Biotechnology is a booming industry that has a strong potential to generate billions of dollars in revenue, support countless livelihoods, and catalyze scientific discovery. But as with any industry, early-stage biotech companies need sufficient funding to do the life-changing work that they do. Research and development (R&D) activities that are meant to create innovative therapies, treatments, and other products require hefty amounts of investment, which can be difficult to come by for firms that are just getting off the ground. More than that, there is also the question of building the laboratory, recurring laboratory costs, and other expenses related to the upkeep, maintenance, and operations of the lab. These can all be constraining for up-and-coming biotech companies, which also need to worry about meeting project timelines.
With that being said, entrepreneurs looking to penetrate the biotech space must be aware of the challenges associated with financing. If you’re a biotech entrepreneur seeking to kickstart your journey in this high-stakes industry, read on to learn about the different strategies you can take.
Opt for Cost-Effective Lab Options
Lab and equipment costs are among the biggest expenses that biotech companies face, especially in their earliest phases. Along with ample square footage, labs need dedicated infrastructure that meets biosafety level (BSL) requirements for crucial “wet lab” matters such as organism analysis, waste disposal, equipment sterility, and power supply. There’s also the need to secure government approval for lab operations, which is another financial concern altogether.
If you’re a biotech entrepreneur who prefers a dedicated lab space but doesn’t want to go through the long wait lists for incubators, you can try renting a co-working lab space. In particular, facilities with at least a biosafety level 2 facility designation where moderately hazardous work can be done. These lab spaces have the equipment, resources, and infrastructure necessary for early-to-mid-stage startups that have yet to generate a sustainable return on investment (ROI).
Many biotech companies prefer this option because it brings fewer headaches when it comes to financing and regulatory hurdles. Singapore, in particular, is favored by many biotech startups due to its strong government support for science and technology (S&T), its competitive economy, its top-caliber talent pool, and its potential as a jumping-off point for expansion in Asia. Through options like co-working labs in startup-friendly countries, entrepreneurs can gain access to a breadth of industry opportunities and make their overall expenditure a lot more manageable.
Apply for an Incubator or Accelerator Program
One of the financing solutions mentioned previously is the biotech incubator, which can be a viable option for early-stage startups. In essence, biotech incubators fill the need for matters like equipment, rent, insurance, and support staff, to name a few. Usually, incubators are launched by private and public entities, including non-profit organizations (NGOs), that can provide long-term support to startups seeking to develop their concepts.
Accelerators work similarly to incubators, except that they mostly cater to startups that already have a minimum viable product (MVP). They also typically operate under a shorter timeframe, so startups under this arrangement are more driven to deliver results within a clearly defined schedule. Most accelerators fall under the sponsorship of venture capitalists (VCs), angel investors, industry experts, and company founders, who can provide direct mentorship and funding for promising startups.
Regardless of which program they choose, biotech companies must be prepared to go through a tedious application process geared towards business models with strong value propositions. There’s also a chance that sponsors would want a share of the profits and an equity stake in the business, which means less control for the founders. Still, applying for sponsorship is worth considering, especially for startups aiming to gain access to capital and speed up time-to-market.
Join Competitions
Public entities may also launch competitions with an attractive prize pool that can help early-stage firms gain momentum and quicken the idea-to-market pipeline. Federally funded programs, for instance, often launch tiered competitions where startups can compete for prize money throughout various stages of the R&D cycle.
Companies can sponsor competitions like this, too. Therapeutics manufacturer Cytiva, for example, previously held their BioChallenge competition in Southeast Asia to help promising startups scale up their work in cell engineering, purification, isolation, and process development. Winners of the competition get to secure up to SGD 200,000 or USD 142,000 in prizes.
Overall, the prizes that startups will secure through competitions can be used to fill the financial gaps they might be facing as they try to grow their ventures. On top of that, there’s the prestige of edging out competitors thanks to a winning idea and the talent to see it through.
Final Word: Resourcefulness Goes a Long Way
In an industry as lucrative as biotech, entrepreneurs need a lot of grit and resourcefulness to make their bootstrapping efforts work. There may be a need to opt for cheaper ways to run a startup, perhaps by using less expensive equipment, working in alternative lab spaces, or running operations in areas with cheaper logistics and a lower cost of living.
Still, it is possible to make these growing pains less burdensome through effective strategic thinking. In the end, it’s all about having determination, passion, and an innovative mindset focused on turning novel ideas into global game-changers.
