How to start a biotech company?

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How to start a biotech company?

As our dependence on this industry continues to grow, the world needs more bioentrepreneurs who can start biotech startups to help save and enhance human lives. This all begins with an important question — How does someone create a biotech company?

Start a biotech company

Whether you're a recent grad student, a tenured professor, or an entrepreneur, starting a biotech company is an uphill task. Unlike a tech company, a biotech company can't be created from a dorm room or a garage just yet ( is working to change that!). Navigating through this heavily-regulated, IP-sensitive industry requires extra effort.

To guide you on your journey, I have listed 9 rules of success for establishing and scaling your biotech startup. I've interviewed industry leaders and read many publications to come up with this list.


Rule 1. Perform market research and test the commercial viability of your biotech product

Before you invest any time in your business, you need to ask the following questions to confirm the commercial viability of your idea or invention.

  • What is your value proposition? Who are your customers and partners?
  • How big is your total addressable market?
  • Are there any competing technologies or products that address your target market's needs? If so, what is unique about your invention? Is it cheaper, faster, or better?
  • How does your product fit into the entire process or patient care system?
  • Why will people use and pay for your product?
  • Is your idea a product, a service, or a process?
  • Which market segment is the primary beneficiary: medical, agricultural, industrial, or environmental?
  • What need or problem does it solve? What is the unaddressed need it is solving?
  • Who will be your buyer, and how will it help them?
  • How much will it cost to reach a commercial product?
  • What does the regulatory path look like, and what are its associated hurdles and milestones?

The best way to get answers to these questions, minimize the risk of starting a biotech company, and develop your business model is by talking with your potential partners and customers (aka "customer discovery"), venture capitalists, and fellow scientist entrepreneurs.

This will also help you validate your assumptions, prioritize things that matter most to your potential buyers, and help you determine whether there is a genuine market need for what you're offering.

Another thing you should do as early as possible is to ensure that your biotech product will be better than currently available products on the market. It has to be substantially better to be successful. For example, creating a therapeutic product that will add only a few weeks or months to a person's life is probably not worth the effort and money. 

At this point, your goal should be to find out if your innovation is novel, has a viable market, and create a plan to validate your claims.


Rule 2. Get in touch with the tech transfer office

If you're operating from a university lab, getting in touch with the University's tech transfer office (TTO) should most likely be your first step. TTO can become a guiding light throughout your entrepreneurial journey. They can protect your invention by filing a patent application, introduce you to potential mentors and advisors, evaluate your invention's commercial viability, help you form a team, and even help you raise money from their internal university fund as well as from federal and private investors.

Most universities have a standard policy on what happens to the IP in the course of development. These policies generally stated that the University owns all IP generated at universities, and the revenue accruing from inventions is divided between you, the inventor, and the University.

"Tech Transfer offices are connectors to the external world. These offices have insights and resources for taking your innovation from lab to marketplace." - Prabhpreet Gill, Technology Licensing Associate at Princeton University


Rule 3. Protect your biotech startup's IP

Your IP is one of your biotech company's most valuable assets, so make sure you secure it early and effectively. Protecting it will also give you exclusive rights to practice and sell your invention, which is desirable to investors.

If you do not have access to the University's tech transfer office, hire a patent lawyer to help you draft legal patent claims to protect your technology as broadly as possible. Make sure your patent claims reflect the final product rather than just its method.

A bioentreprenuer should never overlook IP protection. Whether you have identified an association between a drug target and a specific disease or developed a novel biomarker diagnostic technology, try to get your findings patented.

To better protect your IP, you need to keep the following tips in mind.

  • Keep your notes and other records of your invention. Consider using to maintain the full audit trail of your work. 
  • Do not disclose your IP without establishing a confidentiality agreement.
  • Keep track of confidential disclosure agreements and material transfer agreement restrictions.
  • Never offer your invention for sale; always consider licensing instead.
  • Have your patent review before publishing scientific data about your invention

Keeping all of that in mind, find out if your technology of interest satisfies the patent office's requirements: is it novel, useful and non-obvious? If the answer is "yes," your technology has a decent chance of getting patented.


Rule 4. Run a proof of concept study for your biotech startup idea 

You need to run a proof of concept study to demonstrate that your idea has the potential to become a commercially viable product. Let's say your IP is about a drug target for a specific disease. In that case, you want to generate data from lab experiments to show some correlation between the target and cure.

If you're not affiliated with any university and do not have access to lab resources, consider applying for biotech incubator programs at Indiebio ( partner), Janssen Labs, and QB3. They can give you the support you need to run a proof of concept study.

"You see, Steve Jobs and Bill Gates started their companies in the garage. Well, for us scientists starting a biotech business, the academic lab is our garage," Hugo Gagnon, CEO of PhenoSwitch Bioscience, a leading mass spectrometry service provider.

Rule 5. Form your all-star biotech startup team and advisory board

Biotech is a team sport. Your team should be able to build a product or service promised to investors and commercialize it. Most investors make a funding decision based on the quality of teams and their collective experience.

However, recruiting team members has its share of obstacles, such as not having enough money to pay a competitive salary. You'll have to be creative and inspiring when convincing people to join the team. If enticing, your company's vision, equity, and stock options can help you recruit your first employees, co-founders, consultants, and strategic advisors.

You want to make sure your team has a diverse makeup of skills and experiences capable of realizing your vision. For example, a cancer biologist wanting to develop an immuno-oncology drug would want to find someone with immunology, pharmacology, and drug development experience, while a clinical researcher might want to hire an engineer to help build a diagnostic product.

To find advisors, networking at scientific events is a tried-and-true option. Other popular choices include reaching out to people on LinkedIn and Twitter and joining a mentorship program like the ones offered by incubators and universities, such as the QB3 Executive Mentorship program. 

Rule 6. Incorporate your company

As a bioentrepreneur, you need an excellent chartered account and a corporate lawyer to help you incorporate your company, establish commercial agreements, apply for a trademark, and other such tasks.

Incorporating a company is essential. Only when your company is incorporated are you qualified to apply for government grants and funding from incubators. Registering a company sooner rather than later is strongly recommended, but make sure that you choose a company structure that suits your business model. For example, if you will incentivize your team and investors with equity, you may consider a C-corporation in the US. Otherwise, a Limited Liability Corporation (LLC) will make more sense.

Rule 7. Find out what resources you need to validate your assumptions and set your biotech up for success

Once you have enough information about your potential commercial product or service scope, you need to understand what will be required in terms of time, resources, and strategy to develop that offering. To help you plan your resource and startup gameplan, I've listed a few questions that will offer you a structured template. 

Lab Space

How can I find a lab space that suits our current research needs? Should we rent a bench space at a coworking lab such as LabCentral, LabShares Newton, BioLabs, and JLABS?

Lab Instruments

What instruments do we need to support the early stages of R&D? Should we buy used equipment and tools from universities or on auction sites like BioSurplus and LabX? Should we outsource everything on

External Consultants

Do we need to complement or supplement our team's skills with external experts? Should we hire consultants on sites like and Kolabtree?

Consumables and reagents

Can we leverage incubators' bulk discounts to obtain consumables and reagents cost-effectively? Or should we buy them directly from the manufacturer or on the marketplace?


Rule 8. Engage with biotech incubators, angels and VCs early

Once you know how much money you need, you need to establish where your finances will be coming from. Will you and your co-founders bootstrap the company with your own money? Apply for incubators like IndieBio and JLABS? You can also apply for an early-stage federal grant like Small Business Innovation Research (SBIR) or Science and Technology Translation Research (STTR). If you're ready, you can start to engage with biotech angels or even VCs. Some of the most active biotech VCs are Atlas Venture, Third Rock Ventures, Arch Venture Partners, Sofinnova Partners, and 5 AM Ventures.

Before you start applying for any funding, you need to make sure your fundraising kit is ready. It would be best to have a thorough business plan, a 1-2 page executive summary, and a script for a 30 second/60-word elevator pitch in this kit. I used LivePlan to create these materials and collaborate with my co-founders, but you can use free templates on Google and collaborate on Google Drive to save $20 a month.

Your business plan must clearly define the following:

  • The market need (problem)
  • How your product or service will solve the problem
  • How much money your product or service will generate
  • How you intend to spend the money
  • Who the key personnel within the company are
  • What the return for the investor will be

Rule 9. Create a digital biotech and set up your startup for success on day 1

Data is a valuable asset of a biotech company that is often underutilized. Digitizing all operational and R&D data can help a startup preserve its institutional knowledge, automate workflows, create machine learning models to recognize the cause of failure early on, and make smarter decisions. However, most biotech startups lack digital capabilities that prevent them from realizing the full potential of their data. Their data stays siloed or offline. 

This is where comes in - We transform your traditional biotech into a Digital Biotech™ and help you scale like tech companies. 

We'll continue adding new rules to this list over time to help set your biotech company up for success.

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