How to Get Funding for Lab Research
The life sciences industry is in an interesting position. Biotech and biopharma have received massive interest from investors in 2020, from both the private and public sectors. As record sums of money poured into the industry, biotech IPOs also increased. It’s made funding a biotech startup much more possible.
However, the biotech sector underperformed in 2021. There is a lot of debate surrounding the increased interest we’ve seen over the past few years. Some believe it is due to high interest from the private market. It can be typical to see private investors pour massive amounts of money into a company and then move on from them as they go public. Meanwhile, the public markets have seemed to move from biotech, as other sectors, such as large Pharma, significantly outperformed biotechs in 2021.
This may indicate that funding opportunities, which were incredibly high in 2020 and 2021, could be harder to come by in 2022 and 2023, as the private and public markets “rebound” from a bit of a valuation bubble.
If you’re currently looking to fundraise, there’s a chance you’re going to have to work harder for funding opportunities right now. Fortunately, you have a lot of sources to inquire with.
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.
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.
Dazzle them with knowledge
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:
- 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 / ownerships – 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?
- Savings opportunities on big-ticket spend:
- Your roadmap
- 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 – Be prepared to explain why your research is needed.
- 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 Funding Sources
The type of science research project or product development you are planning will heavily influence your funding sources. Funding programs are offered by private foundations, federal grants, VCs, or loans.
- Grant programs and public funding
- National Institutes of Health (NIH) Grants & Funding
- National Endowment for the Humanities (NEH)
- Federal Grants (Grants.gov) (apply to a federal agency)
- Department Of Defense – Congressionally Directed Medical Research Programs
- Department of Energy – The Office of Science’s Funding Opportunities
- National Science Foundation (NSF) Biological Sciences (GRU – paid service)
- Foundation Directory Online (Paid service)
- Research Professional (Paid Service)
- University funds (these programs focused on academia and higher education: research institutes and universities)
- American Association of State Colleges and Universities (AASCU) Grant Resource Center
- GrantForward (Formerly IRIS – paid service offered by the University of Illinois)
- Private research grants
- Venture capital
Let Your Data Points & Knowledge Doing the Work
No matter who you’re pitching, you can improve your success rate with knowledge and confidence. And impress them with excellent budget decisions; cut your expenses by leasing your lab equipment from Excedr!