Biotech startups face an uphill battle when it comes to securing funding. Unlike software startups, which can often launch with minimal capital, biotech companies require significant upfront investment for lab space, equipment, research, and regulatory approvals. For many founders, venture capital (VC) seems like the only viable path to scaling their business. But is it?

While VC funding can provide biotech startups with the capital, connections, and strategic support needed to accelerate growth, it comes at a cost—dilution, pressure for rapid returns, and potential loss of control. Some startups choose to bootstrap, relying on grants, partnerships, and alternative funding sources to move forward without VC.

So, can a biotech startup truly survive—and even thrive—without venture capital? In this post, we’ll explore:

• The challenges of bootstrapping a biotech startup and how founders navigate limited resources
• The advantages of securing VC funding and how it accelerates growth
• Alternative funding paths that biotech startups can leverage outside of traditional VC
• Whether it’s realistic to build a successful biotech company without VC backing

By the end, you’ll have a clearer understanding of whether venture capital is a necessity or just one of many funding options for biotech startups.

The Challenges of Bootstrapping a Biotech Startup

Bootstrapping a biotech startup is no easy feat. Unlike tech startups that can build an MVP with minimal costs, early-stage biotech companies require extensive resources—lab space, specialized equipment, raw materials, and years of R&D before even approaching commercialization. Without the deep pockets of venture capital funding, entrepreneurs must find creative ways to stretch their funding while navigating a high-cost, high-risk industry.

High upfront costs: Funding science without VC

Early-stage biotech startups often face substantial early expenses, including:

• Lab space and equipment: Renting lab space in a major biotech hub can be prohibitively expensive, and purchasing essential equipment comes with hefty price tags. Shared lab spaces, incubators, and leasing options can help, but they still require capital.
• R&D and regulatory hurdles: Drug discovery, therapeutics, and diagnostics demand rigorous research and compliance with FDA regulations, requiring significant investment long before revenue is generated.
• Talent acquisition: Hiring experienced researchers and regulatory professionals is critical, but without venture capital funding, startups must often rely on sweat equity, grants, or academic collaborations.

Limited runway: Slower growth, more uncertainty

Without VC backing, biotech startups must rely on alternative funding sources like grants (e.g., NIH, SBIR/STTR), strategic partnerships, and early revenue streams to survive. While non-dilutive funding preserves ownership, it’s often unpredictable and highly competitive. Limited capital can slow development timelines, leading to missed opportunities in a fast-moving industry.

Strategic trade-offs: Balancing risk and growth

Bootstrapped early-stage biotech startups must prioritize sustainability over speed, often focusing on incremental milestones rather than moonshot innovations. This can mean:

• Developing lower-risk products: Instead of pursuing breakthrough therapeutics with long regulatory timelines, many bootstrapped biotech entrepreneurs focus on diagnostics, lab tools, or contract research services that generate revenue more quickly.
• Delaying clinical trials or expansions: Without significant capital, startups may struggle to advance beyond preclinical research, slowing their path to commercialization. Some seek early revenue partnerships with pharma companies or government grants to de-risk their progress.
• Forgoing expensive talent or partnerships: While VC-backed startups can recruit top-tier scientists, regulatory experts, and commercial leaders early on, bootstrapped companies often rely on academic collaborations, contract research organizations (CROs), or lean internal teams to get by.
• Maintaining control at the cost of slower scaling: The upside of bootstrapping is that founders retain full ownership and decision-making power. However, the trade-off is often slower development, missed opportunities, and difficulty competing with well-funded biotech companies moving at VC-backed speed.

While some early-stage biotech startups successfully bootstrap their way to profitability, it requires careful financial management, creative funding strategies, and a willingness to move at a measured pace—a stark contrast to the rapid acceleration that VC-backed startups experience.

How Venture Capital Accelerates Growth

For biotech startups, securing venture capital can be a game-changer. While bootstrapped companies must carefully pace their growth, VC-backed startups gain access to significant capital, industry expertise, and strategic networks, allowing them to scale much faster. However, this funding comes with expectations—investors seek high returns, often pushing startups to achieve aggressive milestones on tight timelines.

Scaling faster: Funding R&D, talent, and clinical trials

Venture capital provides biotech startups with the resources to expand quickly and take on higher-risk, high-reward projects:

• Advancing drug development: VC funding allows startups to move beyond preclinical research into clinical trials without financial bottlenecks. Since clinical trials are expensive and lengthy, having capital in place can mean the difference between a stalled project and a viable therapeutic.
• Hiring top talent: With sufficient funding, startups can attract experienced scientists, regulatory experts, and commercial leaders who help navigate complex challenges and accelerate commercialization.
• Investing in infrastructure: Instead of relying on shared lab spaces or outsourcing research, VC-backed companies can secure their own lab facilities and proprietary technologies, ensuring greater control over their development pipeline.

Access to expertise: Strategic guidance and partnerships

VCs don’t just provide funding—they also offer strategic support, industry connections, and credibility:

• Investor expertise: Many biotech-focused VC firms have deep experience in life sciences, helping startups refine their business models, secure regulatory approvals, and position themselves for long-term success.
• Industry connections: VC-backed startups gain easier access to pharmaceutical partnerships, academic collaborations, and potential acquirers, giving them a competitive edge.
• Board oversight: While VC involvement brings valuable insights, it also comes with governance structures that may shift decision-making power away from founders.

Risk vs. reward: The cost of rapid growth

While VC funding accelerates a biotech startup’s trajectory, it’s not without trade-offs:

• Equity dilution: Founders must give up ownership in exchange for capital, meaning they may have less control over strategic decisions.
• Pressure for rapid returns: Venture-backed companies are often pushed toward aggressive fundraising cycles, IPOs, or acquisitions, which may not always align with the startup’s long-term vision.
• Market-driven pivots: VCs prioritize financial returns, which can lead to pressure to shift business models or abandon projects that aren’t generating enough investor interest.

Why some biotech startups embrace VC funding

Despite the risks, many biotech startups view venture capital as a necessary catalyst for scaling breakthrough innovations. The ability to secure large funding rounds allows companies to compete in a high-stakes industry where speed and execution can determine success or failure.

For some founders, VC funding is a fast track to commercialization—for others, it’s a trade-off between autonomy and acceleration.

Alternative Funding Paths for Biotech Startups?

In the biotech world, venture capital is often seen as a necessity—but it’s not the only way to build a company. Some startups, especially those working on diagnostics or platform technologies, have reached key milestones using grants, strategic partnerships, and early revenue instead of VC funding.

Take Moderna, for example—before it became a household name, the company secured over $25 million in DARPA funding to develop its mRNA platform, reducing its reliance on private investors early on. Other startups, like Adaptive Biotechnologies, leveraged partnerships with big pharma companies to fund R&D, while companies like Carmat (a medtech firm) tapped government grants and crowdfunding to support development.

While stories of fully bootstrapped biotech successes are rare, the idea that VC is the only option? That’s a myth. Plenty of biotech companies have found alternative ways to, at least, initially fund research, scale their teams, and bring therapies to market before trading equity to investors (who are often looking for 10x returns, changing the way in which the company runs).

Grants and non-dilutive funding

For startups working on cutting-edge therapies, grants from institutions like the NIH, BARDA, and the SBIR/STTR program can be a lifeline. Unlike venture capital, these funds don’t require giving up ownership—but they come with competition, paperwork, and limitations.

Winning a government grant isn’t just about having a great idea. It’s about alignment. Agencies want to fund research that fits within their specific initiatives—whether it’s pandemic preparedness, cancer research, or next-generation vaccines. Startups that can tailor their proposals to these priorities stand a better chance of securing funding.

The challenge? Grants take time. They don’t provide the same fast injection of capital that a venture round does, and there’s no guarantee of renewal. Still, some biotech companies stack multiple grants to fund their early research, using them as stepping stones until they’re ready for a licensing deal, a partnership, or—if needed—a later-stage VC round.

Strategic partnerships

Venture capitalists aren’t the only ones willing to fund biotech innovation. Pharmaceutical giants and larger biotech firms are always on the lookout for promising research. In some cases, startups can strike early licensing deals, joint development agreements, or R&D partnerships that provide funding without requiring them to give up equity.

Take the case of a startup developing a novel cancer therapy. Instead of raising a traditional Series A, the founders partnered with a large oncology-focused biotech. The deal gave them access to funding, lab space, and regulatory expertise—without dilution. The trade-off? They had to share rights to their technology.

For some founders, that’s a deal worth making. For others, it feels like giving away future upside too soon. The key is finding the right balance between securing funding and maintaining long-term independence.

Crowdfunding and alternative investors

It sounds almost laughable—funding a biotech startup the way people fund passion projects on Kickstarter. But in recent years, equity crowdfunding platforms like Wefunder and Republic have given biotech startups a new way to raise capital. Unlike traditional crowdfunding, these platforms allow startups to sell small equity stakes to a broad base of investors, pooling money from thousands of individual backers.

Is it easy? No. Convincing retail investors to back a preclinical biotech company is a challenge, and these platforms work best for startups with strong public appeal—think disruptive diagnostics, next-gen longevity tech, or breakthrough therapies with viral potential. But for the right company, it can be a way to raise early capital without dealing with VCs.

Revenue-based financing and venture debt

Some biotech startups with early revenue opt for venture debt or revenue-based financing instead of giving up equity. In this model, investors provide funding in exchange for a percentage of future revenue or structured loan repayments. Unlike traditional loans, these agreements can be more flexible, aligning payments with the startup’s actual performance.

The upside? No dilution, no board seats, no pressure to sell the company before it’s ready. The downside? You’re on the hook for repayments, and in biotech, where revenue can take years to materialize, that’s a serious risk.

So, Is VC Essential for Biotech Success?

For biotech startups that don’t fit the venture capital model, alternative funding options exist—but they require patience, strategic planning, and often, a patchwork of multiple funding sources. Some companies make it work. Others find that without VC, they simply can’t move fast enough to stay competitive.

The real question isn’t just whether biotech startups can survive without venture capital. It’s whether they’re willing to accept the trade-offs that come with independence. Because at the end of the day, funding isn’t just about money—it’s about control, speed, and the future of the company you’re trying to build.

In other words? Venture capital isn’t the only way to build a biotech company—but for many, it’s the fastest. While some startups manage to fund early research through grants, partnerships, and alternative financing, the reality is that without major capital infusions, progress is often slower, riskier, and more uncertain.

Bootstrapping preserves control but limits speed. VC accelerates growth but comes with pressure and dilution. Some startups thrive by stitching together a mix of funding sources, from angel investors and pre-seed funding to strategic partnerships with the healthcare industry. Others find that taking on venture capital is the only realistic way to compete in the biotech industry.

At the end of the day, biotech investments aren’t one-size-fits-all. The best approach depends on your business plan, risk tolerance, and long-term vision. If you can fund your company through grants and industry partnerships without compromising progress, VC may not be necessary. But if speed, scale, and industry connections are critical, venture capital can be a powerful catalyst for biotech success.