Bioscience Funding Landscape: Access to Capital Options

For most startups and growing biotech businesses, access to capital is a top priority. Ensuring sufficient runway is built to support research and development can make the difference between success and failure, so understanding the landscape is vital.

First, the traditional way to access capital via investors and venture capital remains lucrative. Significant new dollars flowed to health innovation last year. In 2021, the total healthcare investment dollars reached $47 billion (more than double 2020's first half pace) and Q1 2021 spiked to a record $23.4 billion, beating Q3 2020's quarterly record by 56%. The investment continued to grow in Q2 2021, increasing to $23.9 billion. Digital health, in particular, funding among US-based startups hit an unprecedented $29.1 billion across 729 deals in 2021, nearly doubling the prior year’s record of $14.9 million. Just $1.3 billion of this went to women’s digital health innovators. However, most of the dollars continue to be directed to safe bets with oncology (common cancers) obtaining the most funding and auto-immune (where 80% of patients are women) receiving the least, and it is still a game of who you know.

Another traditional source for the life sciences industry is the SBIR and STTR grant program, but this is very competitive as well with a 12-18% success rate, depending on which NIH institute one applies to for funding. The application process is lengthy and cumbersome, the funding awards are low starting at $250,000 and can grow to Phase 2 level of $1-2 million but can take a year before reaching a higher amount. Often a small business can apply for an SBIR/STTR grant and not receive the funds for 6-9 months and by then the innovation path has changed.

A third government funding option for bioscience startups falls into the area of grant funding with a vast range in the kind of mechanisms used to make awards exploding in recent years. For many of these opportunities, you do not need to be a small business with under 500 employees and under 50% ownership rules, and you do not have to be capped at $240,000 or $1-2 million. You also can make a submission much more efficiently with a pre-proposal and the Program Manager has sway with just how much funding can be allocated. What is key for these funding streams is knowing the Program Managers, gaining insights on priorities and how your innovation aligns, and meeting key timelines in the year-long funding process. Opportunities include USAMRDC, Office of Naval Research, Air Force, AFWERX, DefenseWERX, CDMRP Program Announcements, Joint Warfighter Medical Research Program, Congressionally Directed Spending or Community Project Funding, and various consortiums that are tied to government but run independently, such as MTEC, MCDC and ARMI, among others.

Navigating these opportunities and relationships can be a challenge, but accessing Program Managers and gaining insights into priorities can be easier by attending the annual MHSRS conference, tracking the funding announcements and aligning with their descriptions, and engaging with those running these various programs as a resource to help them achieve their missions. You can learn more from the G2G team – check out our upcoming free webinars on June 17 and June 23.