it represent? It means that you are going to trade ownership of your firm for money from various investors.

In order to achieve this, you will have to convince them that both you and your corporation are a good investment, hence, you need to make sure you've developed a solid business plan and that you have great sales skills. The most common types of equity investments include venture capital investors and angel investors.

Venture capital investors companies collect money from rich people, as well as financial institutions, and make a huge fund. Normally, these funds have both a beginning and an end. It is typically ten years, with the first five years having active investments in brand-new portfolio businesses.  

Angel Investors – Unlike the ones mentioned above, this type of investor represents individual investors, which means that they make individual decisions when it comes to investing. At times, they will create groups with a goal to simplify their due diligence and become much more efficient.

A reputable group is titled the Tech Coast Angels. Even though all of this sounds very appealing, you still have to do everything that’s in your power to convince every single one of these people to invest in your business.

University Funds

A lot of biotech start-up companies come from research that was started within universities. So if your firm is the product of some type of university invention, you can always turn to them for financial help.

Furthermore, a couple of universities have started (or are currently in the process) making funding precisely to invest in the growth of businesses with academic ties. If you decide to get involved in these programs, you just might get the opportunity to get financial help and even to tap into some amazing university resources.

Proven Ways to Fund a Small Biotech Business

Even though no one has said that convincing anyone to invest in your start-up company is ever going to be easy, it’s definitely worth trying. As you can see, there are a number of options, so if one of them doesn’t work out, try out others.

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