Life science and healthcare companies have many avenues available to raise capital at various stages, each with its own benefits and considerations. Savvy founders and startup leaders should understand which asset class can offer the best opportunity to advance and support their company’s success. Across all sectors – therapeutics, diagnostics, tools, medical devices and digital health – the approach you take today to create your syndicate of investors will impact all future funding rounds.
A new report from J.P. Morgan offers an overview of five types of private market investors: incubators, venture capital, corporates, family offices and SPACs.
Incubators
Incubators (sometimes called accelerators) can be great resources at the earliest stages of a company’s development. There are hundreds of life science and healthcare incubators in the U.S., and they each offer a distinct approach to capital formation and resource management.
Most include research and lab space for relatively low or no cost—and some provide seed funding to operate. While the level of funding varies and may be nominal, it is often enough for those seeking proof of concept or early stage, pre-clinical efforts.
Things to consider:
- Some incubators have longer-term occupancy options, while others can be very short.
- Some specialize in certain sub-vertical efforts, such as specific therapeutic areas, while others are all-encompassing.
- Incubators may have added benefits as well, such as access to development and corporate equity partners, which could ultimately provide longer-term funding.
Venture capital
Life sciences companies often need significant amounts of capital to reach scientific and operational milestones, particularly in the clinical growth stages. Venture capital (VC) investments can help and continue to trend upward for companies at all stages of development.
Venture firms bring a wealth of resources to the table outside of just capital needs. Life science and healthcare VCs have likely experienced the challenges and successes of multiple operations in the pre-clinical, clinical and commercial stages. For this reason, they can help founders and managers navigate pitfalls and capitalize on scientific and market opportunities.
Things to consider:
- Many VCs have cultivated valuable networks of mentors and partners that can be utilized and maximized by early stage business leaders.
- Some VCs may prefer an active role in your company, like serving on your company’s board of directors.
- In recent years, venture rounds are increasing in size across many areas and companies are accessing the public market at earlier and earlier stages.
Our team of life science and healthcare bankers and specialists focus on solutions for pioneering companies at all stages – from early stage through commercialization.
We understand the complex funding and regulatory challenges you face at every step of development, and we’re ready to help you stay positioned for innovation and growth. Learn more about how our life sciences team can help companies like yours.
When looking for the best funding source to support your organization, consider your firm’s needs, where it is in its growth cycle, and where you expect it to go in the future.
Our team of life science and healthcare bankers and specialists focus on solutions for pioneering companies at all stages – from early stage through commercialization.
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Photo: J.P. Morgan
