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Funding Landscape for Startups

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When you’re just getting started, figuring out how to fund and support your company can feel overwhelming. The good news? There are many programs, grants and organizations ready to help, each offering different types of support depending on your needs.

These funding sources differ in what they provide, how they work, and what they expect in return. Some offer money with no strings attached (non-dilutive), others ask for ownership in your company (dilutive). It’s important to understand these differences so you can choose the path that fits your vision and your company’s stage of growth.

Start with Clarity: What does your company need?

Before diving into the options, take a moment to step back and reflect. The early “prep work” will make a big difference in choosing the right support and the right programs.

Here’s a few helpful questions to ask yourself:

  • What is my long-term goal for this company?
  • ​How fast do I want to grow, and how involved do I want to be day to day?
  • Am I willing to give up decision-making power (think: CEO-level decision-making, choice over your scientific strategy, etc.)?
  • With what kinds of people and in what environments do I (and my company) thrive in?
  • What support do I need, and what is already in place?
  • Do I know what/when my go/no gos are?

Make a list with all the support and services you’d want to have, and where your biggest gaps are – before even beginning to look for funding. This exercise will make it easier to pick the route that is best for you. Being clear on these factors will be helpful to choose the right strategy from the beginning, and makes sure you’ll be in a good spot to act aligned with your intentions, values and goals.

Pursuing the Right Kind of Funding

Non-Dilutive Funding

In this section, we introduce different types of early-stage funding and support. There are several non-dilutive sources of funding that academic researchers will already be very familiar with. Note, the term “non-dilutive” means that the funding does not come at a cost of equity (ownership) in the company. Instead, these are considered grants, donations, etc.

Many opportunities are tracked and listed on the Contraceptive Technology Innovation (CTI) Exchange.

The NIH offers a range of grants and agreements that can support research and development:

  • R01 Grants: For specific research projects, often awarded to academic partners but can involve biotech collaborators.
  • ​R21 Grants: Exploratory/developmental research grants for high-risk, high-reward projects.
  • U01 Cooperative Agreements: For collaborative research with substantial NIH involvement.
  • P50 Center Grant: Support multidisciplinary research centers.
  • X01 Service Requests: The Contraceptive Research Branch (CRB) of NICHD specifically makes use of these creative funding sources to conduct and manage research at a prequalified CRO on behalf of an investigator.
  • ​Cooperative Research and Development Agreements can facilitate research projects between biotechs and University/NIH laboratories, leveraging NIH funding.

From a startup point of view, any funding that is non-dilutive to equity is a benefit, and many startups have survived on government funding as a lifeline for early project advancement. However, the level of funding provided by these grants, the restrictions placed on execution and outsourcing, the extra administrative grant management requirements, and the slow timeline to get the funding make these difficult mechanisms to rely on as primary sources to accomplish transformative milestones in biotech.

Non-Government Foundations and Global Health Donors

  • Bill & Melinda Gates Foundation (www.grandchallenges.org)
    • Focus: Funds innovative female-controlled contraceptive R&D, especially non-hormonal methods suitable for LMICs. Supports platforms for drug discovery, assay development, and novel delivery systems.
      • Programs:
        • Grand Challenges: Initiatives like “Accelerating Discovery for Non-Hormonal Contraceptives” (2020) and “Strengthening the Contraceptive R&D Ecosystem in Africa” (2022) fund projects for safe, effective, and accessible female contraceptives.
  • Clinton Health Access Initiative (CHAI) (clintonhealthaccess.org)
    • Focus: Administers the Catalytic Opportunity Fund (COF) to support the global introduction and scale-up of reproductive health products, including novel contraceptives.
    • Programs:
      • COF, funded by the Gates Foundation, Foreign, Commonwealth & Development Office (FCDO), and Children’s Investment Fund Foundation (CIFF), provides short-term grants for catalytic activities in contraceptive innovation.
      • Supports development of products like DMPA-SC and hormonal IUDs, with potential for novel methods of use, but does not fund early-stage R&D.
  • David and Lucile Packard Foundation
    • Focus: Supports high-quality family planning services and contraceptive R&D as part of a rights-based reproductive health agenda.
    • Programs:
      • Funds research to measure contraceptive autonomy and develop novel methods, often in collaboration with academic institutions.
      • Supported studies in Burkina Faso to assess contraceptive access and quality.
  • Male Contraceptive Initiative (MCI)
    • Focus: Funds research and development of non-hormonal, reversible male contraceptives, including discovery-stage and preclinical studies.
    • Programs:
      • Provides grants for drug and device development, supports young investigators, and funds social science research on male contraceptive demand.
      • Supports projects like reversible sperm inhibitors and vasectomy alternatives.
  • Organizations that may be willing to collaborate/partner on contraceptive development

​Other sources: Look into town and state-level programs that may have funding, university centers that may offer funding or assistance finding funding.

Nonprofit Resource Highlight: LaunchBio

LaunchBio is a nonprofit organization supporting early-stage life science entrepreneurs through educational programming and networking opportunities. They have programs such as Investor Connect that introduces founders to active biotech investors.

​Dilutive Funding Sources

Now we’ll turn to “dilutive” sources of funding, meaning you raise capital by giving up a portion of your ownership (equity) of your company (and with that, often also part of the control, but we’ll get to that later in the “deal terms” section).

It’s important to approach this stage thoughtfully. Some programs, like incubators, may require no equity at all, and only require a lease to use lab space. Others, like venture studios or accelerators, will ask for equity in exchange for support, guidance or capital.

“ Equity is your company’s currency, and once you give it away, you can’t really get it back. It might sound like a “better deal” than paying somebody in cash (especially if you’re heavily cash restricted), but be mindful that if you give your equity away too early or too easily, it might:

  • Limit the amount of equity you have available to offer to future employees, co-founders or advisors as part of their compensation package, to attract top-tier talent and keep incentives aligned over a longer period (vesting)
  • Scare off future investors: Too much early dilution, a crowded cap table or low founder equity may lead to hesitation from investors, as they want to see long-term incentives that are aligned with founder interests
  • Impact your ability to steer the company long-term

It’s always a good idea to check in with trusted advisors, mentors or your legal counsel before making equity decisions. Make sure you understand the full scope of what’s being offered, and what’s being asked in return, and check in with yourself if this deal feels good for you.

​There are different types of dilutive funding sources:

Venture Builders/ Venture Studios

These are VC-backed organizations that specialize in building startups from scratch. In many cases, the studio itself originates the idea, assembles a team (which might include you as a founder), and provides deep operational support to being a company from concept to seed-stage funding. There are some studios to which you can bring your early-stage ideas (external sourcing), and they will evaluate them for feasibility and levels of excitement. In these cases VCs will act as co-founders and will be very involved.

What they typically offer:

  • Support with ideation, early research, business modeling and company formation
  • Access to capital, shared services (legal, HR, finance), and experienced operators
  • Close partnership: You’ll work alongside their internal team

What they typically ask for:

  • 30 – 50% equity ownership
  • Sometimes control rights or significant say in company direction

You may want to consider this route if:

  • You don’t have the infrastructure, time or risk appetite to build solo from scratch
  • ​The studio provides meaningful capabilities you’d otherwise struggle to access, and can accelerate your journey massively

Potential trade-offs:

  • Giving up this much equity early may limit your flexibility for future hiring or fundraising
  • ​Be clear about how decision-making is shared, and what your long-term role will be

Incubators

Incubators typically offer support like physical space, basic infrastructure and a light-touch support environment. Think of them like co-working labs or early-stage innovation hubs. They’re usually less structured in their program offering than studios, not as hands-on in their support and don’t offer capital. They however give you a lot of freedom, and come at a lower cost. Some of them also come with networking opportunities or connection to the broader ecosystem, which can be interesting to consider. Additional incubators are listed in this airtable.

What they typically offer:

  • Lab or office space (often at a reduced cost or subsidized)
  • Access to shared equipment, technical support, and a like-minded community
  • Networking events and workshops

What they typically ask for:

  • Little to no equity, instead you’ll pay rent or a participation fee​​

You may want to consider this route if:

  • You need affordable lab access and prefer independence
  • ​Are looking for a community and networking opportunities
  • You’re still refining your scientific approach or working toward early milestones

“ Ask for a full break-down of what’s included (e.g. equipment, access, mentorship, networking) and make sure it aligns with your stage and goals​.

​Accelerators

Accelerators are time-bound programs (often 3 – 6 months) designed to help startups move fast, sharpen their pitch and connect with the ecosystem, mentors or investors. Many finish with a “Demo Day”, where you present to a curated group of investors and ecosystem players. Accelerators can be a great option to connect you with the ecosystem and increase visibility.

What they typically offer:

  • Structured mentorship and business training
  • A small amount of capital (often $100k – $500k)
  • Exposure to a broad investor network
  • Prestige/Visibility (esp. with programs such as Y Combinator, IndieBio)

What they typically ask for:

  • 5 – 10% equity

You may want to consider this route if:

  • You want help refining your narrative, business model, or fundraising strategy
  • ​You’d benefit from visibility, brand recognition or ecosystem/investor connections

Potential trade-offs:

  • The equity that is asked for can feel expensive relative to the capital offered – consider whether the services and connections provided to you are worth it for the equity given away
  • Some programs are more geared toward tech startups, vet for biotech alignment

Focused Research Organizations (FROs)

FROs are a relatively new funding and operational model built to pursue specific, high-impact scientific objectives. They typically run for a fixed period (often 5 years) and operate with a blend of non-profit mission and milestone tracking for the development of high-impact public goods.

The FRO effort is mainly driven by Convergent Research, a non-profit initiative designed to fill critical gaps between academia, startups and large industry players.

You may want to consider this route if you’re working on a technology that might not yet be commercially viable, but high-impact and time-sensitive. And also if you’re aligned with the mission to create publicly available scientific infrastructure or tools.

Type

Venture Builders/Studios

Incubators

Accelerators

FROs

Examples

Goal

Create biotech startups from scratch, generating their own ideas, building teams, and developing products, often acting as co-founders

Position company for Angel/pre-Seed/Seed investors

​Provide startups with shared laboratory facilities to de-risk idea

Position company for Seed/Series A based on a validated concept

Pre-defined, outcome-oriented goals, addressing bottlenecks in a field that are underserved by existing institutions

Company Sourcing

Internal ideation

Startups apply

Startups apply

Internal/external ideation

Support Provided

+++

+
(typically provides lab space)

+
(mentorship, networking)

++++

Length of Support

0.5-3 years

1-2 years

~3 months

Defined number of years tied to milestones (e.g., 5)

Management

Deeply hands-on, part of management/operations

Infrastructure support, but little oversight

High-level guidance

Variable

Equity Stake

30-50%

Little to none

5-10%

Companies may be spun out of FROs

Equity Investors

​As your startup grows, you’ll likely interact with a range of equity investors, each with different motivations, expectations and timelines. These investors provide capital in exchange for ownership (equity) in your company.

Here’s a quick overview of who you might meet along the way:

  • ​Angel investors: High Net Worth (HNW) individuals who invest very early and often provide mentorship and connections. Angels tend to be more flexible than “institutional” investors, but still expect a return
  • Venture Capital (VC): VC firms invest professionally managed funds into startups with high growth potential. They often lead investment rounds, take board seats, and support you through the scale-up of your company. Their goal is a strong return (typically 3x+) within a 10 year window. VC dynamics and roles are covered in much more details later in this playbook
  • Impact Investors: These investors seek both financial return and measurable social impact. There are not many that invest in biotech, but might be a fit if your company aligns with public health or global equity.
  • Private Equity (PE): Usually enters later in the startup journey, once your business is revenue-generating or profitable. PE investors are often focused on optimizing operations, scaling mature products or preparing for an acquisition.

Type

Angels

Venture Capital

Accelerators

FROs

Source of Investment

High Net Worth (HNW) Individuals

  • Family Office (FO)
  • Donor Advised Fund (DAF)

Limited Partners

  • HNW Individuals
  • Pension Funds
  • University Endowments
  • Sovereign Funds
  • Corporations

Limited Partners ​

  • HNW Individuals
  • Pension Funds
  • University Endowments
  • Sovereign Funds
  • Foundations
  • Development Finance Institutions

Limited Partners ​​

  • HNW Individuals
  • Pension Funds
  • University Endowments
  • Sovereign Funds
  • Foundations
  • Insurance Co.
  • Corporations
  • Development Finance Institutions

Investment Stage

Pre-Seed, Seed
(Often invest prior to a formally priced round)

All stages of private companies

Seed-Series B
(Biotechs are not usually aligned with Impact Fund definitions of rounds)

Later stage, mature companies

Investment Amount

$10k -$1M

$100k – $100M

$100k – $10M

$50M+

Ownership Stake

Minority stake

5-50% equity

5-50% equity

Majority stake or full ownership

Risk Level

Highest

High

Moderate

Moderate-Low

Return Timeline

5-10+

5-10

5-7

3-7

Level of Involvement

Typically low involvement

Strategic advisors, potential seat on the Board

Strategic advisors, potential seat on the Board

Highly involved in strategy and operations

Overview of VC Investment Sectors

Venture capital (VC) investments in these sectors often overlap, but they differ in focus, risk profiles, development timelines, regulatory requirements, and return potentials. Below is a breakdown of each sector, followed by a comparison table highlighting key differences. These distinctions are drawn from industry analyses and VC perspectives, noting that terms like “life sciences” can sometimes encompass biotech and medtech, while “healthcare” is broader.

Biotech: This category is used to define small molecule, peptide, protein, RNA, cell, and gene-editing therapeutics. It broadly encompasses any technology that pharmacologically modulates biological processes, organisms, or systems to develop products like drugs and vaccines.

Techbio: A newer term for technology-driven biology, where tools like AI, machine learning, and data analytics accelerate biological or pharmacological research (e.g., drug-discovery platforms). It’s more scalable and platform-oriented, blending tech startup models with bio applications. Techbio investors also invest in biotech companies (and vice versa) if the vibe is right.

Life Sciences: A broad umbrella encompassing the scientific study of living organisms, including biotech, medtech, and sometimes pharmaceuticals. VC here funds R&D in areas like genomics and diagnostics, emphasizing novel scientific discovery milestones.

Healthcare: Encompasses the entire ecosystem of health delivery, including services, hospitals, insurance, digital health tools, and patient care. Investments often prioritize operational efficiency and market adoption over pure science.

Medtech: Involves medical technologies like devices, equipment, diagnostics, and software for healthcare applications (e.g., wearables or imaging tools). It is hardware/software-focused with an emphasis on engineering and usability

Deeptech: Refers to advanced, science-based technologies requiring significant R&D (e.g., AI, quantum computing, materials science). In VC, it can overlap with other sectors but emphasizes breakthrough innovations with long horizons, often applied to bio or health challenges.

What type of investors should startups turn to?

The “real tea” about investment across these sectors in 2025 is that the VC landscape for therapeutics is at its lowest point in terms of funding allocation and sentiment in modern history. In particular, Biotech industry leaders are split between this being the same or worse than the impact of the financial crisis in 2008/9. Many factors contribute to the current climate, including: a public biotech market that is at rock-bottom with no signs of recovery (no IPOs mean VC exits are limited to pharma M&A), high federal interest rates (high cost of capital), tremendous uncertainty at the FDA, the lack of staff at the FDA, the gutting of NIH and political influence over the type of science that will continue to receive funding, the influence of AI (creating uncertainty over what is real and what is over-hyped nonsense), and an explosion of high-quality Chinese biotech assets (albeit these technologies are currently limited to oncology and immunology).

All of the market influences listed above push funding milestones towards further and further de-risked stages. Biotech VCs are now almost exclusively focused on clinical stage assets and are rarely starting new companies that are not run by long-time industry insiders who already have a track record of lucrative exits on their CVs. Medical device innovation may have an easier time securing funding compared to biotech in the current climate, but it is tough out there for everyone. Our recommendation for first-time, scientist-founders is to bring someone with deep biotech/medtech/lifescience/healthcare experience into the core leadership team, and focus on Angel investors, accelerators, incubators, family offices, and Techbio investors. These are the most likely groups of investors that will back you in 2025.

BIOS – Top 100 TechBio VC Funds

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