Article by Stefan Rouach,PhD, Massera Winigah  8 minutes read

90% of biotech start-ups fail. Alongside lengthy drug development times of up to ten years, founding or investing in a biotech start-up can be a daunting prospect. To make matters worse, the biotech industry has recently been riddled with uncertainty despite a show of heavy investment in previous years, which was then followed by a post-Covid pullback. This has forced even the most seasoned entrepreneurs to adopt a more cautious, concentrated, and agile approach to their go-to-market strategy.  

Each year, Hello Tomorrow hosts its renowned Summit, a premier international event that convenes deep tech start-ups, investors, industry leaders, and researchers to showcase cutting-edge innovations aimed at addressing the most pressing challenges of our time. This year featured several insightful panels focusing on subjects related to healthcare and biotechnology, related ranging from quantum supercharged precision medicine to neurocognition in bioengineering.  

One panel in particular, “Building Successful Biotech Start-ups”,  explored how to identify and nurture innovation, understand the unique investment dynamics in biotech compared to traditional venture capital, and overcome key challenges such as regulatory hurdles, scaling, and strategic exits. The panel, hosted by Rainbow Lo, PhD., featured insights from Stephanie Marrus from the University of California San Francisco, Christian Tang-Jespersen of ACME Capital, and Tõnu Esko from the University of Tartu in Estonia.  

Following the panel, we sat down with Stephanie Marrus, Managing Director of Entrepreneurship at the University of California San Francisco, to deep dive into some of the hurdles prospective biotech founders could encounter, and to determine the practical steps they can take to successfully drive their innovations from the lab to the marketplace. 

At what stage should biotech start-ups adopt a business mindset to increase their odds of success?

“The key is cultivating a business mindset from day one,” says Stephanie Marrus. One common challenge for scientists entering entrepreneurship is focusing on discovery while overlooking commercial viability.

“You can have amazing science, but without a solid business case, it will remain confined within academia,” Marrus explains. Even the most groundbreaking research must show clear market potential to attract funding and partners.

Importantly, this shift in mindset doesn’t mean compromising scientific integrity. Instead, it means asking commercially relevant questions early on. Who is the customer? What is the route to market? How will we generate revenue? What regulatory hurdles lie ahead?

Founders who think this way from the start are better positioned to make smart decisions on R&D, funding, and go-to-market strategy.

In practice, it means building market validation and business planning into the scientific process from day one. This approach also increases investor appeal. Biotech investors typically look for strong IP, regulatory clarity, a defined clinical path, and early market traction. Speaking their language and showing a credible route to market can make all the difference.

How can founders in biotech ensure that their scientific innovations meet business needs? 

Biotech start-ups often excel in scientific innovation, but aligning that science with real-world business needs is what determines success. According to Stephanie Marrus, the key lies in taking a proactive, market-driven approach from the start.

Identify unmet healthcare & biotech market needs

Stephanie recommends a proactive approach: biotech entrepreneurs should understand product-market fit from the very beginning. Rather than assuming their research suits a particular market, founders must first identify real-world problems in need of solutions. They can then align their scientific capabilities to address them.

Early market validation is essential. In fact, according to CB Insights, the top reason start-ups fail is a lack of genuine market need. This accounts for 42% of all failures.

Embed customer discovery early in R&D

Building on Stephanie’s insight, biotech founders should embed customer discovery into their R&D process as early as possible. This means engaging with stakeholders such as clinicians, regulatory experts, payers, and patients, well before developing a prototype or proof of concept.

Frameworks like Steve Blank’s Customer Discovery method provide a structured way to test assumptions. These include questions around value, usability, and adoption. Doing this early helps avoid costly mistakes later on.

For example, a start-up working on a new therapeutic must look beyond scientific promise. It must also assess the reimbursement landscape, clinical workflows, and competitive pipeline. These factors all influence adoption. Taking this insight-led approach reduces the risk of late-stage pivots and increases the odds of delivering a meaningful solution.

Take advantage of the ecosystems support systems: accelerators & EU programmes

In Europe, EIT Health offers programmes that support this way of working. They equip start-ups with tools like the Lean Canvas, Value Proposition Canvas, and customer journey mapping, all tailored to healthcare. Crucially, these programmes include mentoring from clinicians and industry experts. This helps founders test their ideas in real-world conditions, ensuring they build not just what’s possible, but what’s needed.

Map your translational pathway to market

Finally, founders must adopt a dual mindset: balancing long-term scientific ambition with short-term commercial reality. One way to do this is by mapping a translational pathway. This outlines the step-by-step process of turning scientific discovery into real-world applications such as therapeutics, diagnostics, or medical devices.

For biotech start-ups, it becomes a practical roadmap that connects innovation with regulatory, financial, and market demands.

The translational pathway typically includes: 

1. Discovery & Basic Research 

a. Fundamental science conducted in academic or research settings. 

b. Early data on mechanisms, targets, or biological processes. 

2. Preclinical Development 

a. Proof-of-concept studies in vitro and in animal models. 

b. Focus on safety, efficacy, pharmacokinetics/dynamics. 

c. Intellectual Property (IP) is often filed during this phase. 

3. Translational Research 

a. Optimisation of lead compounds or prototypes. 

b.Early interaction with regulatory bodies (e.g. EMA, FDA) for feedback. 

c. Begin to assess manufacturability, scalability, and cost implications. 

4. Clinical Development 

a. Phase I: Safety in healthy volunteers or patients. 

b. Phase II: Efficacy in a limited patient population. 

c. Phase III: Large-scale trials to confirm safety and efficacy. 

d. Regulatory approval submission occurs after this phase. 

5. Regulatory Approval 

a. Submission of a dossier to authorities (e.g. EMA’s Marketing Authorisation Application, FDA). 

b. Involves review of clinical data, manufacturing processes, and risk-benefit assessment. 

6. Market Access & Commercialisation 

a. Reimbursement discussions with payers (e.g. national health systems, insurance). 

b. Launch and distribution planning. 

c. Sales, marketing, and continued real-world evidence gathering. 

7. Post-Market Surveillance  

a. Monitoring safety and effectiveness in real-world settings. 

b. Continued product optimisation or line extension. 

Why the translational pathway matters for biotech founders 

Understanding this pathway helps founders to plan realistic timelines, mitigate risks and communicate more effectively with investors and potential partners. Many of these individuals expect a clear, phased plan for product development and launch. It also helps anticipate and navigate complex regulatory hurdles that, if ignored, can stall even the most promising innovations. 

A lesson from the field: Cygnus Inc.

The case of Cygnus Inc. serves as a cautionary tale. Introduced in 1985, this non-invasive wearable glucose monitor aimed to replace traditional invasive methods but ultimately failed due to technical performance challenges, limited medical reimbursement, and inadequate market penetration.  

Today’s innovation: SWIR sensors and commercial reality

Today, microneedle patches continue to dominate blood glucose monitoring. However, manufacturers of small wearable devices such as wristwatches and rings are increasingly turning to optical measurement technologies, notably short-wave infrared (SWIR) sensors, as a promising alternative. While these SWIR sensors offer significant potential, their successful adoption hinges upon addressing critical factors including material development costs and obtaining FDA approval for the chemical components used.  

Researchers in this space are acutely aware of these barriers, and much of the innovation driving SWIR-based sensing today is focused on lowering material costs and engineering FDA-compliant chemical formulations. In this case, scientific progress is being directly shaped by commercial constraints, precisely the kind of business-aware innovation that sets successful biotech ventures apart from those that never make it beyond the lab.  

What does a resilient team look like in a biotech start-up?

Building a strong team, which embodies resilience and adaptability, should be of top priority for founders. Stephanie stresses that the most successful start-ups are led by teams capable of responding swiftly and effectively to unforeseen challenges in volatile markets, which is especially true in biotech.  

“You can have the best-laid plans, but inevitably, something will go wrong,” she notes. “Investors look closely at the resilience of the team, their ability to pivot, adapt, and persist”. 

 

A diverse set of skills, expertise, experience, and complementary strengths are key to weathering the aforementioned challenges, particularly in biotech, where complexity spans scientific research, clinical trials, regulatory hurdles, and commercialisation.  

Building a team does not only cover internal human resources. Establishing an external strategic advisory board can bring a biotech start-up guidance from advisors who understand not only the scientific nuances but also the clinical, regulatory, and commercial pathways. These advisors should come in with seasoned industry background in biotech, be able to foresee typical pitfalls and guide the start-up through its growth stages. 

How can biotech founders attract international investment?

As markets globalise and grow evermore intertwined, accessing international funding, especially from venture capital hubs like Silicon Valley, is paramount and poses unique challenges. Stephanie highlights geographic proximity as significant to investor interest. “Investors are reluctant to travel extensively; they prefer investments closer to home,” Stephanie explains. 

Silicon Valley investors prefer companies whose management teams are locally accessible, even if their research operations remain overseas. The advice for international start-ups seeking U.S. investment is clear: establish a presence in a major investment hub, while maintaining crucial R&D operations in the home region.  

As an example, when you look at the statistics of U.S.-based biotech start-ups, they raised approximately $23.6B in venture funding in 2024, substantially more than their European or Asian counterparts, which emphasises the advantages of having a physical presence where the deals are made.

What role does storytelling play in making complex biotech solutions more appealing to investors and clients?

You cannot underestimate the value of a good pitch. Founders need to express a masterful command of the art of storytelling. In an industry inundated with technical details, data-heavy presentations, and niche subject matters, storytelling emerges as a powerful differentiator.  

Stephanie shares an impactful example from her own experience: “I remember a pitch from 2013 vividly because the founder started with a personal story about her mother’s cancer battle,” Stephanie recounted. “Eleven years later, it still stands out to me“.  

Great storytelling can reach an investor on an emotional level. It can humanise the scientific innovation, reminding potential funders why they are drawn to the domain. 

In biotech, the core of a compelling narrative often centres on personal motivations or profound societal impact, such emotional resonance not only captures attention but also illustrates the passion and dedication behind a biotech start-up’s mission. 

What criteria do investors use to justify the risk of investing in early-stage biotech start-ups?

For investors, biotech is a different game entirely. Unlike software or hardware ventures, where rapid iteration and early revenue can help de-risk the investment, biotech start-ups operate under a unique set of constraints: long development cycles, complex regulatory hurdles, and commercial models that often hinge on partnerships with major pharmaceutical players.  

There’s no shortcut to market via a Minimum Viable Product (MVP), and monetisation can take years. Instead, early-stage biotech ventures must demonstrate compelling science, a clear regulatory strategy, and credible pathways to eventual clinical or commercial validation, all before generating a single cent in revenue. 

This explains why many biotech investors will often ask themselves these questions before investing:  

-Does it seem like the right concept for the market? 

-What is the competitive landscape like?  

-How big is the market?

-Is this the right team to do the job?

-Can I grow the team over the long-term?  

Final thoughts

Success in this demanding sector hinges not only on scientific excellence but equally on a strategic grasp of the sector’s unique business realities, from navigating complex regulatory pathways and planning robust clinical trials, to securing early partnerships with pharma and building investor confidence long before revenue is on the table.

Unlike other deep tech ventures, biotech start-ups often face long timelines to commercialisation and rely heavily on acquisition or licensing deals for market entry. By proactively bridging science and business and embracing these industry-specific imperatives, biotech founders are better positioned to translate groundbreaking research into real-world impact, ultimately impacting lives and society at large. 

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