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For many life sciences companies, financing is not a one-off event but a recurring part of their growth strategy. New investments are needed to reach the next development phase, and at the same time, that very progress determines investor confidence.
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We see this dynamic repeated in almost every growth stage of a life sciences business. The sector is characterised by lengthy development processes, continuous funding needs, complex liquidity forecasts, and dependence on investors, financiers, and strategic partners.
Investors look beyond the science
A groundbreaking technology or promising research results are important, but they rarely form the sole reason to invest. Investors primarily want to understand how scientific progress translates into business value.
This means that companies must be able to answer questions such as:
- Which milestone will be achieved with the investment?
- What does the expected cash runway look like?
- What risks could impact the timeline?
- Which scenarios have been modelled?
- What value will be created when the next development phase is successfully completed?
Milestones, financing, cash position, and investor confidence are closely intertwined.
Financing requires a credible story
Research by the OECD shows that biotech companies in Europe still lag behind their counterparts in the United States when it comes to venture capital and access to growth financing. This is precisely why a compelling investment case is more important than ever. External financiers explicitly look at governance, transparency, and the quality of financial information. A strong investment case is therefore about more than a scientific presentation. Liquidity planning, valuation, management information, and strategic choices also play a crucial role.
Start earlier than you think
Many entrepreneurs only start a financing round when the pressure on cash flow increases. This reduces the ability to weigh alternatives. The most successful financing processes often begin well before capital is actually needed. This allows time to strengthen financial processes, work out scenarios, and gradually engage investors in the company’s development.
The question is not only whether investors believe in your innovation. The question is mainly whether they have sufficient confidence in the company behind that innovation. Those who combine scientific progress with financial control, transparency, and a clear growth strategy significantly increase the chances of successful follow-up funding.
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Authors
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Monique Pisters
Monique Pisters is specialised in international tax issues, such as mergers and acquisitions as well as compliance coordination services. Starting from 2019, Monique acts as International Business director for Grant Thornton Netherlands. In this respect she is the first contact point for foreign companies and foreign Grant Thornton offices that wish to receive information about working or establishing in the Netherlands.View Profile