Biotech startups don’t have the luxury of moving slow. From the first experiments to early clinical trials, every decision about money and infrastructure shapes whether you can hit milestones on time. One of the biggest choices founders face early on is how to equip the lab: do you buy outright, or lease what you need?
Buying may seem straightforward, but for most early-stage companies, the upfront costs and hidden expenses can drain runway fast. Leasing, on the other hand, spreads costs over time, keeps cash flow intact, and provides flexibility when programs evolve.
This post breaks down why leasing often makes more sense than buying for biotech startups—covering costs, timelines, and strategic fit—so you can make the decision with eyes wide open.
The Challenge of Buying Equipment
Upfront costs strain early-stage startups
For most biotech startups, purchasing lab equipment outright means writing six- or even seven-figure checks before the first experiment begins. A single piece of cutting-edge instrumentation—mass spectrometers, sequencers, or high-throughput analyzers—can cost as much as an entire seed round. Add a required down payment and the numbers get even steeper.
That kind of spend can severely strain cash flow. It leaves less room for hiring key scientists, running pilot studies, or investing in intellectual property protection. Investors often see this as a red flag. At the seed or Series A stage, they want capital directed toward milestones that increase valuation—compelling data, early clinical results, or partnerships—not sunk into infrastructure.
On top of that, technology in the life sciences advances quickly. Sequencing costs continue to fall, automation platforms evolve every few years, and new instrumentation hits the market faster than ever. A piece of lab equipment bought today risks becoming obsolete within a short period, forcing startups to either make do with outdated tools or find capital for another purchase.
Ownership comes with hidden expenses
The price tag isn’t the only cost of buying. Owning equipment also means absorbing:
- Depreciation: Equipment value erodes over time, weighing down the balance sheet and reducing financial flexibility.
- Maintenance and downtime: Service contracts, replacement parts, and unexpected repairs quickly add up—and downtime can stall critical experiments.
- Real estate and build out: Outfitting lab space to house specialized equipment often requires additional spending on HVAC, electrical, or safety systems.
- Insurance and compliance: High-value instruments usually need specialized insurance, and regulated labs face calibration and validation costs to maintain compliance.
- Training costs: New hires may need specialized training to operate and maintain complex equipment.
These hidden expenses compound quickly. Instead of preserving capital for research and development, fundraising, or partnerships, startups risk sinking large amounts into infrastructure that doesn’t directly generate scientific progress.
The Case for Leasing
Preserving flexibility and financial health
Leasing turns what would have been a major upfront purchase into predictable monthly lease payments. Instead of draining runway on equipment, startups can preserve cash for research and development, hiring, or fundraising milestones. Lease terms can also be structured around business needs—whether that’s a short-term validation project or a multi-year therapeutic program.
Another benefit: lease payments are often treated as operating expenses, which can make them tax-deductible. Investors and lenders frequently prefer this treatment because it keeps balance sheets cleaner and shows fiscal discipline. For early-stage biotech companies, signaling capital efficiency can make fundraising conversations smoother.
Staying cutting-edge without overcommitting
Because science evolves quickly, biotech startups can’t afford to get locked into outdated tools. Leasing gives companies access to new equipment and cutting-edge technology without the long-term risks of ownership. At the end of the lease, startups typically have options: return the equipment, renew the lease, or purchase it at a reduced cost.
This flexibility reduces the risk of obsolescence and lowers switching costs. If your program pivots, your workflow changes, or new instrumentation becomes available, you’re not anchored to equipment that no longer fits your business needs.
Practical benefits for startups
Beyond cash preservation, leasing provides several operator-level advantages:
- Faster procurement: Capital purchase approvals can drag on for months; leases often get equipment into labs in weeks.
- Reduced reliance on venture capital: Avoid raising extra funding just to cover infrastructure costs.
- More capacity for partnerships: Keep capital free for CRO contracts, collaborations, and other growth initiatives.
Together, these benefits make leasing a cost-effective and adaptable approach for early-stage biotech companies—one that supports both scientific progress and financial stability.
Leasing vs. Buying: A Quick Comparison
Cost considerations side by side
On paper, buying looks simple: pay the purchase price and the equipment is yours. There’s no ongoing obligation, and if the asset is used for years, ownership can appear more cost-effective than lease payments. However, biotech founders know the true costs don’t end at the sticker price. Equipment depreciates quickly, often losing resale value before it’s fully written down. Maintenance contracts, spare parts, and downtime all add hidden expenses that make ownership more expensive than it first appears.
Leasing spreads costs across predictable monthly payments, easing cash flow pressure during the most capital-constrained years of a startup’s life. While the cumulative payments may exceed the purchase price over a long lease term, the tradeoff is avoiding a major upfront hit to working capital. For early-stage companies, the ability to keep money available for R&D, fundraising activities, or hiring often outweighs the theoretical savings of ownership.
Strategic fit for biotech companies
The leasing vs. buying decision is less about absolute cost and more about strategic fit. For early-stage startups, particularly those working in incubators or outfitting small lab spaces, leasing aligns with milestone-driven science and uncertain timelines. Equipment can be upgraded, swapped, or returned as needs evolve—reducing the risk of locking into a long-term commitment that no longer serves the business.
Buying, on the other hand, works best for established biotech companies with stable programs, larger lab footprints, and predictable workflows. In these cases, owning equipment can make sense if the instruments will be fully utilized for many years and the company has the capital reserves to absorb obsolescence or unplanned downtime.
Geography can also tilt the balance. In Boston and other biotech hubs, where real estate is expensive and build outs are complex, leasing offers a cost-effective way to get up and running without overspending on infrastructure tied to a single location. By keeping options open, startups can scale intentionally rather than overextending too soon.
Key Questions for Founders
Before committing to lease agreements
Not all leasing companies operate the same way, and the fine print matters. Founders should press for clarity on a few key points:
- Flexibility of lease terms: Does the lessor offer short-term and longer-term options that align with your R&D milestones?
- Service and downtime coverage: Who handles preventive maintenance, repairs, and liability if equipment goes offline?
- Tax benefits and accounting treatment: Will lease payments be treated as operating expenses and tax-deductible?
- End-of-lease options: Can you return, renew, or purchase the equipment—and under what terms?
In our 15 years working with biotech startups, we’ve seen the best outcomes when founders ask these questions early, making sure their lease agreements match not only immediate needs but also their broader business plan.
Before purchasing equipment
If you’re leaning toward buying, different questions come into play:
- Depreciation impact: How will owned equipment affect your financial metrics and balance sheet?
- Long-term fit: Will the equipment still serve your business needs as programs pivot or scale?
- Cost-effectiveness: Does the purchase price—and the ongoing operating expenses tied to it—make more sense than available leasing options?
The decision ultimately comes down to aligning infrastructure with strategy. Whether leasing or buying, the right questions ensure you’re not just acquiring lab equipment, but setting up your company to move faster toward critical milestones.
Final Thought
For biotech startups, the decision to lease or buy lab equipment goes beyond simple cost comparisons. It’s about aligning financial strategy with scientific milestones. Buying may suit established biotech companies with stable programs and large reserves of capital, but for early-stage teams, leasing often proves the smarter choice.
By converting large upfront costs into predictable monthly payments, leasing preserves cash flow for research and development, hiring, and fundraising. It also reduces exposure to depreciation and obsolescence while keeping startups flexible as business needs evolve.
In a sector where speed, adaptability, and financial health define success, leasing is more than a financing option—it’s a way to build labs that scale intentionally and support long-term growth.
Need lab equipment without tying up capital? Excedr helps biotech startups access cutting-edge tools through flexible leasing agreements—preserving cash flow and supporting milestone-driven growth.