LS&HC Horizons 2023 - Flipbook - Page 30
Hogan Lovells | 2023 Life Sciences and Health Care Horizons | Transactions
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Non-dilutive funding opportunities for life sciences
and health care companies
As market headwinds continue to present
challenges for start-ups, life sciences and
health care emerging companies may need to
advance further into the development process
with their own de-risking strategy before
institutional venture capital investors or big
pharma will partner or invest. Particularly
in today’s challenging fund raising market,
emerging companies should consider available
non-dilutive funding opportunities.
Start-up funding can either be dilutive,
which requires selling equity in the company
in exchange for cash or other value and in
which the founders’ and early shareholders’
ownership percentage is reduced, or nondilutive, which does not result in a percentage
reduction in founder ownership. In the U.S.,
non-dilutive options include government
grants, such as from National Institutes of
Health (NIH), National Cancer Institute
(NCI), National Science Foundation
(NSF), Biomedical Advanced Research
and Development Authority (BARDA),
U.S. Department of Defense (DOD) as
Barry Burgdorf
Partner, Houston
well as regional options including the
Cancer Prevention and Research Institute
of Texas (CPRIT) and California Institute
for Regenerative Medicine (CIRM). Many
rare diseases also have national nonprofit
foundations that can provide funding
opportunities for companies involved in
research and commercialization within
specific focus areas. Strategic development
partnerships can also provide funds to develop
and commercialize products without impacting
the capitalization table.
However, when raising money, it is always
wise to remember the old adage: “It is better
to have part of something than all of nothing”.
Many are the stories of faltering life sciences
companies that turned down money because
the terms where too harsh hoping for a better
deal down the road.
Andrew L. Strong
Partner, Houston
