Starting a biotech company is a daunting journey filled with both challenges and opportunities. Unlike many other industries, the path from idea to market in biotech can be particularly long. To build their biotech company, founders must navigate a labyrinth of scientific validation, regulatory requirements, and fundraising challenges before their innovations can reach patients.
According to Paul Jaminet, chief executive officer (CEO) of Angiex, “Building a biotech company takes confidence – to pitch, to lead, and to sustain belief in your vision through thick and thin for the decade or more it takes to build the company.”
From choosing your area of focus to landing your first funding after building a clear strategy, attracting talents, and grasping the importance of intellectual property (IP), the biotech process is no walk in the park. Beyond these concrete hurdles, Xavier Duportet, co-founder and CEO of Eligo Bioscience, noted that starting your biotech business can be lonely.
“I started the company 10 years ago in France, and I would say the biggest challenge at the time was being quite alone as a young entrepreneur in the biotech world and building credibility to start the company. It was hard to find mentoring back then, but the environment changed a lot in Europe since – for the better – although there is still a stronger network effect in the U.S.”
Yet, for those willing to embrace the risks, the potential rewards are immense. In this article, we provide advice for aspiring biotech entrepreneurs provided by founders who have successfully gone through the process.
Table of contents
Choosing the right focus
One of the first critical decisions for any biotech founder is selecting the right area of focus. Unlike more general industries, biotech requires deep expertise in a specific field, combined with a keen understanding of unmet medical needs and market demand. The right choice can position a company for long-term success, while the wrong one can lead to wasted time and resources.
Duportet was doing his PhD between INRIA in France and MIT in Boston, working with David Bikard at the Rockefeller University on phage and CRISPR when he started the company, and 2013 was an exciting time for CRISPR. “We were the first to demonstrate that when you deliver CRISPR to bacteria and cut the bacteria’s chromosome, it dies. So that was the foundational IP, essentially transferring gene editing to the microbiome. We are now set to get to the clinic in the next 18 months for a lead indication in acne vulgaris, as the first topical CRISPR treatment.”
He described the decision of its biotech’s focus as driven by the technology. “At Eligo Bioscience, we launched the company on a technology push – we had a brand new technology platform – so that is a solution. Alternatively, you can do a market pull, meaning identifying a problem to fix. However, this is highly dependent on the timing of fundraising, the market, and the technology you have, so there is no right or wrong answer about how to pick the technology of your company. Just make sure you are solving a problem and that you want to spend the next 10 to 15 years working on it.”
Jaminet agrees that science guides this direction: “I would say that if your science doesn’t tell you which area of biotech to focus on, you don’t have enough science to justify starting a company.” For his company Angiex, its focus on antibody-drug conjugates in oncology was a natural extension of the discoveries made by its scientific founders. For him, a strong scientific foundation is crucial, as it not only justifies the company’s direction but also helps attract investors and partners who see the potential in a well-defined focus.
Alexander Shneider, founder and CEO of CureLab Oncology, compared starting a biotech company to a hunt. “A good hunter reads the signs and follows the trail. A bad hunter ignores the subtle clues, hoping for a lucky break. I started with vaccines, which led to oncology, then chronic inflammation, even aging, following where the science led the company.”
Founders should carefully evaluate their market landscape, looking for gaps where their technology or expertise could offer a competitive advantage. Understanding the potential patient population, the competition, and the evolving needs of healthcare providers can help define a focus area that is not only scientifically promising but also commercially viable. This blend of personal expertise, scientific validation, and market awareness forms the foundation of a successful biotech startup.
In summary, choosing the focus of your biotech company starts with a foundation of solid science. From there, it’s crucial to ensure that your solution addresses a real problem and that there is a viable market for it. A technology push shouldn’t be a leap of faith, read the signs as you would for a market pull.
Importance of university collaborations early on
Starting a biotech company can be lonely but that doesn’t mean you have to go through the process alone. In the early stage, universities and other institutions can be decisive allies to build credibility.
As Duportet humorously puts it, it’s about “street cred” and synergies. “Two of the co-founders of Eligo Bioscience were professors at the Massachusetts Institute of Technology (MIT) and Rockefeller University – their presence gave some credibility to the company. Publications with these Universities helped too – we published two Nature Biotech papers with these labs, adding weight to the technology. Being incubated at the Pasteur Institute created some synergies for us so that is something to look out for.”
Jaminet also reminisced about the importance of universities in the early stages of Angiex. “We obtained key IP from a research hospital, Beth Israel Deaconess Medical Center in Boston. I would say the greatest value we got from them was the ability to use its Animal Research Facility.”
He is, however, more skeptical about partnerships for biotech start-ups.”It is hard for small companies to form partnerships, they are generally labor-intensive and can easily divert a company from its mission. You don’t want too many cooks in the kitchen or too many decision-makers with influence.”
According to Shneider, university partnerships can be a blessing or a curse, depending on the deal structure, so choosing your pattern requires scrutiny. “We succeeded by using universities as high-IQ CROs. Our deals prevented premature publication, ensuring patent protection. We kept these university researchers laser-focused on our goals, even when it clashed with their academic instincts. But not every principal investigator is open to this; many prioritize publishing over potential cures.”
Overall, universities and research institutions provide a great source of scientific innovation and initial technological development for new startups. “As well as being tremendous sources of talent, they are also great places for aspiring researchers to be able to work on breakthrough innovations that can form the basis for new startups. We are seeing increasingly more scientific enterprises emerging from academia,” said Mati Gill, CEO of venture studio AION Labs, a pharma-specialized venture builder.
University partnerships undeniably are crucial for emerging biotech but, very much like investors, the company must choose wisely who it partners with to build on synergies.
Attracting the first investments for your biotech startup
Once you’ve nailed down your focus, perfected your science and secured your IP, you need funding. But how should you pitch your business to convince investors to invest in your company?
Duportet said wanting to change the world is one thing but you have to be concrete about your project – after all, it is business. “You have to make sure you are not pitching your technology, but a product, with a clear timeline of value inflection points. Often in biotech people are fascinated by the technology – I still am – but to secure funding, it is more about what’s the point of that technology, what problem it can solve, and how valuable it is to solve it.”
Duportet added that the best way to be successful in your funding endeavor is to be as informed as possible to understand the investors’ perspective. “You also need to share the same language with investors – you need to learn about the basics of fundraising. You want them to invest in your company but you need to know how they work too. Basically, do your homework – if I had to recommend one book, it would be ‘Venture Deals’ by Brad Feld and Jason Mendelson.”
Additionally, mapping out the plan for your company to make it clear toward what investors are putting their money. “Plot out the path your company will take through to revenue or a possible exit point based on substantial evidence – e.g., clinical proof of concept for a drug. What are the major value inflection points and proof points? How much money will be required at each stage, and where will be the inflections in your burn rate? What will be the points in time at which you will raise large financing rounds, and what data or experimental evidence will you need to have in place to recruit investors?” said Jaminet.
All founders we talked to agreed investors primarily invest in people. “Investors are better at judging people than science,” said Jaminet. “Investors are looking for a good team with solid science. The team should understand the business and have a clear plan – not just empty promises about the technology – but a team that understands how to spend the cash to create value milestone after milestone,” added Duportet.
Not all investors are the same – according to Shneider, different investors have different appetites. “Some seek quick returns, others are patient. Some focus on specific therapeutic areas, others are opportunistic. It’s crucial to understand their investment thesis and tailor your pitch accordingly. Show them how your company aligns with their goals and risk tolerance.”
Remember, fundraising is not only about looking good for investors, it’s also about finding the right fit for your company’s vision. That is why Jaminet advises to keep planning on fundraising incessantly. “Always be building relationships with potential investors. Alternate between priced equity rounds and convertible notes; as soon as you close an equity round, open a note and raise into that.”
But everything doesn’t always work out as planned. In fact, it rarely does and you will face rejection. Shneider noted that history is filled with great inventions that were initially rejected. “Don’t be discouraged by rejection – be grateful for those who see your work’s value.” Similarly, Jaminet advises not to be too greedy in the process. “You have to make everyone else a winner. Often, you have to build relationships by taking a loss yourself in the first transaction. Be prepared to make everyone else a winner, and odds are you will also become a winner in the end.”
Entrepreneurs should not become overly focused on the exact monetary value assigned to their company during funding rounds, especially in the early stages. Instead, the priority should be on securing the right investors who can support the company’s long-term growth and success.
“Don’t let yourself get bogged down in valuations. In the initial funding stages, choosing the right investors and securing the funding necessary to get you where you need is far more important than valuations. Choosing your investors will be one of the most important decisions a founder will have to make in their entire journey,” said Gill.
It is also important to take into account the multiple sources of funding biotech startups can pursue depending on the path they outlined. “It is important to understand which are the appropriate funding sources. For example, it could be grants, angel money, or private equity. Depending on the business plan, any or all of these could be appropriate,” reminded Jennifer Good, CEO of Trevi Therapeutics.
To sum it up, you should put yourself in the investors’ shoes to present a viable product responding to a market need and be on the lookout constantly to find adequate investors for your company.
Navigating regulatory hurdles and intellectual property
Navigating the regulatory landscape can be another major hurdle in starting and building a biotech company. It might not be what founders are most interested in at first, but overlooking some regulatory aspects can slow you down or limit your possibilities in the future. Biotech companies must engage with regulatory bodies like the Food and Drug Administration (FDA) in the U.S. or the European Medicines Agency (EMA) in Europe.
As Good advises, “Engaging with regulatory authorities at appropriate times in development is always important. Equally important is getting regulatory advice from trusted sources who have gone through the process.” Missteps in this area can delay progress, making strategic planning essential for startups looking to avoid costly setbacks.
This means that, from the earliest stages, biotech companies need a strategic plan for their interactions with regulatory bodies. Establishing communication channels with regulators can help companies understand what is required at each stage, reducing the risk of costly delays or missed requirements.
For companies aiming to enter the U.S. market, understanding the FDA’s approval process is crucial. This involves preparing comprehensive data from preclinical studies, navigating the complexities of Investigational New Drug (IND) applications, and planning for the various phases of clinical trials. Missteps here can result in lengthy hold-ups, making the right guidance from regulatory consultants or experienced partners a valuable asset.
Shneider confirms understanding the regulatory landscape early is crucial. He told Labiotech that he wouldn’t start a project without at least a broad understanding of the regulatory landscape.
“Simple example: the United States Department of Agriculture (USDA) forbids plasmid products with antibiotic-resistant genes. Meanwhile, the FDA doesn’t – at least not yet. Ignorance here can cost you dearly: wasted money, and repeated work. So, when CureLab Oncology’s sister company, CureLab Veterinary, went for USDA approval, we made a detour and created an antibiotic-free plasmid system. On the other hand, CureLab Oncology, aiming for FDA, didn’t need this,” Shneider explained.
Indeed, looking back, Jaminet believes that regulatory considerations should have come earlier, as they became critical when Angiex finalized its drug and began IND-enabling.
“Ideally, one would begin work on analytical assays and manufacturing process before the drug is finalized, so CMC (chemistry, manufacturing, and controls) considerations can influence design choices, but that isn’t always possible. ADCs are complex drugs that require significant expertise, so contract manufacturers and analytical specialists must be relied upon. It can be hard to de-risk regulatory requirements without spending a lot of capital. Sometimes these trade-offs can be hard to judge,” he said.
But regulatory hurdles aren’t the only challenge – IP is equally crucial to a biotech company’s trajectory. Strong IP protection can be the foundation of a company’s competitive edge, making it easier to secure funding and partnerships. Duportet sees overlooking IP as one of the most common pitfalls.
“Spend some time understanding what IP is. I see too many founders or small biotech companies filing IP without fully understanding how important it is to have a strong IP basis and relying too much on their University or their tech transfer office to write the patent.”
He warns that a poorly executed IP strategy can hurt a company down the line, not only by making it difficult to secure investment but also by weakening the company’s ability to defend its innovations against competitors.
“IP is not only a stamp for investors, it’s also the basis for your entire product strategy later on.”
Successfully combining regulatory and IP strategies is critical for ensuring that a biotech company transitions smoothly from research to market, maintaining its competitive edge along the way. Founders must balance the need for regulatory compliance with a forward-looking approach to patenting that secures their competitive advantage. By addressing both areas early and effectively, companies can avoid setbacks and build a more resilient pathway to success.
As critical as regulatory strategy and intellectual property are, they can only be effectively executed with the right team in place.
Recruiting the A team to build your biotech company
Building a biotech company requires a diverse array of skills, from scientific expertise to operational leadership and business vision. Recruiting the right talent early on is crucial, as these initial team members shape the company’s culture and drive its growth.
Duportet emphasized the importance of communication and visibility when attracting top talents. “You have to communicate a lot. We were lucky to be one of the few synthetic biology / CRISPR companies in Europe – we knew this was our edge, so we communicated a lot about that. We also received prizes early on, which helped. My advice would be to get in the press and highlight what makes your company unique.”
However, recruitment strategies go beyond just visibility. In the early stages, founders often rely on their own networks to build a strong core team. Good shared that she initially hired people who had worked with her before. “This is an advantage if you can access former employees as they feel loyal to the mission and you already know they are high performers. Former employees are also great sources who can refer candidates they feel would be a good fit,” she noted. For startups, tapping into existing relationships can be a fast and reliable way to build a team that shares a common vision.
In the early stages of building a biotech company, Duportet also thinks it is essential to have a proactive approach to talent recruitment. As he pointed out, Eligo did not outsource talent acquisition. “We went from lab to lab to do some targeted research and find people with the expertise we were looking for. Then it’s about finding your edge to make them interested in working with your company.”
Jaminet takes a different approach, emphasizing the value of working with specialized consultants. “One nice element of the life sciences industry is the sizable number of experienced senior consultants. Many functions in a startup do not require full-time employees – an experienced senior person can do what is needed in a small number of hours per week. It is well worth paying a high hourly rate in exchange for very efficient and high-quality work.” For startups operating on tight budgets, using part-time consultants can provide access to top-tier expertise without the long-term commitment of a full-time hire.
Building a strong team isn’t just about filling roles – it’s about finding people who share the company’s vision and can adapt to the evolving needs of a growing biotech company. When it comes to finding the right people, Shneider thinks honesty is the best policy.
“I was brutally honest about my vision, goals, and values as it is at least as important not only to attract the right people but also to avoid the wrong ones. Creating a successful company is creating a culture. A wrong atom introduced into a structure could distort the entire structure. On a more practical side of things, I offered them a reasonably high stock option.”
All this advice can help make your journey smoother, but if you do start your biotech company, that journey is long, and the odds are, there are some things you are going to wish you had known earlier.
What founders wish they knew before starting their biotech company
With so many complex factors at play, even seasoned founders inevitably find themselves reflecting on lessons learned along the way. We asked the founders what is the one thing they wish they had known before.
Duportet told us about the importance of finding and solving the “killer experiment” – a crucial scientific series of tests that provides clear evidence for the feasibility or potential success of a biotech company’s approach.
“I wish I knew I had to find the ‘killer experiment’ and solve it as soon as possible. You need to de-risk as soon as possible and the science you are building should support your business proposal. Basically, ask yourself what you can demonstrate in a minimal amount of time, that will create value and that you can de-risk. Assess how much time and resources you need, and go from there.”
Essentially, it’s about identifying the experiment that will create the most value with the least investment of time and resources, showing early on that the company’s idea has real potential.
Jaminet points to fundraising awareness and building durable relationships in the business. “Many people began to help us years after we first made contact with them. Others helped us a little at first and then helped us more and more as they grew more familiar with us and gained confidence in us. Had I fully appreciated earlier how long the path to building a biotech company is, and how often relationships are cultivated over many years before they become fully fruitful, I may have invested more effort in cultivating potential partners earlier.”
Similarly, Good said financing a biotech is definitely something you have to find your way through but she is glad she didn’t know about how difficult it actually is. “I’m probably glad I didn’t know how difficult it was or I may have had second thoughts on starting a company.”
Another business aspect to consider is to spend the funds wisely, and that doesn’t mean spending the least you can. Although that hasn’t particularly been an issue in his company’s trajectory, Jaminet warns against taking too many risks to save money. “There is nothing more expensive than having to do something twice because it wasn’t done right the first time.”
Apart from business considerations, building a biotech company – and probably any company – is a life-changing experience. Shneider said it reshaped his personality. But he is also glad he didn’t know the sacrifices it would mean, not only for him but most importantly for his close ones, be it material comfort or work-life balance. Knowing yourself and what a commitment it represents is an essential part of deciding to start your biotech company.
With the right focus, strategy, and resilience, your journey as a biotech founder might very well be successful. All that is left for us to say is good luck!