James Coates is the Health and Human Performance principal at Decisive Pointa venture capital and advisory firm that invests in and supports startups with emerging defense technologies.
Future-proofing the finances of your biotech startup through a market collapse means more than just raising capital or rushing to close your round.
I perform due diligence on dozens of life science companies each week whose technologies might help future-proof the world against the next biothreat, pandemic or otherwise. I see everything from neural probes and artificial intelligence for clinical trials to synthetic biology and quantum sensors. Every startup coming across my desk was well capitalized, but trouble might be on the horizon.
With inflationary market dynamics now firmly here and fiscal tightening ongoing, it’s natural that more speculative ventures with higher cash burns, such as biotech — especially the deep science stuff — suffer the most and suffer first.
But government investment cycles oppose private investment dynamics. When the economy is doing better, it requires less intervention and support. During times of crisis, monetary and fiscal policies are meant to resolve economic burdens swiftly. This is as true today as it was during the early 2000s or after 2008.
Founders of biotech startups are most vulnerable in these conditions and must look beyond classic fundraising to survive. In a downturn, non-dilutive grants or contracts from the government should be seen as more appealing than ever because they provide runway without dilution and make for great headlines.
As a startup, it’s easy to focus on dilutive capital raises, even if the macroclimate may not be the best for it.
Our team built our venture capital firm through advisory work. Since 2019, we’ve worked with over 100 startups in every sector from across the country, securing them over $350 million to innovate emerging technologies.
We take a broad view of national defense and consider any technology that might help future-proof our way of life, life sciences included. Most founders don’t know it before they engage with us, but there are large pots of non-dilutive capital out there earmarked for applied life science research that have 100% success rates. You just have to know where to look.
So how should you go about sourcing non-dilutive capital from the government for your biotech startup?
Don’t ignore the DOD
We support health startups all the time that aren’t aware of how much life science research and development funding the US Department of Defense has; some of it even dedicated to small businesses.
The Army, Navy and Air Force each have their own strategic health and life science priorities, but so do the Defense Health Agency, Defense Innovation Unit, the Congressionally Directed Medical Research Program, Defense Advanced Research Projects Agency and NASA, just to name a few .
