Founding a biotech company is a special challenge. The development of active medical ingredients through chemical or biotechnological processes as well as the development of therapeutic approaches, such as gene therapy or immunotherapy, are time-intensive processes that are associated with high risks and high costs. This applies equally to startups in diagnostics or with service-oriented business models in the preclinical area.
Biotech startups are hardly comparable to startups in the IT sector. Ideas are often based on years of research in an academic environment before they are even commercially viable. On the other hand, this means more technological substance and thus special unique selling points for the business model. This also results in high competitiveness and sustainable business development. This is well illustrated by the fact that hardly any other industry is more resistant to crises than the healthcare industry.
The German capital region Berlin-Brandenburg is internationally one of the leading locations in the health care industry, health care and life sciences. World market leaders, renowned researchers, first-class clinics, innovative startups and specialized professionals from all over the world work here continuously and together on top performances for the regional and global healthcare market. This is an excellent basis and provides an inspiring environment for innovative startups.
But not every good research idea turns into a good business idea. Several success factors and framework conditions are required for a good idea to become a commercial success.
The concept is just the beginning
Before taking the first steps towards a start-up, the technological concept must first be in place. The idea must be thoroughly validated, as much data as possible should be collected, and proof of basic technical feasibility should be provided. If the functional proof is missing, it will be extremely difficult to obtain start-up financing already in the seed phase.
In this respect, a convincing technical concept is the decisive prerequisite. It is just as important to know the market, which usually has to be viewed globally. What is the current state of the art? Is one’s own idea superior to other solutions, who is the immediate competition and how large is the market potential? And already here, one should think about what the potential market entry hurdles could be, from which the options for action for one’s own strategy arise. This also includes securing intellectual property in order to have freedom of action. Information on this can be obtained from the transfer offices of universities and research institutions. Ultimately, the concept must be economically viable and convincing in addition to being technically feasible.
It needs team players
Once the prerequisites for the technological concept and the market conditions have been met, the next and perhaps even the decisive challenge follows: team building. The path from project to start-up means the beginning of a complex process that ties up many resources in addition to the actual scientific work. This can quickly lead to being overwhelmed and thus to a quick end of the original ambitions. Biotech start-ups are usually initiated and also shaped by a scientist. This makes it all the more important to bring business skills into the team. It is therefore better to seek support in good time, to form a team with a clear division of tasks or to find a competent partner who can devote himself fully to the task. This then also includes the willingness to share one’s idea as well as shares in the company at a very early stage. A broad-based founding and management team is essential for success.
Team building also includes recruiting qualified and motivated personnel. Here, the Berlin Brandenburg region offers optimal conditions. With around 150 degree programs in the field of health and life sciences and a total of around 40 life science-related scientific institutions in the Berlin-Brandenburg region, the potential for recruiting skilled personnel is outstanding.
A well-positioned team is rounded out by employees who are knowledgeable and have strong opinions. Ideally, these should be scientists, but also industry insiders who have a good reputation in the business field concerned. They ensure the necessary acceptance and reputation of the startup and, with their connections, can be door openers to valuable contacts such as initial customers. Investors can also be impressed if excellent experts are tied to the company, e.g. in the form of an advisory board.
Contact points for people wanting to found a company
The success factors mentioned so far are in the direct sphere of influence of the founding person or the founding team. External factors that promote the success of a start-up should also not be neglected. These include the general conditions that prevail at the location and offer startups a startup-friendly and innovative environment.
On the way to founding a company, you should take advantage of the extensive services and programs offered by universities and research institutions as early as possible. Currently, Berlin’s universities are joining forces and expanding their services for founders with new formats, such as the startup scholarship, and providing support for all startup-related questions. In addition, or for startups that do not come directly from an academic environment, a wide range of services can be accessed in the capital. Contact points include the development bank of the state of Berlin, the IBB, the IHK, and we, Berlin Partner for Business and Technology, offer comprehensive support to founders. This includes, for example, the identification of suitable funding, the search for a location, support in recruiting personnel and in networking with suitable partners. Last but not least, the founding team receives constructive feedback on their business idea. For example, Berlin Partner offers the annual Seedcamp, a 2-day workshop where potential founders can receive valuable information from experts and former founders.
“Thanks to first-class science and successful startups, the capital region – HealthCapital Berlin-Brandenburg – has become the leading European biotech location in recent years. To keep it that way, supporting innovative startups is a top priority for us at Berlin Partner.”
Dr. Kai Bindseil © Berlin Partner – fotostudio charlottenburg
Taking advantage of the range of incubators and accelerators is equally recommended. These points of contact help with optimizing the business model, expanding the network, all the way to connecting with the first investors. In addition to the workspaces of universities and colleges for founders, there are more than 100 incubators/accelerators in the capital. Of these, some specialize in the LifeSciences and support founding teams from the earliest stages. Such programs are offered, for example, by Vision Health Pioneers, the SPARK program at BIH or the Bayer Group’s G4A accelerator program.
Room for development
A well-developed infrastructure of laboratory space that is available to startups and meets the needs of dynamic development is also enormously important. The Berlin-Brandenburg region is also particularly well positioned in this regard. There are eight startup and technology parks with more than 240,000 square meters that offer specific space for biotech companies. This offer is extremely important, especially for startups that need laboratory space, as this saves high investments in laboratory equipment. And there is further investment in the expansion of the infrastructure. A new laboratory building with around 15,000 square meters is being built at the Berlin-Buch campus, and in the next few years the FUBIC, a new technology and start-up center with around 50,000 square meters for life science companies, will be built in the immediate vicinity of the FU Berlin. Together with the other locations, this will create the best conditions for the upcoming start-ups in the future.
“The BerlinBioCube will provide start-ups with an international, vibrant live science community. As in research buildings, spacious areas for the creative exchange of the young companies will be created there in addition to state-of-the-art laboratories. Very crucial is also the proximity to established biotech and medtech companies and renowned biomedical research institutions as well as cutting-edge technology platforms”
Dr. Christina Quensel © Campus Berlin-Buch GmbH/Peter Himsel.
Tailored programs in funding
To establish the first project, access to capital or funding is essential. However, there are effective programs available to you in the very early stages. The most effective here is EXIST funding, which is available to academic spinoffs. There are also several options for proving technical feasibility: for example, the federal government’s VIP+ validation program. Or the options for funding for the so-called preseed phase, so that potential founders hardly have a problem financing the first steps here. At the local level, life science startups are clearly the focus of public funding. These include IBB, with its wide range of funding opportunities, and IBB Venture, one of the largest early-stage financiers in Germany. Both have a clear commitment to life science startups. This is not without significance for future investors. Among other things, they evaluate the availability of funding in the development phase as well as local co-financing.
The environment is decisive
Does the location have a positive effect on the startup’s development? Investors like to check whether startups are located in an innovative and startup-friendly environment. Are there sufficient networking opportunities with science, with other companies for cooperations or even with potential customers on site and, last but not least, sufficient recruitment opportunities for qualified personnel. Also not to be neglected is the question of whether the location is also attractive for international workers – all aspects that are important for investors and that apply to the capital region with 40 scientific institutions, more than 280 biotech companies, more than 30 pharmaceutical companies and the international flair.
An outstanding example in the context of the aspects mentioned is T-Knife, a spin-off from the Max Delbrück Center and based on the Buch and San Francisco campuses. T-Knife aims to develop new therapies against cancer using genetically modified immune cells, or T-cells. Within a year, T-Knife has succeeded in raising more than 170 million euros with international investment funds.
“Our technology was already very advanced before we were founded and we had a broad scientific data base that supported our hypothesis. Together with our competent team, this was one of the convincing arguments for our investors.”
Dr. Elisa Kieback © T-knife
A startup-friendly climate for biotechnology is based on a clear commitment to the life sciences as a key technology and growth engine for the future. With support for networking between science and industry, for the development of projects, and for startups and settlement projects, a wide range of services is available. For example, the cluster strategy that has been pursued for years, the formation of the health industry cluster and the international marketing of Berlin-Brandenburg as a business location set an example.
Overall, it is clear that a biotech start-up is a demanding challenge. However, once the technical and market requirements have been met, biotech founders will find the best framework conditions and services in the capital region. You just have to take advantage of them!
About the author:
Volker Erb, a graduate industrial engineer (FH), has been working for Berlin Partner für Wirtschaft und Technologie GmbH in the field of healthcare for over 20 years. His main focus is on the networking of science and business as well as the support of R&D projects and start-ups. In addition, Volker Erb is the initiator and moderator of various formats such as the “SeedCamp” as well as the coordinator of successful networks such as the “NetPhaSol”. In addition, he is a coach and juror at various business plan competitions.