10 Things You Need to Know Before Starting a Biotech Company

The biotech industry can be high risk.

It is definitely high payoff when done well.

If you’re wondering how to start a biotech company, look no further. We’ve compiled a list of 10 things you need to know before starting a biotech company.

Ready? Read on!

How To Start a Biotech Company

It can be overwhelming starting a biotech company.

There’s a lot to think about, and a lot of moving parts. Sometimes quite literally.

You’ll need to register your business name and hire staff. You’ll need to brand the product effectively.

But beyond the business basics, there are 10 things you need to know before starting a biotech company. Here they are, in no particular order.

1. You’ll Get Nowhere Without a Plan

There are those that roll their eyes at a business plan.

Today’s biotech entrepreneurs are often laboratory or AI scientists. They are generally happier trawling through lab results than strategy.

A business plan is critical for analyzing your market, your product, and your company representatives. If you need funding, you need a business plan.

No investor will pass you a check before looking at your business plan – and in minute detail!

2. Medical and Agricultural Are Your Best Bet

Most biotech start-ups are seeing success in two fields: medical and agricultural. If there’s a way to focus your research and development efforts in these areas, you’ll get a great payoff when it’s time to go to market.

Luckily, in biotech, there is no shortage of ways you can make it applicable to these two mega-markets!

3. No Market? No Point

We are all guilty of getting excited about something and running with it without checking the details.

If you’re a science geek or a tech-head and you’ve just discovered some great biotech advance, you’re ready to explode with excitement. We get it.

But here’s the thing. If the market doesn’t want it, there’s no point. Really, this comes back to your business plan.

Sketch out a Value-Proposition Canvas before you get too far down the line. Because great science doesn’t always mean great business.

4. Personnel Are Your Biggest Strength & Your Greatest Weakness

There’s nothing quite like having a great team of researchers. Offering lab assistance, bouncing ideas off each other.

Answering the what-if questions before you ask them. In the competitive world of biotech though, your personnel could be the path to disaster.

Let’s say you have someone on your team leaking your research to competitors.

Let’s say they have much more financial backing than you.

They can get your ideas to market quicker, and leave you with nothing.

Some solutions are ramping up the lab and IT security to ensure you know who is talking to who through and about your technology.

There are also soft skill approaches you can try. These include team building and team goal setting.

If the team feel like they are the company, not just a cog in a machine, there will be less motivation to talk to competitors. Appropriate legal protections are another key to avoiding information leaks, as we will see next

5. Don’t Do Another Thing Until You Have a Great Attorney

Some businesses say that marketing shouldn’t have a budget. Because it pays for itself.

In the world of biotech entrepreneurship, the same is true about attorneys.

Ask around for recommendations of a great attorney. Find one with real experience working with biotechs. Ask them if you can speak to some of their other biotech clients to make sure what they are telling you is backed up by other entrepreneurs like you.

Your technology advance is your business. Someone can steal that knowledge, and with it, your business. All your research and development, all your investment and efforts will have been in vain.

That’s why we suggest you get a great attorney, and early. Holding onto your money-making idea means your attorney will pay for themselves in the long run.

6. There’s No Beating Virtual

A biotech company should stay focused on the science. On constant iteration and innovation.

If you get too big, you’ll be bogged down instead with the admin of running a company. We suggest you keep it virtual.

There are a lot of co-work options. Use them for meetings. Or on days when you want the motivation of working alongside others of cross-pollination of ideas.

The digital age opens up options, from virtual assistants and co-working to outsourcing – which we will look at next. Use all of these options so you can keep a slim, agile company that invests its money where it needs to: research, attorneys, and marketing.

We would also say, if your biotech development is a ‘side hustle’, keep it that way for as long as you can. What we mean by that, is don’t quit your day job – quite literally.

It’s easy to take a weekly paycheck for granted. Until it’s taken away. Especially when you factor in the value of medical insurance.

Going virtual allows you to look like a ‘serious business’ while you keep one foot in your stable, paid job.

Be patient, if you have a water-tight business plan and approach your biotech company carefully, there is no reason why you can’t have every success.

7. Outsourcing Saves Time and Money

There are a whole lot of services companies put in-house, from recruitment and IT to content creation. All of it can be outsourced.

We recommend you do this when starting a biotech company. It gives you a key advantage – scalability.

If a big pharma or AI company comes knocking, offering big sums to you as a supplier, you want to say yes right away. If you have all core services in-house, you’ll lose your time in recruitment and IT support, and the rest.

If you have outsourced all these functions you can scale up at a moment’s notice.

8. You Must Keep Moving

Work to create a company culture that celebrates and rewards constant innovation. Tell staff that they can criticize anything in the company if they have a suggestion for improvement.

It might not be the suggestion you choose, but it creates a culture where everyone owns the improvement process. And that’s great for innovation.

Another key component of innovative business culture is to make it clear that errors are expected as part of the process. Innovation works best with constant iterations.

To create a culture where your staff aren’t afraid to try things differently, celebrate all mistakes as new learnings. Your company might be constantly looking for new applications of your technology.

Or maybe they are continually making product prototypes. Look for advice on iteration and prototyping, from experts like you can find on this website.

9. Become a C Corporation early

This is where we talk about corporate law. Stay with us, we promise you’ll thank us later.

If you don’t choose your corporate structure well early, you can get screwed at tax time now or into the future. It also can impact how interested investors are.

Once you have some interest from investors, we recommend you become an incorporated company. This allows you to raise money and/or get a federal small business innovative research (SBIR) grant.

Many companies start as an LLC and convert afterward to a Delaware C Corporation. If you have investor interest, it is time to incorporate into a C corporation.

At the end of the day, the choice between LLC and Corporation will boil down to your company’s individual situation. So get some tax advice. Look at the pros and cons of each for your biotech company.

Small companies often favor LLC structure as it doesn’t have a lot of bureaucratic requirements. But an LLC has no shares or stocks to issue, which can be favorable for a biotech company.

Venture capitalists also tend to favor corporate structures. They want preferred shares of stock. And they like to have companies in their portfolio to have similar structures.

Think over these and other factors, do some research. When it comes to corporate tax advice for your biotech company, you might want to go for a second third or even fourth opinion.

Be rock-solid on your decision as changing a corporate tax structure is not a simple thing.

10. You’ll Need Patience (By the Bucket Load)

Once you’ve got your inspiration, and the experiments are looking solid, the data supports your hypotheses, it’s hard to sit on your hands.

You will need to be patient. A Biotech company can take anywhere from two months to two years to get off the ground.

It could take longer to see real financial success. We recommend you schedule all the steps we’ve advised you on here – from business and strategy planning to tax advice and outsourcing.

That way you can have a visual aid that’s shows progress. It means you’ll be using this waiting period wisely, setting a firm foundation under your business. 2 in 3 small businesses fail.

There’s every reason why this statistic would be the same – or worse – for biotechs.

It is good to have these statistics in mind.

Not to focus on the likelihood of failure – that’s pessimistic and unhelpful. Use them as a reminder of just how important all the logistic set-up is. Use it to remind you why you must check all the boxes.

Why you should keep getting quotes. Keep your staff inspired. And on it goes.

It can be a good idea to join a network of like-minded entrepreneurs. To share your frustrations with. But also to bounce ideas off, and to keep you motivated.

Time To Get Your Biotech Company Started!

You asked us how to start a biotech company, and we delivered.

Now that you have your business ideas, your research results, and our 10 pieces of advice, nothing can stop you!

If you’d like more business resources on how to market your biotech company or create a good company culture, have a look at our website. You’ll find reviews and comparisons of different companies there, to find the perfect contractors for your company.

Check it out today!