The Biotech Founder’s Guide to Early-Stage Funding
Unlike less capital-intensive industries, the biotech field isn’t one where a founder’s own assets can get the business off the ground (at least not in most cases). More often, startup funds must come from seed capital.
As the word “seed” implies, these funds help to nurture a new biotech concept into life, typically at the preclinical development stage. Sometimes seed capital comes from the founder’s family and friends, although that may be less likely for a biotech with significant capital needs. More likely sources of seed capital for a biotech startup include:
✔Angel investors with the resources to make six-figure investments
✔A subset of venture capital (VC) firms that target biotech startups and have the resources to make investments in the million-dollar range
✔Grants from academic institutions or government agencies like the US National Institutes of Health
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What Type of Early-Stage Funding is Right for Your Biotech?
To achieve a successful fundraising round, it’s vital that you choose the type of capital that’s best for your biotech based on the company’s maturity stage and your current runway.
Preparing to Raise Capital for Your Biotech
- Invest in an accounting solution.
- Develop clear, accurate financial statements.
- Prepare to provide more sophisticated financials.
How an Outsourced Provider Like Scrubbed Can Help
Trying to raise capital while you’re also running a biotech—setting direction, managing the operation, and likely working at the bench—can be an overwhelming undertaking. If you don’t have an accounting or finance background, it can be especially difficult to ensure your finances are in order before approaching the investor community.