How to Secure Government Funding For Your Life Sciences Startup

Jul 27, 2020

Guest Blog by Sven Karlsson, Co-Founder and COO, Platelet BioGenesis

The extraordinarily long research and development timelines for biotechnology products makes raising capital an essential and never-ending focus for most companies in our industry. As Henry Termeer famously said, “When you run a biotechnology company, you don’t sleep easy. You raise money. You’re dependent on raising money. That’s what biotechnology CEOs do, all the time.”

But aside from traditional venture funding, there’s a source of money that’s often overlooked by early-stage companies: government grants and contracts.

If approached strategically, grants can be unusually useful for early-stage companies. They fund research and development. They are typically non-dilutive, meaning they do not affect the ownership structure of your company or reduce the value of existing shares. And, if you play your cards right, they can potentially create a customer – the federal government – for the product or technology you are developing. However, government funding can be complex and time-consuming to both seek and manage. First, chasing awards that do not support your development plan can distract your team and take your company off on a tangent. In addition, awards require compliance. You need to have systems and capabilities in place to appropriately allocate funds and track expenditures.

Since founding Platelet BioGenesis, my team has successfully secured a number of government grants that accelerated our development programs and private investment. In 2016, just after we launched, we received a $1.5M award from the NIH that catalyzed our first angel investment round. More recently, last fall, we received a contract worth up to $56 million from the Biomedical and Defense Research and Development Authority (BARDA).

The complaint I most often hear from entrepreneurs about applying for grants is that the funding takes too long to arrive. It can often take a year or more between submitting an application and receiving funding. For our BARDA grant, it took almost six years from our first meeting with the agency until the contract was awarded. But bear in mind that raising angel or venture funding for an early-stage company can also often take more than a year – and this particular contract is particularly complex and has the potential to significantly advance our company’s technology.

Like raising any other type of capital there is no guarantee of success: securing government grants comes down to knowing the market and meeting the needs of your investor. Here are a few basic pointers:

  • Government procurement is all about their needs, not yours. Learn what they are looking for and why. Listen to them. Don’t just tell them how great your technology is. As always, product-market fit is critical.
  • Understanding the needs of the government is a process, not a destination. There are many places to learn what grants are available. A good place to start is, but don’t forget about budget hearings, agency and department budget documents, individual program websites, and the federal register. A skilled lobbyist can help you navigate this complex terrain.
  • Potential funders like BARDA, the Department of Defense, and the National Institutes of Health are filled with smart, experienced people. View them as partners and leverage their expertise pre- and post-award. Reach out and speak with your program manager – they want to help you.

Just as important is remembering what the government is not. The government is not a venture capitalist. They don’t care how much your company has raised or what your anticipated ROI will be once you bring your product to market. They have a problem to solve and they are looking for a company and technology that can help them solve that problem. 

Entrepreneurs are rewarded for thinking outside the box. Government employees often do not have that luxury or may appear that they are not forward-looking. They must stay in their lane and focus on their specific requirements. The government budget is large but it is limited each year and the program manager must make the best of his funding but solving a problem such as a vaccine that prevents COVID even though you may have a vaccine that you believe can prevent numerous pandemics.  Expect what may appear to be a certain amount of tunnel vision but appreciate that this is because they are laser-focused on solving a specific problem.

Want to get started in something that might make a material difference in your company’s prospects? You can begin by learning the government contracting rules, called the Federal Acquisition Regulation (FAR). Here’s a good guide for beginners published by the Small Business Administration. This document is more detailed and provides an overview of the U.S. Army Research Office’s funding plans through February 2025.

What should you do next? Assign a person on your staff (hint: it could be you!) to become the point person for government grant opportunities and start researching opportunities. Leveraging government funding opportunities can lengthen your cash runway, open new doors, and help you grow your company. Your investors will thank you.

About the Author:

Sven Karlsson
Co-Founder and COO, Platelet BioGenesis

Sven Karlsson is co-founder and chief operating officer of Platelet BioGenesis, a Watertown company that has developed a unique allogeneic cell therapy platform that leverages the power of platelet biology.

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