What types of funding are typically available 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 types of funding that are typically available for an early-stage life sciences company.
As with most types of early-stage investments, a life sciences company raises funds either by issuing shares or by borrowing money from individuals, venture capital bodies or lending institutions.
The ability and appropriateness of either type of funding will often depend on issues such as: the personal financial position of the initial shareholders and related persons; the type of business and products that the life science company is trying to develop; the stage of development of the technology (i.e. is it just an idea at the time of the fundraising or has intellectual property already been developed that can serve as a platform for the future development of a company, e.g. a spin-out); the financial position of the business; and the asset position of the business…
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