What are the typical sources of funding for an early-stage life sciences company?
Fundraisings of early-stage life science companies can be complicated affairs, not just from the point of view of negotiating and settling the legal and other documentation but also from the point of view of actually securing the funds from investors in the first place. Fundraisings of early-stage life science companies are often of a higher value than fundraisings for other types of technology companies due to, in a large part, the resources that are needed to research, develop and trial their products, ensure that they comply with government regulations and the projected cash burn associated with these. Fortunately, there are a number of ways for early-stage life science companies to raise funds. Here Taylor Wessing discusses the typical sources of funding for an early-stage life sciences company.
While in the initial stages of the lifecycle of a technology company, founders may look to family, friends and private high-net-worth (often referred to as ‘angel’) investors to invest in the company in a ‘seed’ round, although this is less typical of life science companies due to the often significant cash injections needed to research, develop and trial their products. As a result, founders typically look to professional corporate investors to provide the rump of the capital required to kick-start an early-stage life sciences business, with friends, family and angel investors often co-investing a smaller amount of capital alongside the corporate investors…
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