Raising a pre-seed round in biotech.
At pre-seed, biotech is usually science moving out of a lab. Grants often come before equity. Here is what early investors look for and who writes the first checks.
Biotech
Biotech investors fund data, not traction. Each round buys the next experiment that removes a risk: a preclinical result, an IND, a clinical readout. Grants and licensing deals often matter as much as equity.
What pre-seed investors expect in biotech
There is no product yet, only science. Investors look at three things instead.
Science that reproduces
- Data that has been repeated, ideally outside the original lab
- A clear mechanism and why it should work in patients
- An honest list of what is still unknown
Rights to the invention
- A license or option from the university or institute
- Patent filings that cover the core idea
- Freedom to operate checked against obvious prior art
A team that can translate
- The scientific founder plus someone who has run a company
- Advisors with drug development experience
- A realistic view of who works full time and when
How the round comes together
Pre-seed biotech money is often non-dilutive first, then a small equity check from specialists.
- Grants and university money
- Angels and specialist funds
- Accelerators and incubators
Grants & non-dilutive
Often leads
Federal research and small-business grants fund early experiments without dilution.
University funds
Often leads
University funds and gap programs back spinouts from their own labs.
Angels
Sometimes
Former pharma and biotech executives write early checks and advise.
Accelerators
Sometimes
Life science incubators trade lab space and support for a small stake.
Pre-seed & seed funds
Now and then
A few specialist funds start companies around a promising lab result.
Grants, SAFEs and the license
Early biotech money mixes grants with SAFEs or convertible notes. The university license often includes equity, royalties and milestone payments. Know what it costs before you sign anything else.
The slides investors read first
Science
The key result and how often it repeated.
Unmet need
The patients and why current options fail.
IP
License status, patents and what they cover.
Plan
The next experiments and what they prove.
The ask
Grants, equity and the milestone it reaches.
Questions founders ask
Should I apply for grants before raising equity?
Often, yes. Research grants can fund the experiments that make your company investable without giving up ownership. Expect slow timelines and plan cash around them.
Do I need the university license before I raise?
Investors want at least an option or a clear path to an exclusive license. Most will not close until the core rights are secured.
Sources
Sources: FDA guidance on IND applications and clinical phases; federal research grant program guidance; university technology transfer practice; investors' published criteria. Editorial content, reviewed quarterly. Not financial, legal or medical advice.
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