Starting a biotech company requires a lot of capital. While this can be intimidating, a couple of biotech companies (which started with a shoestring budget) are out there making waves. This means there is hope if you know how to start the building process correctly.
Your first worry should not be based on how to progress without funding or how to raise funding without evidence of viability. It should be on providing a health solution that is unique or better than that of your competitors.
This guide is a compilation of the essential steps you must take to lay the proper foundation for your biotech company.
It will also provide the background to hit milestones with a minimal budget in the early stages.
How to Start a Biotech Company (in 8 Simple Steps)
1. Execute market research
Starting a biotech company begins with having a good idea, product, or solution with a high chance of succeeding in the market. Executing proper market research is the only way to know if your biotech product will be viable.
During this research, you get to ask yourself questions like:
- Who are your consumers?
- What is your value proposition – both unique and generic?
- How big is the market you are about to go into?
- Are there any competitors and what makes your product better?
- What to expect in terms of challenges and milestones?
At some point in this research, you must interact with potential partners and fellow entrepreneurs. This may take the form of a survey or a physical meeting.
This will help you validate your assumptions, teach you better prioritization, and provide insight into whether there is a genuine market for your solution. Once you confirm a genuine market for your product, you can run a proof of concept.
2. Decide where to set up your laboratory
Before running a proof of concept, you need to decide on the location of your lab. There are two major locations for starting a biotech company – a university laboratory or one provided by an incubator program.
You must contact the tech transfer office (TTO) if you are setting up at a university lab. On the other hand, if you opt for an incubator program, you need Janssen Labs or QB3.
Both options are acceptable because they can provide you with all the resources you need to run a proof of concept, help you form a team, connect you to potential mentors, and provide funding from federal or private bodies.
However, you should note that most universities have a standard policy that affects your intellectual property (IP). This gives them the right to a percentage of your company’s revenue.
3. Run a proof of concept for your idea
A proof of concept is a set of data demonstrating your product’s commercial viability. It is different from market research because it contains only original data from laboratory experiments.
In other words, if your startup is about a drug target for a particular disease, the proof or laboratory data that supports the efficacy of your drug should be available here.
4. Get intellectual property (IP) protection
Now that you have an IP, it is necessary to protect it. This will give you exclusive rights to practice and market your products to customers and investors. If you are not affiliated with a university’s tech transfer, you can hire a patent lawyer for drafting legal patent claims for your IP.
Here are some tips to better protect your IP:
- Ensure your patent claims reflect the final product rather, not just methodology.
- Keep your notes and other records of your invention
- Protect confident disclosure and material transfer agreement documents
- Never disclose your IP without establishing a confidentiality agreement.
5. Set up your team and advisory board
Creating a biotech startup requires many activities that you cannot do alone. This is why assembling a team is essential. You have to be creative and inspiring, and your company’s vision can help you recruit your first employees.
These employees must have the needed passion, a set of different skills, and experience that can support and bring your vision to fruition.
For example, if you are working on an immunology drug as a cancer biologist, you need professionals in the field of pharmacology, immunology, and drug development experience.
6. Incorporate your company
Incorporating your company will require the service of a chartered account and corporate lawyer. This will help you establish commercial agreements, and apply for trademarks, grants, or funding, among other things.
Common incorporation options include a C-corporation(if you are in the US) or a Limited Liability Corporation (LLC). However, you should tilt towards a C corporation if equity is your main selling point to employees and investors.
7. Engage biotech incubators, angels, and VCs early
Engaging biotech investors early is one way to get funding if you and your co-founders cannot run the company effectively with your money or if there is a need for expansion. However, before applying for these funds, ensure you have a thorough business plan.
8. Digitize your startup
Going digital with your product cannot be over-emphasized. This is because it makes your biotech solution accessible worldwide and helps you keep your record or data (confidential or not) intact.
With digitalization, you also get the opportunity to automate workflows and run an analysis of your company’s strengths and weaknesses.
FAQs
Which country is No. 1 in biotechnology?
The United States tops the list in terms of biotechnology research.
Other top countries include China, the United Kingdom, Singapore, Sweden, and Germany.
Do biotech companies make money?
Successful biotech companies profit from $50 to $500 million yearly.
Why do most biotech companies fail?
Biotech startups fail due to lack of capital, flawed research, evolving market, and inexperienced leadership.
Conclusion
Biotech startups generally aim to improve biological lives via research and experiments. In other words, it is a niche that requires decent funding and the ability to connect your solution to whoever needs it.
Creating one requires market research, collaborations, and digitizing your solution. To gain traction, your solution must also be unique or better than what already exists.
If you combine this with quality consistency, good customer service, and regular improvements or upgrades, you can be confident in making profits. Your value can also help you leverage further funding in an unending cycle.
I hope you found this article helpful. Perhaps you would like to understand the relationship between businesses and environmental safety; see my guide on the 10 strategic ways businesses protect the environment.
Thank you for reading.
