What to Look for in a Biotech Incubator

From the article in Labiotech by Jules Adam

Starting a biotech is a daunting task with a lot of parameters. And if you’re only starting, the chances are you don’t have all the resources and knowledge it takes to be successful or as efficient as possible yet. This is where biotech incubators can be useful, decisive even. But that doesn’t mean they’re all right for you. 

Selecting the right biotech incubator is a critical decision that can significantly influence a startup’s trajectory. The appropriate incubator offers more than just physical space; it provides tailored resources that align with a startup’s specific needs, including access to equipment, regulatory guidance, and funding opportunities. A well-chosen incubator can accelerate development, enhance credibility, and increase the likelihood of attracting investment, whereas an ill-suited one may impede progress and limit potential.

As Mati Gill, chief executive officer (CEO) of AION Labs, puts it, “A biotech venture studio or incubator can be the launchpad that transforms promising ideas into successful ventures – but only if chosen wisely. The right environment serves not just as a space but as a dynamic ecosystem that accelerates innovation and mitigates risk.” 

So, let’s take a look at the things to consider when deciding on an incubator to make sure you “choose wisely.”

What makes a successful biotech incubator – the right blend of infrastructure, support, and network

A successful biotech incubator is characterized by several key features that collectively create an environment conducive to the growth and development of early-stage biotechnology companies.

What kind of infrastructure and support do you need?

An incubator’s history of supporting biotech startups is a strong indicator of its effectiveness. This can be assessed through metrics such as the amount of funding incubee companies have raised, and the successful product launches they have achieved.

Gino Segre, managing director of Bakar Labs, confirms that there is plenty you can look at to see if an incubator is successful. “Tenant occupancy relative to other incubators, fundraising success of the tenants over time, and word of mouth satisfaction are good indicators of the operating track record of the incubator.” Reaching out to former incubees to have direct feedback on their experience with the incubator is one of your strongest indicators if this is the right direction for you. 

According to Gill, it is a combination of factors that make an incubator successful. “The foundation of a successful venture studio or incubator lies in its ability to address three key principles of company creation: tackling a well-defined and validated big problem, assembling a team and technology capable of winning in the space, and providing the optimal environment for growth through committed design partners, mentoring, investor relations, proof of concepts, financial and administrative support, talent sourcing, and team building.”

Indeed, successful incubators offer more than just physical space; they provide a suite of services including mentorship, and business development assistance. These resources are crucial for startups to navigate the complex biotech landscape.

Segre emphasizes the technical aspect of the incubator as Bakar Labs maintains hundreds of pieces of equipment to support the pace of research and has a tenant support infrastructure that enables it to provide quick turnaround times to a wide range of requests.

Rachael Craig, managing director of life sciences and healthcare strategy products at Clarivate, noted that some aspects are sometimes overlooked by scientific founders. “Scientists usually know what equipment they need and how to conduct their science. In contrast, access to business, legal, licensing, regulatory, and paths to commercialization mentorship early, can really help with building a successful foundation.”

Craig also pointed out that it’s important to take into account the strategy the incubator might have for startups.

“A corporate incubator may have strategic aims, such as to get a first look at potential pipeline opportunities, explore a high-risk or complex area of promising science, or talent to add to their portfolio. A financial group will seek returns, meaning they will want to ensure meaningful financial success from their companies to return money to their investors. A government or not-for-profit group may simply want to advance specific science,” Craig said.

“As a startup, it’s important to understand the business model and incentives of any incubator you might consider and how this aligns with your career and startup goals,” says Rachael Craig, managing director of life sciences and healthcare strategy products at Clarivate

Tell me what your network is and I’ll tell you if you’re the right incubator for my startup

Getting in an incubator is also gaining access to its network. Incubators that facilitate connections to venture capitalists, grant opportunities, and other funding sources significantly enhance a startup’s potential for success and facilitate its funding journey. The availability of financial resources enables startups to focus on research and development without the immediate pressure of securing capital.

Segre advises looking out for on-site programs organized by the incubator to make introductions between startups and investors. Sometimes, the incubator has its own venture fund allowing it to invest directly into the incubee. 

But the network isn’t only about attracting investors, former incubees can very well become partners if there is synergy. If not partners, they can become advisors if they have faced similar difficulties. “We are developing our tenant alumni network to ensure that the community and its collective expertise remain accessible,” said Segre.

Some incubators also have event venues that can be significant opportunities for startups – either as networking opportunities or pitching opportunities. 

Location can be key in some cases. Being situated near established biotech clusters offers startups access to a rich ecosystem of resources, including research institutions, experienced talent pools, and potential collaborators. 

Close ties with universities and research centers provide startups with opportunities for collaboration, access to research, and potential recruitment of skilled graduates.

Locations that are rich in scientific and technical talent enable startups to build strong teams essential for innovation and growth. The availability of skilled professionals in the vicinity of an incubator can significantly impact a startup’s ability to scale and succeed. 

Pitfalls to avoid when choosing a biotech incubator

When evaluating biotech incubators, it’s crucial for startups to be vigilant about potential red flags and common pitfalls that could impede their growth. “A startup’s time and equity are too valuable to risk on an unproven support framework. Warning signs include unclear terms of engagement, lack of transparency around funding opportunities, limited industry partnerships, and insufficient scientific leadership,” said Gill.

Some incubators may demand substantial equity stakes in exchange for their services, which can dilute a startup’s ownership and control. Additionally, ambiguous or complex contract terms can lead to misunderstandings and potential conflicts down the line. It’s essential to scrutinize term sheets for provisions that grant excessive control to the incubator or investor, such as veto rights over budgets or hiring decisions. Founders should be cautious of onerous liquidation preferences or misaligned incentives that prioritize investor returns over the company’s well-being.

An incubator that doesn’t offer specialized resources tailored to the biotech industry – such as access to advanced laboratory facilities, regulatory guidance, or connections to industry experts – may not provide the necessary support for a biotech startup’s unique needs. The absence of a robust network can hinder a startup’s ability to secure funding, mentorship, and strategic partnerships essential for success.

Segre advises reaching out to former incubees. “The best information comes from asking founder tenants about the incubator’s reputation and performance. Specifically, they can ask about how the incubator operators support tenants. If response time is slow, security and safety are lax, this may adversely influence founders’ ability to grow their startup.”

While Craig agrees it is important to reach out to successful founders in the incubator’s portfolio, unsuccessful founders might give you valuable insight too. “Once you’ve narrowed down your list, I would talk to a few unsuccessful founders too. Startups and biotechnology are inherently risky. You can learn a lot about an incubator by how they treated their failures.”

Minimizing expenses is important, but selecting an incubator based solely on lower costs can be detrimental. It’s vital to assess the value an incubator provides in terms of resources, mentorship, and networking opportunities. Opting for a less expensive incubator that lacks critical support services may end up costing more in the long run due to missed opportunities and slower growth. Startups should consider the long-term benefits and potential return on investment when choosing an incubator.

“Many founders are price sensitive, but the operative question is whether the incubator offering is good value. Value comes in many forms, such as programming – guest experts, social events, etc. Startups should, as much as possible, take the long view (2 years) on their development, when choosing a site. Does the incubator have capacity? Is it accessible? Is it a good place to recruit? Will it be able to accommodate the specific scientific needs of the company? How does it choose tenant startups, solely on the ability to pay rent, or instead on the potential of the startup company?” Segre explained.

It’s also important to look at the bigger picture and not overlook the importance of cultural fit and long-term alignment. Aligning with an incubator that shares similar values, vision, and work culture is crucial for a harmonious and productive partnership. A mismatch can lead to conflicts, miscommunication, and strategic misalignment, potentially derailing a startup’s progress. Evaluating cultural fit involves understanding the incubator’s approach to decision-making, risk tolerance, and support mechanisms. 

“A common mistake is selecting one based solely on proximity or perceived prestige without assessing whether its capabilities align with the startup’s specific needs. Founders should conduct due diligence: meet the team, speak with alumni companies, and evaluate how well the studio’s or incubator’s expertise matches their goals,” said Gill.

The biotech startup journey is a long one, and the relationship between startup and incubator can be a long-lasting one too – So, you might as well make sure both are aligned.

“For biotech founders, the right venture studio or incubator is a transformative partner. Look for one that not only provides resources but also becomes an active ally in your mission,” says Mati Gill, CEO of AION Labs

The biotech incubator checklist

To summarize what the experts we reached out to told us, here is a checklist of questions you can ask yourself to make your final decision on which incubator to go for. 

Know yourself

• What infrastructure do you need and is the incubator capable of bridging the gap between what you need and what you already have? 
• What kind of support do you need? Is it building a team, scientific support, legal or administration-related, funding opportunities, etc…

Know your future incubator

• What’s the incubator’s track record? What startups has it successfully supported, how many, and what’s its success rate – what percentage of startups secured funding, or launched products?
• What kind of startups is it focused on? Is it specialized enough to offer tailored expertise? Has it supported similar companies as yours?
• What does its network look like? Does it offer networking opportunities, funding opportunities, and recruitment opportunities? 
• Is its vision aligned with yours? Does the incubator’s work culture and approach align with your team’s values and ways of working?
• Are the contract terms fair and is the process transparent? What are the equity or financial requirements, and are they reasonable for the value offered?