Operational resilience for biotech startups starts with novel science, but building a business that can effectively operate, attract investment, de-risk, and advance the science requires a disciplined foundation. After all, even without products or revenues, it’s still a business.
You cannot control scientific outcomes, but by establishing sound business practices and proactively managing risk, you can avoid common pitfalls and preserve capital for building value — critical factors in attracting and maintaining investor confidence.
Common Signs of Weak Operational Resilience in Biotech
Establishing the right business discipline at the outset can help your organization avoid the following missteps.
A scientific hypothesis without a well-developed business plan and strategy. In today’s environment, it’s even more important that you have a clear and well-articulated plan for how to de-risk your science in the most linear, capital efficient manner. You must be able to differentiate and articulate why your science merits investment.
Misalignment between stakeholders on goals, milestones or capital allocation and use of funds. You must have clear alignment on what drives value, what is an inflection point and why. These inflection points should be directly correlated to your cash runway.
Poor cash management. If the science is what drives value, you must minimize the fixed costs that divert cash elsewhere.
Best Practices to Build Operational Resilience for Biotech Startups
Focus on data-driven value. Articulate a clear, data-driven value proposition that explains how current cash drives to the next milestone, and how that next milestone will continue advancing the value proposition.
Build lean. Avoid overbuilding your infrastructure, over-hiring, and committing to long-term obligations like leases before the science is appropriately de-risked.
Leverage variable resources. Fixed costs are an Achilles’ heel, no matter the fundraising climate or state of your cash runway. Lean on external specialists to fill roles as needed, whether in a fractional, full-time time or project-based capacity. These resources can adapt as your needs evolve.
Have a clear financial picture. Make sure you have a current and accurate budget and long-range cash forecast at all times. Enlist a financial planning & analysis (FP&A) specialist experienced in the needs and timelines of biotech companies.
Choose the right partners. Sector-specific knowledge, experience and connections are important. When aligning with service providers for outsourced finance and accounting, investor relations, human resources and more, make sure they can deliver through the lens of biotech industry perspective.
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