Biotech startups have become quite popular today due to the development of advanced medications for treatment of cancer and other diseases. Both financiers and the general public are paying attention to these startups for seeking opportunities and profits. Also, a large number of firms are becoming public and trying to merge with renowned corporations.

The market is known to be good and is brimming with great opportunities which make it quite difficult to convince the investors. Thus, biotech start-up planners must go through the tips given below to boost their probability of having a successful campaign for fundraising.

Seek Financial Notes

Any new business requires large amount of startup capital to deal with their overhead costs, licensing and permits, product production and development and for research work. After determining the business needs as per the company’s size and development stages, you can look for the several options through which to acquire funding. Some of the common options have been discussed below.

Grants

Grants are easily available for supporting academic collaborations for facilitating invention commercialization. A large number of biotech projects are collaboratively funded by the government. Nevertheless, funding is associated with a number of policies related to data sharing that have to be followed. There are a number of universities who are being assisted by organizations in commercialization of the discoveries made by their scientists.

In the same way, there are non-profit based and biotech companies who are ready to sponsor various grants for start-ups in their field. Some of them are only for post-docs or post-graduates whereas others are for the health professionals. The only step here is to look for the right one that suits your start-up.

Private Investors

There are large numbers of start-ups which are dependent on funds given by private investors who are interested in biotech and have faith in such products. They can be family, acquaintances or friends who have enough money. They can easily be convinced to invest in your product as they do not demand any control over the company they invest in. The only drawback surfaces when the company dissolves as you will surely lose your good relations with them.

Angel Investors

In some cases, family and friends are not of great help and angel investors come into action. They can be defined as individuals who have enough capital for investing privately in startups. They are sometimes willing to shell more than $500 thousand on such projects. However, such investors demand a huge share of the firm and also adequate control. The only benefit from such investors thus comes in the form of advice and experience. There is generally no personal loss of relationships with such investors.

Venture Capitalists

They are similar to angel investors as they also ask for huge control over the decision-making and operations of the company. They are quite a significant resource and most commonly preferred in the biotech sector. Venture capitalists like to be sure that they are investing in a good project which will provide them with strong returns. They will keep rallying around the project assisting in promotion, management and will also provide adequate contacts for further investments. 

Bank Loans

Bank loans are another alternative that provide loan for startups but you have to make sure that you have a good business plan for this. It is generally easier to get small loan for business. Sometimes you can look for personal loans also to begin with. The only drawback is that the loan needs to be repaid in case of business failure. The funding acquired this way might be less than what can be acquired from the other investors. When you opt for debt financing like credit cards, lines of credit and loans, you indicate that you have faith in the investors and are ready to take the risks to be successful.

Public Offering

This option is preferred usually by well-established firms but can help others in acquiring additional funds for completion of a project. It is not always a win-win strategy to sell shares which is why it is important to consider the pros and cons while going public before the launch of an IPO.

Crowdfunding

Some of the projects today opt for crowd-funding to become successful. This model is best for firms which are capable of pre-selling a product which will get released over a short time period. For example, equity crowd funding is quite popular with life science sector. Funds more than €1M can be raised by biotech startups through equity crowd-funding as it attracts large number of small investors. This model is however new as it takes a lot of time to acquire returns.

Summary of BioTech Funding Options

It has become quite easy today to begin with a biotech company just like any tech company due to easy availability of finances. A biotech startup raises money incrementally which helps it in maintaining control over the company. You also have the power to focus on your personal ideas rather than rely solely on the ideas of the VCs.

This indicates towards the beginning of a bombardment of an era of biotech companies. With passing time, these firms will be similar to tech firms which are run by founders capable of sustaining the passion of living the companies built by them and are willing to make the world a better place.

It is very important to be patient while navigating the fundraising journey for a start-up. When compared to any other company, biotech firms require large amount of capital and work harder to acquire it. Nevertheless, the awards are also big for them which make it important to build more of these companies. You must start building your network and accumulate the required set of data. Today is the right time to indulge in a biotech startup but it is not easy to get the right sources of funding overnight.

Irrespective of everything, funding sources will always be available for innovative and ambitious biotech startups. Great commitment, a unique product and ingenuity is all which is needed for being successful.