Last Updated on
January 10, 2024
By
Excedr
Are you embarking on a scientific discovery and innovation journey? Starting a new laboratory dedicated to research and development in biotechnology or biopharmaceuticals is a bold and ambitious endeavor. Whether you're spinning out of academia, leaving an incubator, or wrapping up your accelerator program, this next stage of growth is challenging, to say the least.
With a specific focus on wet laboratories and the dynamic research within their walls, this blog post can help researchers navigate the intricacies of launching a successful lab facility.
In biotechnology, wet labs are pivotal in advancing scientific knowledge and transforming groundbreaking ideas into tangible solutions. Scientists work with biological materials, conduct experiments, and unlock new frontiers in understanding and harnessing living systems.
In this blog post, we will explore the essential elements and critical considerations for establishing a lab for biotechnology R&D. From acquiring necessary equipment and setting up the laboratory infrastructure to ensuring regulatory compliance and fostering a culture of safety; we will cover crucial aspects that lay the foundation for a thriving research environment.
Through a proactive and hands-on approach, you can cultivate an atmosphere of collaboration, innovation, and scientific excellence within your wet or dry lab. We aim to equip you with practical insights and actionable steps to kick-start your journey and set your laboratory on a path of success.
Let’s delve into the intricacies and possibilities of establishing a dynamic lab facility that drives scientific progress and fuels biotechnology and biopharmaceutical research.
Drafting a business plan is crucial to your efforts, because it not only helps to secure startup funds, but also demonstrates that you have done your market research and outlines the services you plan to provide. Your business plan should include:
Though this sample business plan focuses on a medical lab with services to the public, it gives you a good idea about how to adapt it to your research lab.
Lab start-ups can become expensive quickly because it’s necessary to secure lab space, get equipment, find faculty members, and so on. Luckily, there are many lab funding options available including:
The federal government offers hundreds of grant opportunities to life sciences and healthcare businesses and research programs, funded by different agencies such as the National Institutes of Health (NIH), the National Science Foundation (NSF), the Department of Energy (DOE) and more. This includes SBIR grants, STTR grants, and BARDA funding, among others.
Grants are advantageous in the sense that they provide a source of funding that does not need to be paid back. Winning a well-known grant can give your lab promotion and prestige, bringing credibility to your business.
But when you consider that the competition is fierce – given that there are so many businesses and comparatively fewer grants available, and that the application process requires spending money, it isn’t the most practical approach. Not only this, but that free money comes with conditions that must be upheld.
In some situations, grants may be renewed annually, but it’s possible that a grant you were expecting to renew will vanish at a moment’s notice. Because of this, if your lab relies too heavily on grants for operational funds, the business could collapse.
Working with a VC firm may be a sound option, because it often provides a larger influx of cash than other sources can offer. There are a number of pros and cons to venture capital financing that are important to consider.
You gain access to a large amount of capital you otherwise wouldn’t have access to, and you can typically leverage the network of resources the investors are connected with. In addition, the partners at the firm may specialize in your industry, and will be able to provide you with invaluable insight or advice. And, as a board member, they may also bring even more credibility to your organization. However, one of the main drawback is that the venture capitalists who invest in your company become stakeholders, and now own a percentage of your company, earning a share of the profit and possibly making decisions outside of your control.
That said, VC investments can help you grow faster, because without that cash, you may be forced to wait a year or more before you can count on a steady stream of revenue to invest in new equipment or staff. But, your company may not be ready to grow. If you don’t quite know how you’re going to make the business profitable on its own, you could spend too much money on things that won’t help you in the long run.
You’ll have to spend a considerable amount of time (and possibly money) to get your pitch right and present to VCs to raise the funds. You may not get the deal you’re hoping for. But if you do, you’ll expand your network of people to include other business leaders and entrepreneurs who can help you succeed.
There are numerous VC firms who specialize in biotech and the life sciences. It’s worth checking each out to see whether one would be a good fit for you.
These are people or companies that invest their own money in your company, with the idea that your company will succeed so they earn a return on that investment. Venture capitalists are one type of private investor, but others include angel investors, friends and family, and private equity firms.
Friends and family may be eager to help you get started, but failing to honor your commitments could strain the relationship. Private equity firms aren’t generally interested in startups, but instead focus on established businesses.
Fellowships are essentially scholarships for people who have already earned a college degree and are seeking additional education. Often, these are graduate students who are completing their graduate program or graduate degree holders who need hyper-specialized training.
These funding awards vary widely among disciplines and are highly competitive in nature. Fellowships generally last a year, though some may last longer, and some may be renewed.
You’ll need to prepare budgets as part of your proposals. Focus on the science, because it’s a large part of what determines whether you get funding or not. At the same time, you need to budget accordingly, factoring in the total amount per year that first-time investors can request, along with the allowable supply budget per person per year. The budget needs to match the proposed work, especially because of how competitive grants can be.
Opting to lease equipment rather than purchase it outright relieves a great deal of financial burden, and can improve your overall budget. Leasing is a non-dilutive form of financing, which means you as a shareholder retain more ownership of your company while getting the expensive equipment you need into your lab. You can make your dollars go further by paying a smaller upfront cost for the things you need to work with every day.
Leasing is also much faster than raising venture capital or borrowing from a bank, so you can quickly procure equipment without extended, drawn-out lead times. You can learn more about equipment leasing here.
Beyond money for the lab, equipment, and staff, you’ll also want to establish funds for overhead expenses, insurance, accounting fees, and legal fees.
You’ll also want to prepare for funding sources as the lab grows. Beyond VC and grants, the Small Business Administration (SBA) offers loan options for small businesses that meet certain criteria. Your area of research also influences financing opportunities in terms of the available grants.
At a certain point, it will make sense to find dedicated lab space for your operations. Up until this point, you're probably using a shared co-working space or operating out an incubator or academic lab. Whatever gets the job done for now. Sharing space and equipment is limiting however, once you're ready to scale.
Finding somewhere to set up shop will take time, and lab space can be costly. Renting or leasing is an excellent option until you've grown to the point it makes sense to put down some serious money on a space of your own. But, if you end up leasing lab space indefinitely, that's not a problem. Many businesses do. The cost of buying commercial space is often just too high and it can be hard to justify that kind of expenditure.
Create a check list of everything you'll need regardless of whether you're looking for a short-term rental, long-term lease, or space to purchase. Knowing your needs and requirements for operation and scaling will help you determine the best space to move into. Try to keep your costs down, whether that's a monthly payment or a mortgage. Recurring monthly expenses will add up and make a significant dent in your budget, so plan accordingly.
Once you’ve secured some lab space to operate in, and potentially hired a few key lab members, you’ll most likely be ready to procure the lab and office equipment you need to effectively operate the lab.
Depending on your area of research, you will likely need a variety of lab tools and machines, such as imaging equipment, analytical instruments, chromatography, microscopes, and more. This can mean purchasing several centrifuges, freezers, spectrometers and spectrophotometers, PCR and qPCR systems, and even high-throughput liquid handling systems. However, these costs add up, and are generally the area where you’ll spend the most money.
Opting for used equipment can be tempting, since buying new equipment can easily cost hundreds of thousands or even millions of dollars. But, used equipment comes with the risk of equipment malfunction or failure. Lab equipment auctions can provide great deals, but if the equipment fails shortly after your purchase, you’re out of luck.
Alternatively, leasing your scientific equipment offers an affordable way to set up your lab, while ensuring you have quality functional equipment, whether new or refurbished. Whether you operate a medical laboratory or a research laboratory, a lab equipment leasing program like ours ensures that machines are properly maintained and repaired in the event of a breakdown.
Additionally, because of the operating lease structure, as opposed to a capital lease structure, the monthly lease payments are potentially 100% tax deductible. (Speak to a tax advisor to determine the full implications of equipment leasing.)
The leasing approach gives you peace of mind by avoiding the hefty upfront costs associated with purchasing and by removing the headaches associated with annual service contracts.
Any successful business, not just a lab startup, will need a team of advisors to help manage it. Beyond lab management and the lab itself, there are many other functions that must run smoothly, such as human resources, accounting, legal, and insurance.
In the beginning, it’s perfectly fine to hire outside consultants or contractors to address these needs. As the lab grows, however, it may be necessary to convert these to in-house positions. If you operate in an biotech incubator, you may have access to shared business management services.
One of the hardest parts about doing anything is starting in the first place. Founding a lab and pursuing your goals means figuring out how to translate your science, learning the ins and outs of business, making the right legal and financial decisions, managing a team of people, and so much more. Which can feel extremely daunting. But, you won’t get anywhere if you don’t start. Hopefully, this guide helps you start off on the right foot, and provides an outline of what you’ll need to get where you want to go.
