Starting a Biotech Company - Finance
Discussion
Probably get moved to the Business bit but while I'm here -
I know a man who can, in terms of doing clever Biotech stuff.
He's now retired and getting bored.
He now wants to try to do something clever in the Biotech game (that's what he's got lots of degrees, PhD etc in) via his own Company.
He thinks I'm the guy for money advice (not sure why), so he asked me if I knew how he could fund this.
I've no idea how he would go about starting his own Biotech Company or how funding is secured on such ventures.
Anyone here done a similar thing and care to share their experience / tips etc.?
He's not the Dragons' Den type.
I know a man who can, in terms of doing clever Biotech stuff.
He's now retired and getting bored.
He now wants to try to do something clever in the Biotech game (that's what he's got lots of degrees, PhD etc in) via his own Company.
He thinks I'm the guy for money advice (not sure why), so he asked me if I knew how he could fund this.
I've no idea how he would go about starting his own Biotech Company or how funding is secured on such ventures.
Anyone here done a similar thing and care to share their experience / tips etc.?
He's not the Dragons' Den type.
Typically angel investment / seed capital type arrangements to get anything innovative off the ground *but* investors are going to expect:
1) That he will have skin in the game too; and
2) To see real commitment (depending on age, that could present something of a hurdle).
The hardest part isn t usually the funding. It s building for growth: product strategy, development, team. That d be especially important in biotech where there s a regulatory landscape to navigate along with sales channel complexity.
If he s clued up, he ll either recognise the above and seek out investors who can help or, if he can cover it all off well, attract dumb money.
The more people bring to the table beyond just money, the more they expect that to be reflected in their returns.
1) That he will have skin in the game too; and
2) To see real commitment (depending on age, that could present something of a hurdle).
The hardest part isn t usually the funding. It s building for growth: product strategy, development, team. That d be especially important in biotech where there s a regulatory landscape to navigate along with sales channel complexity.
If he s clued up, he ll either recognise the above and seek out investors who can help or, if he can cover it all off well, attract dumb money.
The more people bring to the table beyond just money, the more they expect that to be reflected in their returns.
I know some people in the biotech startup game. I'm not expert but my impression is different, the main part of the job is attracting the investment. Go to Cambridge and throw a rock and hit an underemployed scientist. I've heard stories of 200 applicants day one, for roles in biotech startups. Leaders who can get things moving are rarer and often have history in the game
It's pure venture capitalism. ie makes more sense as part of a diversified investment portfolio. Even really promising drugs with successful trials, very rarely reach approval. Failure rate 90%+. Winners fund the losers. So any leader needs to understand how the odds add up, and the investment landscape, know the right people, and probably been lucky in the past to build some kind of track record.
It's pure venture capitalism. ie makes more sense as part of a diversified investment portfolio. Even really promising drugs with successful trials, very rarely reach approval. Failure rate 90%+. Winners fund the losers. So any leader needs to understand how the odds add up, and the investment landscape, know the right people, and probably been lucky in the past to build some kind of track record.
Edited by lizardbrain on Sunday 15th February 14:50
I actually think we’re agreeing: the idea is important but execution/commercialisation take a slightly different skill set to pure science.
Have seen it first hand when relative was working on some interesting medtech and the founders couldn’t see that there was an imperative to move very quickly on the commercial front and/or that connections were what was needed. I still wish they’d let me make a couple of calls as what they’d developed was both groundbreaking and of huge potential.
Have seen it first hand when relative was working on some interesting medtech and the founders couldn’t see that there was an imperative to move very quickly on the commercial front and/or that connections were what was needed. I still wish they’d let me make a couple of calls as what they’d developed was both groundbreaking and of huge potential.
(Multiple biotech startup (bootstrap and VC) + a bit of corporate)
No where near enough detail to be able to even start to advise.
Tools and tech? Consultancy? Therapeutic or research applications etc etc… to even begin to be able to answer.
If he thinks he’s wanting money then try get seis investment to get off the ground, but even that may be boloney depending what he’s on about.
No where near enough detail to be able to even start to advise.
Tools and tech? Consultancy? Therapeutic or research applications etc etc… to even begin to be able to answer.
If he thinks he’s wanting money then try get seis investment to get off the ground, but even that may be boloney depending what he’s on about.
stuthemongoose said:
(Multiple biotech startup (bootstrap and VC) + a bit of corporate)
No where near enough detail to be able to even start to advise.
Tools and tech? Consultancy? Therapeutic or research applications etc etc to even begin to be able to answer.
If he thinks he s wanting money then try get seis investment to get off the ground, but even that may be boloney depending what he s on about.
It's therapeutic and research - human diseases.No where near enough detail to be able to even start to advise.
Tools and tech? Consultancy? Therapeutic or research applications etc etc to even begin to be able to answer.
If he thinks he s wanting money then try get seis investment to get off the ground, but even that may be boloney depending what he s on about.
I'm now sworn to secrecy regarding the details after a bit more in depth chat today.
He's leaning towards not re-inventing the wheel by having to set up his own lab, but using an existing lab and guiding a research group as a Consultant.
There's a series of experiments that would probably take a year to complete.
He wants to own the IPR and doesn't want to end up with someone else stealing the idea and trying to do it without him.
Is this sort of thing possible?
harryt said:
It's therapeutic and research - human diseases.
Is the aim here to produce something like a drug/device for clinical care from an idea/theory?If so, you are looking at about a decade to go from idea to gaining FDA/MHRA etc approval. That's if everything works, you have to do bench/basic science research, than you have to do Phase 1-3 clinical trials, than production for research.
If it's drugs you are essentially going up against every major pharmaceutical company around, as well as every established academic unit. 99.99% of ideas will never get close to reaching the threshold needed for clinical use.
Every academic with a PhD will tell you their area of interest is potential world changing, everyone is worried someone else will beat them to publication. However very few will have any idea about real wold implementation or how a business works. None will have ever even thought about horizon scanning, external stakeholder engagement or ever engaged with commercial contracts.
Good luck if you want to get involved, spending time exploring options is fine, but I would be very weary of actually committing any ££££. Ask them the last time they had to deliver an end of quarter presentation to the board, and KPIs they focused on......
Edited by gangzoom on Sunday 15th February 19:52
harryt said:
stuthemongoose said:
(Multiple biotech startup (bootstrap and VC) + a bit of corporate)
No where near enough detail to be able to even start to advise.
Tools and tech? Consultancy? Therapeutic or research applications etc etc to even begin to be able to answer.
If he thinks he s wanting money then try get seis investment to get off the ground, but even that may be boloney depending what he s on about.
It's therapeutic and research - human diseases.No where near enough detail to be able to even start to advise.
Tools and tech? Consultancy? Therapeutic or research applications etc etc to even begin to be able to answer.
If he thinks he s wanting money then try get seis investment to get off the ground, but even that may be boloney depending what he s on about.
I'm now sworn to secrecy regarding the details after a bit more in depth chat today.
He's leaning towards not re-inventing the wheel by having to set up his own lab, but using an existing lab and guiding a research group as a Consultant.
There's a series of experiments that would probably take a year to complete.
He wants to own the IPR and doesn't want to end up with someone else stealing the idea and trying to do it without him.
Is this sort of thing possible?
Well by definition you’re going to have to start sharing the idea to get buy in to a vision, or it won’t go anywhere.
Depending what it is, it may be wise to think about what IPR protection you’d even be able to get - patent being the obvious.
Ultimately you can’t get funding and keep control, by definition you’re giving up some control. The IPR is protectable and owned by the company you setup or it’s not protectable (trade secret etc, worse for finding and valuations to raise money)
Tbh if he’s serious about wanting to do something, just based of the responses and approach, he needs a co founder who actually gets business. So I’d be thinking two things.
Who’s my co founder?
Can I protect the idea, and if so how?
And go from there!
Co founder with experience / business head IMO - if he was really serious about going it alone he’d have searched/looked up/self learned about these other elements - doesn’t jump off page as that’s his wheelhouse vs the deeper bio - so plug that gap with experience.
HTH!
harryt said:
He wants to own the IPR and doesn't want to end up with someone else stealing the idea and trying to do it without him.
Is this sort of thing possible?
In theory, yes. In practice, the ability to detect and take action against anyone infringing IP could be quite a different matter. The fact that he’s looking for seed funding suggests he might not have the means to get involved in litigation. That is another area where investor fire-power can help. Is this sort of thing possible?
Acting as a consultant to a lab team is quite different to actually running a business where he’s outsourcing work to a lab… especially when the economic and IP models are considered.
harryt said:
I know a man who can, in terms of doing clever Biotech stuff.
He's now retired and getting bored.
He now wants to try to do something clever in the Biotech game.
1: How much money does he think is needed?He's now retired and getting bored.
He now wants to try to do something clever in the Biotech game.
2: How much financial commitment will he be giving the project himself?
3: Has he got a thoroughly worked out and documented business plan, or just an idea?
3: As a gentleman "in retirement" I doubt he's going to get a penny out of anyone unless he's got a demonstrably competent young team around him.
No experience of the sector, but applying thinking from elsewhere:
1. he seems to want investors to take the risk on development, which could take years, but expects investors to allow him to retain control & IP, which isn't going to happen.
2. he hasn't yet closed the gap between an academically interesting idea, and commercialising it, so he wants somebody else to figure that out, which nobody will do freely
3. I would expect that biotech investors would be coming to a prominent expert offering to fund his ideas. The fact that they're not could be a red flag.
1. he seems to want investors to take the risk on development, which could take years, but expects investors to allow him to retain control & IP, which isn't going to happen.
2. he hasn't yet closed the gap between an academically interesting idea, and commercialising it, so he wants somebody else to figure that out, which nobody will do freely
3. I would expect that biotech investors would be coming to a prominent expert offering to fund his ideas. The fact that they're not could be a red flag.
sideways sid said:
I would expect that biotech investors would be coming to a prominent expert offering to fund his ideas. The fact that they're not could be a red flag.
This is interesting.I don't think they would know about him unless they were looking specifically for someone with his background.
It's very niche.
He can put £200,000 of his own money into this apparently.
He's now thinking of taking it to China or the USA!
He's a very clever man who basically just wants to walk into a lab and mess around with some pilot experiments for a few months.
Or better still get someone 30 years younger to do the 'wet work'.
Are there still labs that you can rent a day at a time?
These popped up in London a while back but I don't know if they still exist.
I remember having a chat with a work colleague years ago about the risk that they could be exploited to make a biological weapon.
So maybe they have been closed down since covid.
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