Biotechnology companies, from start-ups to industry giants, are constantly having to find funding for the next big breakthrough. With the number of innovative technologies, drugs, and therapies increasing rapidly, the number of companies trying to create them has as well. And while the industry has grown, this is not always reflected in the markets. This creates a difficult space for companies trying to launch their new ideas, fill niches, and enter the market. Forecasts indicate significant market growth, which is already being seen in the greater availability of funding and the increase in biotech start-up companies. StemCultures has been able to successfully find National Institute of Health (NIH) grant funding and grow, and below are some take-aways from that success.
Forms of Funding
Funding often comes from a number of places and can be different for every company. For younger companies like StemCultures, there are a few different ways funding often comes in.
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Sales
While smaller and younger companies often struggle to make sales a large portion of their funding, every dollar still counts. Getting a product into the hands of the customers helps bring money into the company. It also helps to stake out a share in the market and expand the company’s reach. However, sales is a tricky and fickle form of funding, dependent on your process, your customers, and your reach. Primarily focusing on other forms of funding, especially early on, often helps get a company going while sales only complement other forms of funding.
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Public Equity
Also referred to as stock or shares, open ownership to the public. This can help a company grow with the market and get an influx of funding. Taking a company public, or having an Initial Public Offering (IPO), can be done in a number of ways. It usually requires a significant amount of public support and financial stability.
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Private Investors
The stereotypical form of start-up funding can be trickier than having investors just offer you funding. Finding the right investor, such as activist investor, angel investor, or seed investor, can be its own herculean task. One type of investor that is rarely the right kind is a family member or close friend. They rarely have the funds or knowledge and background in investing to be able to help a company grow. Once an investor is found, demonstrating the benefits of investment can be a long and drawn out process. Occasionally, it will lead to a source of funding that can also help offer insight and leadership into the organization.
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Grants
Non-profits, governments, and even other companies often will award money to ideas and companies they see promise in, such as NIH grants. They are more of a direct competition with other ideas and companies. Grants can also be a way to see how a company measures up against similar businesses. Grants can range in topics from marketing and sales based to be completely technical. Standard grant applications are often detailed, written reports. Grants are also often awarded to winners at marketing or pitch competitions. Casting a wide net often will help lead to success, similar to college applications or job hunting.
Overall, younger companies can see their funding come from a number of sources. Industrial and economic trends often have large impacts on available funding. Finding the right opportunity at the right time can lead to significant success and growth. The biotech market is expanding and creating opportunities for a number of companies and ideas to grow and develop.
Case Study: StemCultures Federal Funding Success
One such company has been StemCultures, LLC, based in Rensselaer, NY. The company aims to revolutionize cell culture practices by way of controlled-release growth factor technology. The company’s products (StemBeads® and DISC Devices™) are culture media additives that slowly release growth factors over time at consistent levels. This method saves scientists time and money by reducing feeding schedules while improving cell quality. StemCultures was able to find a niche in the broadened medical biotech market as the sole manufacturer of control-release technology for the application of cell culture.
StemCultures has been able to grow with the market over the last several years while also pulling in funding from a variety of sources. The most visible source of funding has been the sales from their products, but they have also worked to secure other forms of funding over the years.
Most recently, StemCultures received an award from the National Institute of General Medical Sciences, a part of the NIH, through the Small Business Technology Transfer Program (STTR). Split into two phases, the first phase of the grant was awarded for over $200,000 in 2021. They are focusing on the research and manufacture of controlled-release growth factors in collaboration with the non-profit Neural Stem Cell Institute and their core facility, NeuraCell. Their clear goal and well-defined process helped with the successful conclusion of Phase 1 in December of 2022. StemCultures has been successful with designing and producing their product. They support labs across the world with StemBeads® and DISC Devices™, as well as with custom products to fit the needs of their customers.
Looking to the Future
StemCultures has recently been awarded the Phase 2 STTR NIH grant. They are optimistic they will be able to leverage the funds for continued growth. A main goal of Phase 2 is creating cell-type specific growth factor media additives. They are focusing on expanding the number of growth factors and styles available in their products. They also aim to increase the availability of their high-quality products. Further commercializing this technology and expanding its access will benefit the greater industry. It will also enable StemCultures to continue to grow, innovate, and revolutionize common cell culture practices.
StemCultures has been able to successfully grow its funding through hard work and diligent research. While this method may not be the best for every young company out there, StemCultures has demonstrated a successful application of NIH grant funding for developing its products and looks forward to continued growth.
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Note: Opinions and accounts expressed herein are those of the author(s) or interviewee(s). They may not reflect those of StemCultures, its officers, or directors.