Grants & Public Funding for Biotech Startups

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As you may have read in our overview on fundraising in the life sciences, there are multiple fundraising options for early-stage companies that still have a significant amount of research and development to do before launching and scaling a product or service. 

Grants, a specific type of funding, is provided through both government agencies and non-governmental organizations. When a grant is provided by a government agency, it is considered public funding, or public grant funding, because the agency is publicly funded. When a grant is provided by a non-governmental organization, it is typically considered private funding.

In this article, we are going to focus on public grant funding, as there are numerous federal funding opportunities for biotech and biopharma startups. Grants are a great option not only because they provide funding; but they can also help you build relationships in the industry, get feedback from respected peers on your work, and give you credibility and prestige. 

What is a Public Grant?

A public grant is an amount of money provided by a government department, organization, or foundation to an individual or company.

The funding provided is used to further an idea or project that can benefit the public, and does not have to be paid back. If you’re a young company hard at work on research and development, grants are the perfect place to look for early funding. 

At any given time, there are thousands of grant opportunities available through government entities, which support different verticals within the life sciences at different phases of business growth and development. Some of these entities include (but are not limited to) the National Institutes of Health, National Science Foundation, Department of Energy, and even the Department of Defense. 

Because there are so many grants to apply for, it’s important that you look for the ones that are best matched to your work, stage of growth, founders, and other characteristics unique to you. 

Public funding is used to advance the priorities and goals established by the agencies that provide it. For example, the National Institutes of Health might fund the development of a new pharmaceutical, or an app designed to connect providers to their patients for medication management. 

The Environmental Protection Agency and Department of Energy have entirely different priorities. For this reason, it’s impossible to give a general idea of what grants are used for and how much money you can expect to receive. 

Grants tend to be quite specific, so your application will have the best shot if you target funding opportunities that match well with your company’s specific goals. They usually have an upper limit of funds they will provide, and guidelines on how much can be spent in different areas of business development. 

Understanding the details of the grant you plan to apply for and what is required of you is essential if you’re pursuing public funding. 

Where Do Grants Come From & What Are They For?

As we mentioned, there are many, many government entities that provide funding for companies in the life sciences, but the place to start is the National Institutes of Health (NIH), which is the largest funding body for scientific research. 

As a life sciences company, research and development is a significant part of your work, especially early in your journey. 

In addition to research grants, the NIH provides grant funding specifically for small business development. This comes through America’s Seed Fund, which is composed of two programs: the Small Business Technology Transfer (STTR) and the Small Business Innovation Research (SBIR), which are overseen by the Small Business Administration (SBA).

Both of these programs are focused on helping life science technology companies take their businesses to the next level by accelerating R&D, attracting investors, and commercializing their products or services. They are also intended to help entrepreneurs from underrepresented communities bring their visions to life. 

Participants in SBIR and STTR must be for-profit companies with fewer than 500 employees and at least 50% of their ownership in the United States. These criteria were updated several years ago, and can possibly change in the future, so it’s important to always check SBIR.gov for the most up-to-date company requirements.

Depending on what your short-term goals are, you might be better suited to one than the other. If you need more funds for R&D, the SBIR program is likely more appropriate for you. If you have or plan to have a research partner (academic or otherwise), STTR is more appropriate for you. 

All participants in STTR are required to have an official partnership with a nonprofit research entity, which can be a university, a research organization, or a federally funded R&D center. The NIH has a breakdown for you that explains the main differences.

As we mentioned earlier, almost every government agency that is science-oriented will have grant opportunities. These are all available at grants.gov, but you can look at their websites for specifics. 

In addition to looking at grants provided by the federal government, we recommend looking at the funding available in your state. As is the case for government agencies, each state has different priorities for business growth and development, so it’s worth seeing if your business goals align with any of them. These opportunities are also likely less competitive since a smaller pool of applicants is eligible.

How do I apply? 

Grant writing is competitive, which means that your application will take time to prepare and needs to be nothing short of excellent. Before you even think about grant writing, make sure you have a solid business plan. 

First, you need an idea that is innovative, feasible, and backed by a comprehensive literature review. You’ll also need a plan for further research that is well-designed, takes into account ethical issues, establishes appropriate controls and plans for statistical analysis, and outlines future collaboration with other institutions and experts. Any data you already have should be properly collected, analyzed, and clearly displayed.

With a comprehensive business plan in hand, you’re ready to look for funding opportunities that would fit you best.  There are thousands of opportunities, so using sites like Grants.gov to filter by the criteria that apply to your business and your team, and anything else that’s important to you, will save you a lot of time. 

Read the requirements carefully; you might find that you’re not quite ready to apply to the ones you’re most excited about, but don’t despair. This can be an aspirational exercise and can help you figure out important next steps for your business.

Even though each individual grant is different, you will follow roughly the same process for all government grants. After you have done your due diligence on application requirements, developed a proposal, created a realistic budget, you’ll be reviewed by a group of peers who understands your vertical as well as you do. 

Don’t try to create the budget you think your panel of reviewers wants to see. Create a budget that will allow you to do exactly what you plan to do with room for unexpected challenges. 

Once your application is approved, your funds will be distributed, and you’ll have to use them within a designated period of time. You’ll also be required to report regularly on your progress and how the funds are being used throughout the lifecycle of the grant.

In Conclusion

Don’t let the long process discourage you. For early-stage companies, grants can be instrumental in moving your business into the commercialization process, while giving you a huge boost of credibility. 

Even if you’re not selected, the self-audit required to prepare your application is still worthwhile. It’s a way to clarify your mission, vision, and what you need to prioritize to get there.

We know this process can be overwhelming, so we have compiled some other resources below for you that can help along the way.

For a comprehensive list of government grants, check out grants.gov.  You can also subscribe to funding opportunity announcements and download their app for easy access.

Sign up for weekly emails from the NIH on funding opportunities here, and learn about NIH grants and the application process here.

More agencies to look into: