You have the science. You have the vision. You may even have a handful of early results that make your blood boil at 3 a.m. And yet, as a biotech founder, the hardest task is probably the first one that gets you up in the morning: fundraising.
Raising money for a biotech business takes a different set of skills from those needed to drive a discovery. You need to master the art of investor pitches, term sheets and cap tables. All the while, your experiments are running, your company is hiring and your patents are being pursued.
If you are a bio entrepreneur wondering if it is worth it, you have been asking the question for years. It is a question for which there is an answer. All you need is a roadmap, a community and infrastructure that works.
The Biotech Funding Gauntlet: Why Great Founders Can Fail
Early-stage biotech startups succeed in just one out of 10 instances. In contrast, companies from the BADASS Labs network have an 89 to 95% success rate and together have raised more than $900 million. What differentiates one founder from the other is not a genius brain, but better resources, guidance and an environment in which to create the product that investors are looking to fund.
Three key problems plague most bio tech founders in their quest to raise capital:
- The lab problem: Before the science can be done, there must be a lab. Bay Area wet lab lab incubators often require long term leases and large capital upfront in deposits and expensive equipment that drain capital resources before the science can happen.
- The equity squeeze: Many founders are willing to give up five to 15 percent equity to receive lab space. This results in significant dilution before a first institutional round of funding.
- The science-business communication gap: Many scientists speak the language of mechanisms and biological pathways. Investors, on the other hand, speak the language of markets and milestones. This leads to great ideas failing because the science was not well communicated.
Dr. David Kiewlich is no stranger to these issues. He has started six biotech companies and brought cancer drugs and cell therapies to market in more than 28 years in the life sciences industry. For more than 18 months, he spent his time trying to find a lab. His experience inspired BADASS Labs.
The Bio Founder Playbook: A How-To Guide to Funding
- Raise the data, don’t raise the decks
The biggest mistake bio entrepreneurs make in the fundraising space is to start raising money before the right data is available. In the field of life sciences, investors need to see proof of concept, some initial data and a scientific rationale. These data points are what investors look at when considering an investment and not a polished PowerPoint.
Access to world-class lab facilities provides a distinct competitive advantage for BADASS Labs’ members. BADASS Labs members have 24/7 access to all the latest high quality professional equipment, including cell culture facilities, molecular biology tools and state-of-the-art analytical instrumentation. There is no waiting period, no limited hours in the labs. The result is fast experiments and strong data. Strong data means the pitch decks can be very effective and the funding opportunities for each of the founding members are enhanced.
- Don’t dilute your cap table like it’s your IP
Founders should protect their equity like it was their most valuable IP, and the same is for their cap table. Each percentage point given up in early stage rounds can translate into huge sums later. However, most startups are giving up ownership for the most basic of infrastructure.
With BADASS Labs, the founder doesn’t give up equity and they don’t have to pay back a loan with equity in their business. Since BADASS Labs is not a venture-backed company but a 501(c)(3), our goals are to fund science and nothing else. Every dollar you raise in an early round can go into the company and not into a debt to be paid back through equity dilution at the first seed round.
A clear cap table is also very attractive to investors and shows you are disciplined, reduces risk and drives higher valuations.
- Don’t focus on raising capital; focus on creating value
Bio science investors look for de-risking milestones. Bio founders should think of fundraising as a series of milestones that must be achieved in order to create value and raise money.
Pre-seed funding should be focused on providing proof of concept data through scientific evidence, while Series A and seed funding should be focused on proof of concept in an in vivo model. A company will look to fund further de-risking of the program at the Series A phase through manufacturing readiness and IND- enabling studies and the Series B and beyond will seek to further the program toward clinical progress, regulatory approval and commercialization.
The most relevant question to ask at each phase of the investment process is not how much is the right amount to raise but rather what milestone and what risk is being mitigated?
Turn community into a competitive advantage
Fundraising is about connections, and warm intros work far better than cold ones, since so many of those connections come from fellow founders, mentors, or peers.
BADASS Labs is structured as a community of companies that share investor intros, technical expertise and fundraising knowledge together. A community with a few winners leads investors to pay attention, and their whole reputation grows.
Infrastructure strategy is funding strategy
Your burn is a fundraising factor. Investors care about how you spend money.
BADASS Labs provides all your lab infrastructure (space, equipment, maintenance, disposal, staff), all for a flat fee with no add-ons, a minimum three-month membership and no forced graduation.
The more you save on your infrastructure, the longer your runway will be, the more experiments per dollar, and the leaner you will be for investors. If you spend less on lab infrastructure, you can spend more on science and generate more data, giving you a more impressive fundraising deck.
Real outcomes: eliminate the friction
BADASS Labs members walk into meetings with more momentum. They come with better data, since they had access to a lab to generate it. Their cap tables are cleaner because they didn’t trade equity for lab access. They have other founding peers in the community who have raised funds before.
This has led to more than $900 million raised, an 89–95% funding rate versus a 10% industry average, a lab in Alameda, California and expansion plans in Salt Lake City.
Dr. Kiewlich says, “Kindness should be the key factor for everything,” and that’s exactly what we want to provide: helping founders with some of the hardest parts of starting a company. Fundraising makes you question yourself every day, but if you have a community who believes in your work, lab infrastructure that moves your science faster, and a model that never takes your equity, your fundraising experience changes.
Your move: Don’t rent an excuse, give evidence
You have the choice between paying for lab infrastructure or paying your team (or giving equity for lab infrastructure), and you don’t have to.
Founders raising millions aren’t the best in science necessarily; they generate the most data in the shortest time and keep their equity intact, while creating a strategy with a strong community and de-risked milestones that shows progress to investors.
With BADASS Labs, we have created the infrastructure, strategy, community and resources for founders to get to the next step, and we are now recruiting the next set of fearless biotech and climate tech founders.
Frequently asked questions
How does BADASS Labs help founders prepare for fundraising? Founders have access to labs 24/7 to get more and more data as they go. They can talk to other founders who have raised more than $900 million between the 12 founders in our network, have zero equity dilution, and can network with others as we build them for the funding stage.
I don’t have any data yet, only an idea. That’s the perfect time to join us! Early access to professional lab space allows founders to generate more data more quickly, as they need to show investors before fundraising.
Do you really take no equity, no IP? Yes, we are a non-profit, 501(c)(3) organization and we do not take any equity in your company and do not make claims to IP. You own your company and your discoveries.
Who are the best companies to work with BADASS Labs? Founders doing all of life sciences and climate tech are our ideal founders, including cell and gene therapy, onco, sustainable biomanufacturing, battery materials, biofuel, carbon capture, and more. But the core remains the same: generate more data quickly, protect your equity, build community and fund your milestones.
Is BADASS Labs only in the Bay Area? In addition to Alameda, we also recently set up in Salt Lake City and are working to expand more.
If you want to stop spending money on infrastructure and more on generating more data that gets funded, schedule a tour or connect to our founder community or apply for our labs. Your next funding round is your next experiment.