5 strategies for biotech startups to outlast a market downturn

Founders in the biotech industry are no strangers to challenges. Success is impossible to come by without substantial investment, time, and technical expertise. Although life science startups managed to come out relatively unscathed last year, the enduring economic climate is turning fundraising into a never-ending marathon. Inflationary market dynamics and ongoing fiscal tightening continue to pose significant risks to capital commitments. A successful raise in 2021 feels like ancient history.

As a venture capitalist specializing in early-stage life science companies, I work with startups that have the potential to revolutionize the world against biothreats, pandemics and more. Every day I see new biotechnology that inspires my team and our investors to put capital to work. Many of these startups were well-capitalized last year but are now facing difficulties as they look to raise.

To ensure survival, it’s essential to explore alternative funding methods rather than relying solely on classic fundraising. This is especially true for biotech startups, where investment needs are higher and success timelines can be much longer.

If you’re an entrepreneur in the biotech industry, it could be time to make practical pivots to ensure your company can thrive. Here are five strategies that could help your biotech startup navigate a cooling fundraising environment:

1. Set lower fundraising goals

During an economic downturn, trying to raise a large sum might not be feasible, and the time and resources you invest in fundraising could be better used on key business initiatives. By raising less, you can prioritize your survival, conserve your most valuable resource (time), and keep your focus on meeting near-term inflection points. With a smaller pool of investors, you can also maintain a stronger influence over your company’s strategy.

2. Target experienced investors

When raising, it’s crucial to focus on building relationships with investors who share your vision and can offer more than just capital. Investors who have experience in your industry can provide valuable guidance and connections that can help you navigate challenges and take advantage of opportunities — this type of investor is valuable in a downturn since they can advise you on technology-specific strategies.