Six reasons why your start-up should chase soft funding - BioInnovation Institute

Six reasons why your start-up should chase soft funding

Six reasons why your start-up should chase soft funding

Funding is essential to all start-ups. Especially in life sciences as the entrepreneurial journey is long and requires a lot of risk willing capital. For many start-ups, a venture capital investment is the number one priority but at BioInnovation Institute, the portfolio start-ups are encouraged to also seek a different kind of funding: Soft funding – or non-dilutive funding as it is also referred to in the investment world.

“To receive an investment, the founders must usually give away shares of the company. This is not the case for soft funding which makes it an attractive option”, explains Cathrine Nygaard Christensen, Funding Specialist at BII.

BioInnovation Institute has partnered with the European funding agency Innovayt and the American funding agency Freemind Group that support BII’s portfolio start-ups in identifying relevant soft funding options and supports in the application process.

Since 2018, BII’s start-ups have raised close to EUR 14 million in soft funding and the typical grant size is between EUR 100.000 – 200.000.

We asked Cathrine Nygaard Christensen a few questions about this funding opportunity.

Why is soft funding a good option for life science start-ups?
There are actually six reasons why a start-up should go after soft funding.

  1. You get funded without losing shares
  2. It allows you to accelerate your development process
  3. It can foster collaborations and enable new hires
  4. It is a quality mark for the start-up
  5. It allows you to reach more milestones and thereby increase company value
  6. It allows you to de-risk which makes it easier to attract substantial funding

 

How do you go about raising soft funding?
First, you need to identify relevant options for your start-up and decide which to apply for. Talk to colleagues in other starts-up, what have they done? Or partner with agencies that offer help to find the right options, develop a strategy and even write the application. While most start-ups run the application process themselves, for very competitive programs, bringing on an agency can be a good idea If your application is rejected, seek feedback and don’t give up. It happens to a lot of companies and in the very competitive programs, it is not uncommon to apply three or four times.

What are your best tips or recommendations?
First of all, only spend time on opportunities that fit your start-up instead of trying to squeeze into an odd box. Be aware of criteria and guidelines and read them thoroughly so you won’t be rejected due to formalities. Focus less on the science and more on storytelling than you are used to in academia.
And finally, don’t be afraid to reveal your gaps. The providers are typically governmental institutions or private foundations that are risk willing in the very early stages of the entrepreneurial journey. The important thing is to provide a contingency plan for how you are going to fill those gaps.

Want to join BII? Apply for our open call for the Venture Lab program.

 

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