5 Simple Tricks to Building a Lean Biotech

Starting up in biotech is hard. And expensive. But not as much as you might think.


Over the past two decades, the costs of biotechnology research have been cratering. Never has there been a better time to launch a biotech startup to address the most pressing challenges of our time.

Of course, starting up isn’t the goal — it’s the first of many steps to success in your endeavor. It won’t be cheap, especially if your idea is in the clinical space — but you can vastly increase your chances of success by operating on a principle of lean, efficient iteration as you move toward the next milestone that you need to persuade investors to join, and stay with, your company.

No rules are universal, but here are 5 basic principles to keep in mind as you look to launch your startup biotech:


1. Trust no one

Whenever you start a business, the first thing that happens is that various people start trying to put their hands in your pockets.

There are many vendors and partners you will need to interact with over the coming months and years — including suppliers, service providers, and possibly a tech transfer department or two. While it’s important to develop good relationships with your key partners, always remember that the only person who has your business and its success as their #1 priority is you.

Sales people get paid to make sales. Lawyers need to persuade you to pay for their [very expensive] advice & services. Tech transfer exists to maximize the value of their institution’s IP to that institution. All these people may be necessary partners as you move forward, so you need to cultivate positive relationships with them — but understand that they are all acting in their own interests, and you are the only person qualified to make the best decisions for your company.

2. Learn how much things actually cost

One of the biggest challenges for new biotechs with founders who are fresh out of academia is learning how much you really need to pay for equipment, supplies, and services. Equipment manufacturers and biochemical suppliers are notoriously guarded about even the “list price” for their products, let alone their margins and ability to absorb discounts. The one thing that you can be sure of is that their real cost is much lower than you think.

Learn to comparison shop. Get at least 3 quotes for any piece of equipment or machinery, even if you think that you already know exactly what you need. Don’t be afraid to haggle or ask for deeper discounts — some suppliers will even let you “try before you buy” or lease-to-own major equipment just to close a deal with a new customer.

Surprisingly, a lot of basic lab equipment can be found on Amazon for significantly less than scientific suppliers. You can also use a virtual lab manager like HappiLabs to source affordable, quality materials and equipment without the time investment of having to do it all yourself.

3. Don’t pay for things you don’t need

This is a biggie. There are a million things that you can blow your startup budget on that won’t help one iota in your endeavor. Even if you have a generous cash pile from an Angel investor or the like, don’t be tempted to blow it on expensive offices, top-of-the-line new equipment and computers, or more staff than you necessarily need.

Unless you specifically need a specialized stand-alone facility to perform your work, find more affordable space in a coworking lab or incubator facility. Unless you really need the advanced functionality of the latest model of a particular research instrument, buy a cheaper, older model, or even a used one at a fraction of the price. Unless you really need someone with a PhD running experiments at your bench, hire someone with an associate / bachelors degree instead.

The same goes for services — at Lab Launch Inc, we use Google Apps for most of our office back-end, Gusto for payroll and benefits admin, and Legalzoom for issues like incorporation and compliance needs. Easy to use, pay-as-you-go service providers like these can help you stay lean while you are starting out; full-service bundled HR and admin packages are great for businesses who need to scale significantly and rapidly, but as a startup you should try to do everything yourself until you can’t.

4. Move fast and don’t waste time

Time is literally money. A startup business is not discovery research, and you don’t have the time to learn a new technique or assay (you have enough to learn about running a business already!). You need to set firm timelines, milestones, and clear go/no-go [pivot] decision points when creating a business plan that will be attractive to investors.

If your founding team doesn’t already have the necessary expertise in an essential technique, then you need to hire someone to do it. This could be an extra founder, a full- or part-time employee — or you can outsource it to an independent lab through online marketplaces such as Science Exchange or Scientist.com. In addition to saving you both time and money, having data generated by independent 3rd-party scientists goes over excellently with investors.

The same is true of preclinical drug trials. Planning out and executing a full FDA-compliant preclinical study requires a whole lot of specific expertise that if you don’t already have, you will pay dearly for. Suppliers such as Charles River double as contract research organizations (CROs), and have decades of experience with the specific requirements of FDA preclinical assays. Using a CRO who can perform the necessary studies at a set price and guaranteed timeline will allow you to demonstrate achievable milestones to investors, and will save you significant money without the overhead of in-house compliance expertise.

Don’t even think of running a clinical trial yourself if you don’t already have experience. Spend time networking and researching other people’s experiences to find a good partner CRO who will manage the trials for you.

5. Guard what is yours

As a new startup, in can be incredibly tempting to sign away chunks of your business in return for “free” services and advise. Be very careful with your equity — what might seem insignificant now can turn into a major headache down the road if your business’ ownership is split between too many competing interests.

There are essentially only two reasons ever to give anyone equity in your business:

  1. In exchange for money
  2. In exchange for work

As for (1), your challenge is what a fair valuation of your company is. In the case of (2), it’s a determination of what really constitutes “work”. For the lean biotech, “work” means a significant contribution to the development and growth of the business. For the most part, this does not include non-specific business advise, rent, or networking assistance.

Startup accelerators are unique in that they fall into both categories ; i.e. are both an investor and contribute to your business’ growth, usually for about a 7–10% equity stake. Especially for those who are new to entrepreneurship, an accelerator can be a transformative experience, so it is worth looking into the various opportunities (IndieBio, Techstars, Y Combinator, …) to see if their goals align with yours. Check out their curricula and testimonies from previous batches — a well-run venture accelerator can add incredible value to your startup, but beware ill-defined “accelerators” that offer little more than PR and a couple of networking events for a significant chunk of your equity. Take the time to do some serious homework — if you find a good fit, it could launch your startup to heights you never even imagined possible!


Llewellyn Cox is CEO of Lab Launch — affordable, accessible, no-strings biotech incubator space for Los Angeles & Southern California

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