How to Get Funding for Lab Research in 2024

The life sciences industry is in a state of flux. After a record-breaking year in 2020, biotech funding slowed down in 2021. Several factors contributed to this slowdown, including the ongoing COVID-19 pandemic, the war in Ukraine, and rising inflation.

Despite the challenges, biotech companies still have opportunities to raise funding in 2023 and beyond. Here are a few things to keep in mind:

  • Focus on your target audience. When you’re pitching your company to investors, it's important to understand their interests and needs. What are they looking for in a biotech investment? Tailor your pitch to their specific needs.
  • Be prepared to answer tough questions. Investors will want to know about your company’s business model, competitive landscape, and financial projections. Be ready to answer their questions clearly and concisely.
  • Showcase your team’s expertise. Investors want to invest in companies with solid management teams. Make sure to highlight your team’s experience and knowledge in the biotech industry.

If you can do these things, you’ll be able to strengthen your position and pitch and likely increase your chances of successfully raising funding for your biotech company in 2023.

Here are some additional tips for raising biotech funding in 2023:

  • Build a strong network of contacts. Get to know investors and other people in the biotech industry. Attend industry events, join relevant online communities, and contact people you know who can help you.
  • Create a compelling pitch deck. Your pitch deck should be well-designed and easy to understand. It should highlight your company’s mission, products or services, market opportunity, and management team.
  • Be prepared to negotiate. Once you’ve secured an investment, you’ll need to negotiate the terms of the deal. This includes things like the amount of funding, the valuation of your company, and the terms of the investment.

Raising biotech funding can be a challenge, but it’s possible. By following these tips, you can increase your chances of success.

In this article, we'll take a closer look at these tips, expanding on what we've mentioned and including additional advice for fundraising. This includes funding sources biotechs have had success raising from.

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Create a Funding Strategy

Most life sciences and healthcare startups that successfully secure product development and research funding solicit multiple sources. That said, the capital you raise may come with expectations of a return on investment (ROI), depending on the source of funding.

Your strategy shouldn’t only focus on grant funding, venture capital, or licensing deals with large pharmaceutical companies; it should focus on “all of the above.”

Consider exploring every possible financing avenue, with “best fit” in mind. But, to increase your chances of securing funding, you’ll need to be prepared.

Each type of funding requires a different approach. Before you even think about approaching a lender or investor, or filling out a grant application, do your research and get your paperwork together.

Make sure you understand the requirements and meet submission deadlines during the application process. We can help you with that. Let’s dive a little deeper.

Be Specific When Fundraising

No matter who you’re standing in front of—a VC, a small business lender, or a research council—they want specific reasons for why you’re fundraising, and, depending on where you get the funding from, may even impose restrictions on how you can spend it.

It’s a general rule of thumb to time your funding requests to coincide with a new project, a new phase of research, the procurement of new analytical lab equipment, or on operational expansion building on your demonstrable business growth.

In your business plan, detail exactly what you need to spend money on: from funding the next stage in your scientific research to moving to a bigger lab space, budget out what you need and be prepared to show your work.

For example, understand how much it will cost to move from preclinical studies into a phase I clinical trial. You’ll have a strong idea of exactly what you require from a potential funding source, and can get highly specific in your requests.

Demonstrate How You Will Use the Funding

Investors will have questions. To impress them, you’ll need to be both knowledgeable and confident. This is what you need to know.

Funding Terms

Learn important funding terms. This will help you understand what’s important to an investor and what they’ll be looking for.

  • Valuation: An independent analyst estimates the value of your company based metrics including management, capital structure, prospective future earnings, and the market value of assets.
  • Percentage/ownership: Owners, partners, and shareholders in your business.
  • Burn Rate: Negative cash flow. Essentially how much money you’re spending per month.

Budget Expertise

How will you spend their money? Make sure you’re on the same page when it comes to budget, and show them that you have a plan on how you will spend the funding.

Your Roadmap

It’s important to know what it will take to get to where you want to go. Ask yourself these questions:

  • When will you be able to go to market?
  • How long until you run out of money?
  • What approvals do you need? Will your project need approval from the FDA?

Back Your Assertions with data

Make sure you’ve got the data to back up your claims. Otherwise, it will be near impossible to convince an investor your worth investing in. You can ask yourself these questions to become better prepared to back up claims with data:

  • What percentage of the population will be affected?
  • Is the science translational?
  • Can you turn your observations into something that has an impact on patients?

Grow Your Network

It’s not all about who you know, but name recognition is important in any industry, and impressive in the sciences. Join high-level groups and discussions, and attend events and presentations prepared to make insightful comments about the subject.

More than just meeting people, you want to impress them with your knowledge and passion. You never know when a contact may result in a funding opportunity.

Pitch the Right Investor

Once you’ve defined exactly what you’ll use the money for, research investors to find the right fit. Start with grants or fellowships, and look over the application brief to make sure your grant proposal meets their guidelines. Identifying funders who support whatever you need the money for.

Create a Visual Presentation

Assemble a presentation that includes:

  • The problem you intend to address. Detail the focus of your lab and the need.
  • Your unique selling proposition – what makes your research idea unique and valuable?
  • Representative data – prove the need exists and that you can translate your science into an intervention. Who or what will your research benefit?
  • Competitive analysis – how many labs are working on the same problem?
  • Your business capabilities and expertise of your staff
  • Projected timeline
  • Your funding request – the amount of funding you need

Think of each of these points as an elevator pitch. Boil it down to the fewest possible words that make your point. Be succinct and to the point. Investors want to get to the bottom line as quickly as possible.

Your goal is to convince your audience with ideas, facts, and capabilities. Before presenting to funding agencies, get outside opinions: peer reviews from colleagues and opinions from non-science contacts to be sure it’s understandable to anyone.

Research All Possible Funding Sources

The type of science research project or product development you are planning will heavily influence your funding sources. It’s important to understand the various funding available, and which type makes the most sense for your business. Some sources include grant programs, university funds, and private research grants.

Grant programs and public funding

University funds

Let Your Data Do the Work

No matter who you’re pitching, you can improve your chances of securing funding using your knowledge and expertise. Additionally, you will want to demonstrate your ability to run a business and forecast budgetary needs.

If you’re interested in learning more about your funding options, we have a number of resources on the topic:

Resources for founders, scientists, and the life sciences community.