There’s a new trend in the biotech startup world, and that’s the increasing presence of biotech startup incubators across the country. Many scientists are moving away from the large pharmaceutical companies, whether as a result of job layoffs or their desire to work in a smaller company setting, and are grouping together with new exciting ideas to begin their own biotech company. While the startup incubator has long been used in the technology world, but recently incubators specializing in the life sciences have been cropping up around the country.

startup incubator

Startup incubators provide resources to early stage biotech companies. Image courtesy of http://biotechnbeyond.com/

What exactly is a startup incubator anyway? They are programs designed to specifically help an entrepreneurial company through a variety of business resources and services. Biotech startup incubators typically provide access to wet lab space at a much lower cost to the company, and have a wealth of resources, including a large network, that startup companies can access. Often times, the month-to-month leases at a startup incubator and the access to investors attract early companies to test our their ideas before committing to a long-term office space.

Why are startup incubators so popular in the biotech industry? Studies on companies entering an incubator have shown an extremely high survival rate, where 87% of companies who have entered an incubator program were still in business. This successful survival rate is much higher than the average survival rate of 50% for the average startup company. One major reason why the startup incubator can help the survival rate of an early stage company is because these incubator programs can help an entrepreneur cut their losses sooner rather than later if the idea is not going to yield a profitable company.

However, one of the major challenges of the startup incubator is sufficient funding. While investors are more than willing to finance a new incubator space, the challenge is finding the continual steady funding. Because early stage biotech companies are typically unstable and don’t have large amounts of funds in the first place, they are not the ideal tenants. Subsequently, startup incubators are often subsidized by federal, state, and local funding. The hope is that these incubators will provide an boost to the local economy in the long run and foster a successful startup culture in the area. While it may still be too early to tell whether this is the case, biotech startup incubators such as Assay Depot’s own startup incubator,  Bio, Tech, and Beyond, continue to help early stage companies in their endeavors to successfully enter the biotech industry.

References

  1. http://www.the-scientist.com/?articles.view/articleNo/39245/title/Incubator-Boom/
  2. http://www.utsandiego.com/news/2012/oct/02/big-pharma-turns-incubators-crowd-sourcing-new-pro/