6 Ways to Reduce Costs When Setting Up Your Biotech Startup

Though biotech startups have the potential to be extremely profitable, the real trick is surviving the first few years of operation. Outside of investor funding, most biotech startups need to file useful patents and create market-viable products in order to generate income. The time to produce these innovations may take several months or years, throughout which most biotech startups tend to rely on venture capitalisation.

Thankfully, there are some proven ways to stretch that initial VC budget. Below are a few ready solutions to help biotech startups further stretch their initial operating budget.

1.) Consider Renting Space and Equipment

Fortunately, it’s now easy to find equipment and biotech lab space for rent, especially in highly developed biotech hubs like Singapore.

Rentable biotech lab spaces and equipment are almost always the best options for biotech startups. This is because starting a laboratory from scratch can be far more expensive compared to setting up a regular office. This is especially true if the laboratory needs to meet a biosafety level standard for containing hazardous materials and potential pathogens.

Renting also allows productive research work to take place almost immediately. This is an especially important consideration in the context of startups, as most need to make progress as a condition for further VC funding.

2.) Avoid Early Employee Attrition

Finding qualified biotech workers can be extremely difficult due to the specificity of the skills and experience needed. What’s more, resignations and dismissals early on can seriously hamper the progress of research work, which could be disastrous if the startup has yet to earn a regular income or create a viable product. Given this, startups in their early phases should hire very deliberately and avoid moves that cause early attrition.

3.) Consider Your Logistics Costs

The cost of logistics is one of those things that isn’t usually an issue when one is working in the academe or under the auspices of a large organisation. However, for small biotech startups, the cost of shipping the necessary equipment and consumables will eventually add up. What’s more, the complex nature of laboratory work almost makes it inevitable that people will order the wrong reagents or tools occasionally.

To avoid these issues, it pays to look at all the options for logistics before approving each purchase. Avoid using pricier logistics options for materials that aren’t time-sensitive or especially fragile, and make sure to account for return options on big-ticket purchases.

One way to further reduce the cost of logistics from the outset is to locate the startup in a known biotech or pharmaceutical hub. This way, the operation will have better access to established supply chains for most of your essential supplies. If that location is also a general logistics and air passenger hub, such as Singapore, Los Angeles, Tokyo, London, Paris, or Hong Kong, then the potential costs of acquiring materials can be brought down even further.

4.) Cut Out the Middleman Whenever Possible

While sourcing materials is far easier than it’s ever been, most ventures are likely going to be paying a lot of money to middlemen simply for facilitating orders.

Though this is still unavoidable in some circumstances, it’s easier than ever before to contact suppliers directly and avoid paying fees to middlemen. A growing number of bulk suppliers may also be more willing to accommodate the smaller order sizes typical of smaller startups.

To save money on purchases, make sure to source essential materials and reagents directly from suppliers, particularly consumables that will get used up quickly. You can also try contacting manufacturers directly to see if they can accommodate reasonably small orders.

5.) Pay Attention to Your Bookkeeping

Many biotech founders often come into the business from academia, where bookkeeping is often the least of anyone’s concern. However, tracking daily expenses is extremely important for ensuring that startups have enough leeway to operate comfortably. This is especially true for new biotech startups, as they may have limited sources of regular income if they have not yet filed any approved patents or brought a product to market.

Take some time each week to reconcile all receipts, invoices, and expense reports. Over time, this should help identify sources of waste and opportunities to further bring down expenses.

6.) Look into Contract Research Organisations for Extra Manpower

Some phases of research require considerably more manpower than others. Since most small startups do not typically have access to a steady stream of grad students, they will have to look for other ways to temporarily boost their labour requirements.

In the past two decades, contract research organisations (CROs) have been filling in this gap in research. Using the services of CROs for short-term manpower exigencies is typically less expensive than hiring an extra team of full-time researchers who may be difficult to dismiss when the need for their services is no longer required. They can also be used to handle the repetitive research tasks while your core team handles the more high-value work needed to bring unique products and patents to fruition.

Save on Your Biotech Startup Costs

Biotech startups and other budding tech operations face unique challenges compared to conventional businesses in that they are usually not expected to be profitable for extended periods. However, there is still immense pressure on these ventures to prove that their research is worth the money invested in them. By renting biotech lab space and implementing the other cost reduction strategies above, biotech startups can perform cutting-edge research without unnecessarily sacrificing the quality of their work.