10 Steps to Start a Biotech Company

Thinking of starting a biotech startup and don’t know where to start? Here are 10 steps, in no particular order, that you and your team will probably have to take in order to get closer to creating a hopefully cool product.

1. Do Marketing Research

Market research helps you assess the potential viability of your product in the market, understand your unique and generic value proposition, gauge market size, and assess competitors and potential challenges. It is one of the most important steps you need to make to build your business plan.

Engaging with potential partners and fellow entrepreneurs through surveys or meetings can validate your assumptions, inform better prioritization, and provide insight into the genuine market demand for your solution​​.

Successful biotech startups like y-mAbs Therapeutics and Algenesis have arguably thrived by identifying unmet needs and offering solutions in ways existing players hadn’t. Market research helps determine the right timing for product launch and is critical in four key areas:

• Buyer Persona Research: Here’s where you put on your detective hat and ask, “Who are these mysterious buyers?” In the twisty world of B2B biotech, buyers could be anyone from Dr. Who to Dr. Strange, but most likely healthcare systems and pharmacy managers. It’s about knowing what makes them tick.
• Message Testing Research: You shout out your taglines and value propositions, and wait to hear if the echo sounds like applause or a yawn.
• Competitive Landscape Analysis: It’s all about finding out who’s doing what in your sandbox and how you can build the better sandcastle. Even if your company is a non-profit (unlikely in the field), competition still matters as long as you want to offer something better not for your ego but for changing something for the better.

Avoiding the Start-up Boo-Boos: Market research is your guide to not falling into startup traps like running out of cash or launching a product that everyone yawns at.

Find out more on how to conduct market research for your biotech startup.

2. Assemble a Cool Team

After acing your market research, the next step is making a team that is talented, committed, and, whenever possible, entertaining. This is where you curate a group of professionals, each bringing unique expertise and perspective to your biotech venture.

Key Roles in Your Biotech Ensemble:

• The Visionary Leader (That’s You, Or Is It?): As the supposed leader of this venture, you combine a clear vision with the drive to turn biotech aspirations into reality.
• The Scientific Expert: Integral to the team, this individual (or individuals) brings scientific knowledge and innovative thinking.
• The Financial Strategist: Vital for managing funds and financial planning, this role ensures the economic viability and sustainability of your startup.
• The Marketing Strategist: Adept in market dynamics and communication, this team member plays an important role in branding and positioning your product effectively in the market.
• The Regulatory and Compliance Expert: This role is key to ensuring adherence to legal standards and protecting intellectual property.

Finding the Right Candidates:

• Professional Networking Platforms like LinkedIn: A useful resource for connecting with potential candidates.
• Biotech Conferences and Seminars: These gatherings are ideal for networking with industry experts and identifying potential team members who are actively engaged in the biotech field. Websites like BioSpace list upcoming biotech events.
• Collaborations with Academic Institutions: Universities often house emerging talent and can be a source of innovative thinkers and potential recruits. The Association of University Technology Managers (AUTM) can help facilitate collaborations.

Feel free to check out some tips on how to assemble a cool biotech team.

3. Devise a Go-To-Market Strategy

To develop a successful Go-To-Market (GTM) strategy for a biotech startup, you have to follow recipes that are useful to most startups, including market analysis, target customer identification, competitive positioning, product differentiation, and a sales and distribution plan.

Your go-to-market strategy will be built based on your marketing research and, as such, will take into consideration the relevant ecosystem, the target problem, and your solution, unique value proposition (if it applies), sale strategy and distribution channel, and brand identity,

In other words, a comprehensive GTM strategy for a biotech startup should include a deep understanding of the biotech market, clear target customer identification, competitive positioning, strong product differentiation, effective sales and distribution channels, and dynamic branding and messaging. These elements, combined with planning and adaptability, should significantly increase the chance of a successful launch and establishing your biotech product or service in the market.

We have some tips on how to devise a go-to-market strategy.

4. Get Help from Third-Parties

More likely than not, you will need some expertise from third-party organizations. Here’s how to effectively leverage external support:

• Partner with Research Institutions: Collaborations with universities and research institutes can be a very good idea for biotech startups. They offer access to cutting-edge research, state-of-the-art facilities, and a pool of emerging talent. Such partnerships can accelerate R&D efforts and bring credibility to your startup.

• Leverage Contract Research Organizations (CROs): CROs can handle various aspects of the development process, from preclinical trials to regulatory submissions. Outsourcing these tasks to CROs allows startups to focus on their core competencies while ensuring that critical development stages are managed by experts.

• Utilize Legal and Regulatory Advisors: Expert legal and regulatory advisors can guide you through the approval processes, patent filings, and compliance requirements.

• Seek Financial Advisory and Accounting Services: Third-party financial advisors and accountants can provide valuable insights into funding strategies, financial planning, budgeting, and navigating tax implications.

• Engage Marketing and Branding Agencies: Specialized agencies can help in creating marketing materials, and executing targeted campaigns.

• Outsource Manufacturing: If manufacturing is not your core strength, consider outsourcing it. Contract manufacturing organizations (CMOs) can produce your biotech products under strict quality controls, allowing you to scale operations without the overheads of maintaining a manufacturing facility.

• Collaborate with Distribution and Logistics Firms: Partnering with specialized firms can help manage the complexities of product distribution, especially in a field where products may have specific storage and handling requirements.

• Tap into Industry Networks and Associations: Industry associations can provide networking opportunities, industry insights, advocacy, and resources beneficial for navigating the biotech ecosystem. They are platforms for collaboration, learning, and staying updated with industry trends.

• Engage with Patient Advocacy Groups: If your product is meant to make a change in healthcare, collaboration with patient advocacy groups can provide valuable insights into patient needs and perspectives. These groups can also aid in clinical trial recruitment and in raising awareness about your solutions.

Leveraging third-party expertise and services should enable you to focus on core areas while ensuring that specialized tasks are handled by experts, thereby enhancing efficiency, compliance, and market readiness.

To find out more, check out this guide on how to form biotech partnerships from the start.

5. Secure Funding

Securing funding is probably one of the most difficult steps for most biotech startups. There are several avenues to explore, including:

Grants and Public Funding

1. Government Grants: Sources like the National Institute of Health and the National Science Foundation offer funding opportunities, particularly beneficial during the R&D phase. Research government grant options at websites like grants.gov for a comprehensive list of opportunities​​​​.
2. Corporate and Nonprofit Grants: Many corporations offer grants for solving particular problems. Nonprofit organizations also provide grants for specific research areas.

Partnerships with Research Universities

Partnering with a university that has a biotech program can provide access to lab space, faculty, and other resources. This approach has proven successful for several biotech companies. Incubators can also be beneficial​​.

Engaging Biotech Experts

Experts may offer investment themselves or help in boosting your company’s credibility within the industry​​.

Venture Capital (VC) and Angel Investors

1. Venture Capitalists: They generally look for startups with some history of success or substantial data supporting their work. VCs provide significant capital but conduct rigorous due diligence and may require a say in company decisions​​​​.
2. Angel Investors: These are high-net-worth individuals who often invest in startups at an early stage. They may invest as individuals or part of a network and can provide funding even when the startup is in its nascent stages​​. Sites like AngelList can connect you with potential investors, including venture capitalists.

Private Investment

1. Private Investments: This involves connecting with biotech investors for early-stage business development. These investments can be categorized into different stages such as angel, seed, Series A, etc.​​.
2. Seed Funding: This follows angel investing and is often the first official equity funding stage, where venture capital firms traditionally get involved​​.

Leveraging Big Pharma Alliances

Partnering with major pharmaceutical companies can help derisk your business, gain credibility, and access new funding sources. Such partnerships can significantly advance a company’s technology and provide a path to regulatory approval and commercialization​​.

Government Funding for Advanced Stages

In addition to traditional venture funding, government grants and contracts can be extremely useful, especially for early-stage companies. These grants fund research and development and are typically non-dilutive. However, securing government funding can be complex and time-consuming​​.

Navigating the Regulatory Pathway

Strategies like repurposing existing drugs, targeting orphan or fast-track indications, and front-loading clinical trials can help derisk the startup and make it more attractive to investors​​.

Crafting a Compelling Investment Thesis

To secure substantial funding, you will want to focus on the problem you’re solving, quantify the market size and opportunity for returns, and highlight your idea’s unique position in the market​​.

As you can see, financing a biotech startup involves exploring a mix of grants, private investments, venture capital, angel investing, partnerships with research institutions and big pharma, and government funding. Each of these avenues has its own set of advantages, requirements, and processes, and you should do your best to select the right mix based on the startup’s stage of development and specific needs.

To find out more, check out this guide on how to secure funding for your biotech startup.

6. Early Stage Product Validation

Here are key strategies and considerations for early-stage product validation:

Securing Early-Stage Investment

• Target Core Investors: Establishing a significant long-term holding with established buy-side investors is a significant accomplishment. This often happens through structured financings like IPOs, late-stage private crossover financing rounds, or secondary follow-on offerings PitchBook, for example, provides data on investors and funding rounds.
• Expand Investor Base: Build relationships with a variety of potential key funds and investors to become a core holding. Use thought leadership and support from experienced IR and IPO advisory teams to attract additional investors​​.

Navigating Complexities of Biotech Industry

• Manage Risk and Build Strategy: This includes building a solid strategy, finding the right partners, mitigating risks, and understanding process development and manufacturing​​.

Leveraging Partnerships and Thought Leadership

• Recruit Industry Experts: Bringing industry experts onto advisory boards or partnering with key opinion leaders can enhance product positioning and build authority within the industry. Coupled with strong data, this approach can make the company more compelling to investors​​.

Attracting Early Investors

• Engage in Late-Stage Private/Crossover Financing: Before an IPO, it’s a good idea to attract early investors through private/crossover financing rounds. This helps secure significant ownership at a discount to the eventual IPO price​​.

Outreach and Networking

• Develop a Multi-Faceted Approach: This includes targeting specific institutional investors, attending medical and scientific meetings, publication strategies, and participating in sell-side investor conferences. For companies with limited experience, engaging an IR and capital markets advisory firm can be invaluable​​.

Finding the Right Partner

• Seek External Expertise: Engaging an IR and capital markets advisory firm with biotech fundraising experience can help in refining messages, positioning the company for an institutional audience, and expanding networks. This partnership can maximize brand awareness and attract more investors​​.

In short, early-stage product validation in biotech requires a multifaceted approach, focusing on market understanding, investor engagement, risk management, strategic partnerships, and effective communication.

Consider checking out our full guide on how to conduct early-stage product validation.

7. Navigate Regulation

Regulation can be complicated and you will need legal experts to guide you. Things to consider include:

Intellectual Property Protection

• Patent Protection: File patents to protect inventions, research findings, and unique processes. Engage a patent attorney with biotech expertise for thorough protection.
• Trade Secrets: Implement robust internal policies and use non-disclosure agreements (NDAs) to keep sensitive information confidential.
• Trademark Registration: Register your brand name and logo to prevent unauthorized use by competitors​​.

Regulatory Compliance

• Understand Regulations: Familiarize yourself with the rules for your specific biotech sector, like drug development or gene therapy.
• Engage Regulatory Consultants: Collaborate with experts for guidance on meeting regulatory requirements and navigating complex approval processes.
• Maintain Detailed Records: Keep comprehensive documentation of research, development, and testing for audits or inspections​​​​.

Clinical Trials and Testing

• Develop a Clinical Trial Strategy: Outline trial objectives, design, and methodology, aligning with regulatory requirements.
• Obtain Necessary Approvals: Apply for approvals from regulatory agencies, local review boards, or ethics committees.
• Adhere to Good Clinical Practice (GCP): Ensure trials meet GCP standards, which outline ethical and scientific requirements for clinical research​​.

Quality Management Systems

• Implement Quality Management: For drugs and biologics, follow the ICH Q10 system which includes management buy-in, defined quality policies, resource management, and periodic reviews.
• For Medical Devices: Manage design control information, manufacturing processes, and ensure comprehensive documentation and quality assurance​​.

Navigating Different Jurisdictions

• Understand Regional Differences: Regulatory requirements can vary significantly between jurisdictions. Startups need to be aware of these differences and prepare accordingly.
• Harmonization Efforts: Organizations like the International Organization for Standardization (ISO) and the European Medicines Agency (EMA) work towards harmonizing standards across regions, which can aid in compliance efforts​​​​.

Licensing and Collaborations

• Negotiate Favorable Terms: Work with legal counsel to draft contracts that protect your startup’s interests and IP rights when entering licensing deals and partnerships.
• Evaluate Partners: Assess potential partners’ financial stability, reputation, and track record before agreements​​.

Funding and Financing Considerations

• Explore Various Financing Options: This includes venture capital, government grants, and strategic partnerships. Each funding source may have different regulatory implications and requirements​​.

Regulatory Strategy for Startups

• Develop a Regulatory Strategy: Entrust this to personnel skilled in managing documentation, testing, and compliance procedures.
• Use Accredited Tools for Compliance: Implement a coordinated and automated Quality Management System (QMS) to standardize processes and ensure compliance​​.

Regulatory Affairs and Startup Success

• Focus on Regulatory Pathways Early: Understanding potential regulatory pathways and setting aside a budget for quality regulatory advice can significantly improve a startup’s chances of success​​.

Startups must also consider the implications of their regulatory strategies on funding, partnerships, and overall business development. Partnering with experts and consultants in this field can provide invaluable guidance and support throughout the journey.

Check out the full guide on how to navigate regulation in the biotech ecosystem.

8. Establish Data Infrastructure

Establishing a solid infrastructure enables efficient data management and paves the way for leveraging advanced technologies like AI. Consider the following:

• Multi-Vault Storage with Unified Search: Solutions like CDD Vault offer the option of deploying multiple vaults for storing various types of data, like molecules, chemical reagents, and DNA-encoded libraries, which can be searched efficiently across vaults​​.
• Unifying Data from Different Disciplines: Tools that support the needs of both chemists and biologists are very useful. This involves defining new protocols, adding data fields, and registering both molecules and biological entities​​.
• Converting Data into Insights: Intuitive and powerful visualization and analytic tools help in viewing and tracking molecule and experimental data, facilitating the conversion of data into actionable insights​​.

Best Practices for Data Management

1. Appoint a Chief Technology Officer/Data Evangelist: From the outset, incorporate a data-based mindset and discipline, understanding the value and role of all information being captured.
2. Adopt an Architecture-Based Approach: Instead of looking for the optimum software application, focus on embracing data standards and ensuring easy export and combination of information.
3. Develop Data Standards: Engage in industry consortia to encourage standards-based data exchange, such as CDISC and ISO IDMP.

Challenges and Solutions

• Data Management Integration: Integrating disparate data sources, rationalizing them, and ensuring data interoperability is a key challenge. Platforms like Scispot offer solutions for building robust data infrastructure in the biotech industry​​.
• Secure Collaboration: Utilize platforms that enable secure collaboration, crucial in the pharma industry, with granular access controls for various stakeholders like CROs, academic partners, and other pharma companies​​.

Future of Big Data Infrastructure in Biotech

• Advancing Data Lakes and Lake Houses: The focus is on developing next-generation data lakes and lake houses. Vertical software-as-a-service solutions tailored to the biotech industry are emerging, enhancing big data infrastructure and promoting innovation​​.

With the right approach and tools, you should be able to set up a data infrastructure that supports growth and, hopefully, innovation.

Feel free to check our full guide on how to establish data infrastructure for your biotech startup.

9. Incorporate

Incorporating a biotech startup involves several key steps, including:

1. Ensure intellectual property (IP) protection for your technology​​.

2. Identify Founders and Key Personnel

• Determine their roles, commitments, and equity stakes​​.

3. Find a Good Attorney

• Choose an attorney with expertise in advising start-up biotechnology companies

4. Incorporate as a C Corporation with Investor Interest

• In the US, most companies start as an LLC and then later convert to a Delaware C Corporation. If you are located in another country or plan to become multinational, it’s best to consult with business experts located in the countries that interest you or otherwise with a good understanding of the relevant business regulations.
• Incorporate early to issue founders’ stock at a low valuation and prepare for raising funds or securing grants​​.

5. Consider Operating as a Virtual Company Initially

• Minimize risks by keeping your day job and building the company cautiously.
• Avoid spending money on physical office space during the early stages​​.

Additional Considerations:

• Importance of Patent Attorney: Engage a patent attorney to help with IP issues, particularly around university-based inventions​​.
• Documenting Your Journey: Keep detailed records of the technology’s development and experimental methods​​.
• Transition from Academia to Industry: Focus on generating reproducible science, ideally validated by an external, high-quality independent lab​​.
• Pathway to Clinical Trials: Conduct a technical and commercial assessment and develop a target product profile (TPP) for your product​​.

Partnering with experienced legal and business professionals can provide invaluable guidance and support throughout this process.

10. Shrewd Marketing

Once your product is developed and approved, do your best to build brand awareness, after all, most people likely don’t know you or your capabilities. If you are a B2B, the focus should be on the needs, interests, and challenges of organizational customers. As a B2C, on the other hand, you will want to understand the everyday needs and behaviors of individual consumers.

Utilizing websites, social media, and email marketing provides scalable communication platforms. Implementing search engine optimization (SEO) techniques and targeted advertising enhances visibility. Creating engaging content like blogs, whitepapers, and webinars is helpful in establishing thought leadership.

In biotech, educational content marketing is highly effective. Producing informative content that educates the market and builds credibility, while explaining the science behind products, addresses the challenges they solve.

The digital transformation in sales and marketing has brought about the need to embrace technologies like 3D product demos and digital marketing campaigns. These tools facilitate real-time engagement and allow for the adaptation of strategies based on feedback. Moreover, aligning marketing strategies with regulatory standards and ensuring transparency and ethical communication in promotional materials is vital due to the regulatory nature of the biotech industry.

Thought leadership is another important aspect, where credibility is established by publishing in scientific journals, speaking at conferences, and participating in panels. Hopefully, you will focus on creating valuable content as opposed to simply boosting your authority in a field.

You may well want to take a look at our full guide on how to build brand awareness for your biotech startup.

Bottom line: Starting a biotech company is more or less like starting any large company

Startups tend to follow similar recipes in order to build their products and services. Of course, there are some niche-specific things to consider, but you won’t notice them from an outline. More so, not all companies necessarily need to follow the exact same outline, since each story may have its peculiarities.