Biotech Startup Funding – Tips on How to Raise Your Capital

biotech startup funding

If there is one type of business in particular that requires years of research, safe and ethical sampling, scientifically backed up studies, and huge financial capital, it’s those in the biotech industry. In previous years, life science companies saw a slow growth when it came to attracting potential investors to fund their projects. But with the advent of new technologies and breakthrough discoveries, the coming years look undeniably bright for the biotech industry.

With the development of new medications aiming to treat cancer and diseases, biotech startups are gaining more public attention, especially from financiers looking for opportunities to grow net profits. Adding to that, there is an increasing number of companies going public and merging with other corporations, and the fundamentals of the biotech market remain reasonably strong.

Although the market is good and filled with wonderful opportunities, it’s not easy to convince investors. If you are a biotech startup planning to raise capital for your business, check out these tips to increase your chances of landing a successful fundraising campaign.

#1 Know your investors and yourself

Just because venture capitalists have the resources to support a startup doesn’t mean that they’ll take on every project. Keep in mind that as a startup company, every investor is different and your project might not be the right fit for them. You cannot please everybody with your brilliant idea, and some investors just don’t have the same goals as your business.

Before pitching your biotech business, it is crucial to know who your potential investors are and what kind of investors you’re actually looking for. Review the background of the company and look for similar projects they’ve previously completed. Likewise, make sure that they have actively funded startups in the last four years to gauge their financial stability.

  • Every investor has their own interest, either early funding or late-stage finance.
  • Look for firms who have previously invested in biotech startup businesses.
  • Make sure that you tailor the investor to your pitch, not the other way around.

#2 Be creative when introducing your business

When approaching angel investors to introduce your business to, be as creative as possible. You need to impress them the best way you can, and there’s no room for cold calls or cold emails. If you opt to play safe and use a generic approach when introducing your startup business, be assured that 99% of the time you won’t get any answer at all.

Your first point of contact with investors should make a lasting impression, so find a unique and exemplary way to send your message across. Utilize the convenience of social media and reach out to them on Twitter, Facebook, or even Instagram. While formality and professionalism count, investors are looking for enthusiastic and passionate startup companies who will do everything to achieve and savor success.

  • Hiring advisory firms adds to the costs and they don’t guarantee successful funding.
  • Impress investors with your desire to improve and change people’s lives.
  • Use your wit and charm to attract financiers, and let them feel that you’re different from other startups.

#3 Present a credible funding plan

Another thing to note when looking for biotech startup funding resources is to present credible capital needs. Your funding plan should be as realistic as possible and it should cover the needs of your business in the long term. While you don’t need to be 100% accurate, try to make it as precise as possible so investors won’t question your financial plans.

Likewise, as a startup biotech company you should never rely on an IPO or Initial Public Offering. Although most businesses skyrocket in value when they go public, there are many stages you need to complete first before you reach this stage. A great example would be to first carry out and compile several clinical trials heavily supported by strong evidence, thereby proving the success of your products or services. Remember that you are just starting to build your business, and your current predictions of where things will go post-launch may not hold for the future.

  • When discussing your financial plan, always keep your funding analysis on hand.
  • Study and rationalize your numbers instead of memorizing totals and figures.
  • Openly address the liquidity path as this is important for many investors.

#4 Mitigate risks

With every trade comes risks that could make or break a startup business, and the biotech industry is no exception. When looking for sources of funding, show you’ll be able to manage potential risks that will surely emerge as your project grows. Remember that this industry is all about risk management and mitigating solutions, so the sooner you discuss these things with potential investors, the greater possibility you’ll have to raise capital for your business.

Providing solutions to minimize, if not completely eliminate, risks requires a solid legal basis. To make sure that your requirements, options, and license framework are all written in a logical manner, consult a trusted law firm to conduct reviews. Make sure that you choose legal counsel with substantial experience in biotech and make sure they are willing to work with you to mitigate potential risks.

  • Most law firms offer huge discounted rates during the seed or startup phase.
  • Risk reductions should be done in accordance with the stage of development.
  • Explain your reasons why an investor should take part before the onset of future risks.

#5 Get the right team

The last of these biotech startup funding tips is all about forming the right team for your startup business. Your team should have the perfect balance between experienced professionals and young talents bursting with enthusiasm. Deep experience counts the most, so include highly qualified veterans who can prove their point in one standing and who you trust won’t miss meetings.

Venture capital investors will look at your whole team and judge the people behind your company. Keep in mind that when it comes to biotech startups, talent is everything, and everyone should be driven by working in complex science. When forming your team, make sure to:

  • Look for those with years of training and paramount portfolio learnings.
  • Create a solid team that will stand the test of time, filled with people brimming with credibility.
  • Pick your SAB or Scientific Advisory Board carefully, consider current requirements and not former positions.

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