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  • Writer's pictureJohn Q Leonard

How to Launch a Biotech Startup


Many Americans talk about their desire to be self-employed, but only about 6% ever act on their longing. What is holding people back? Is it the often cited statistic that 80 percent of startups fail within the first 18 months? (Data suggests the failure rate for biotech startups to be closer to 93 percent)

One major barrier is that research and development costs money that biotech entrepreneurs often don’t have. So what can you, as a new biotech CEO, do to maximize your chances of creating a successful startup and attracting much needed funding?

Here are the most common suggestions from many sources around the web.

Before choosing a product to market, the most important thing you can do first is conduct a comprehensive market analysis. That market analysis should include an industry description and outlook, information about your target market (distinguishing characteristic of potential customers, size of primary target market, growth forecasts, pricing, gross margins) and a comprehensive analysis (strengths weaknesses, barriers to entry, regulatory restrictions)

In a general sense, you need to first figure out if your product is (A) a problem in search of a solution or (B) a solution in search of a problem. In so doing, you need to make sure there even is a problem.

  1. Make sure your product addresses a true market need. To be able to do this, you have to do enough market research to truly understand your target market and the competitors already working in this space.

  2. Assemble the right team. One person can’t do everything. You need to add people with complementary skill sets to your startup team. These people must have the right knowledge and skills but also the right attitude and they must truly understand your vision for your company. This is hard to do when you don’t have enough capital to offer attractive salaries. You can dangle the carrot of equity, but be careful how much equity you offer to whom.

  3. Be ready to adapt your product to the market if necessary. Listen to advisors and especially to potential customers and use their advice to shape your final product.

  4. Differentiate yourself. Make sure that potential customers understand how your product is different (and better) than your competitors.

  5. Make sure you have reproducible data early on. Much of the biotech failure rate is due to the fact that 70-90% of scientific data cannot be reproduced.

  6. Have a strong plan for dealing with the FDA and drug regulation. This is a complex field. You may need to hire advisors to help make sure that you have designed your clinical trials properly and you have all the appropriate paperwork in place.

  7. Think strategically about your intellectual property. Patents are expensive but they are the best way to protect your IP and without IP you cannot build a biotech business. Again you may need to hire lawyers to advise you on how you can best protect yourself.

  8. Choose the right investors. There are big differences in the amount of money you will receive and the control you will need to surrender to different types of investors. While any money looks great to struggling biotech boot strappers, be very careful about whom you partner with. Draw up a term sheet as soon as possible with potential investors so that you can understand exactly what the deal means to you and your company.

  9. Branding is more than a logo and marketing is an integral part of a successful company. Even if you have a hot new drug or medical device that truly serves a market need and you have a target market of millions or billions, you still have to tell these people about your product. That takes time and money.

  10. Don’t be afraid to make mistakes. Just make sure you learn from them. It is almost impossible to start a company without making mistakes and they are the best way to learn.


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