The OneMedPlace blog covers an article in the Boston Business Journal that says that it has become very difficult for entrepreneurs to raise money from angel investors. This raises problems for early stage startups that are often dependent on angel funding to get going. Unlike the software industry, most life science companies cannot be started in a garage with two people churning out a website. There are usually capital costs associated with getting a company started (lab space, instruments, reagents and the like), and that initial infusion of funding is the lifeblood of the young startup. What surprised me was learning that many “angel” deals are ,often in the $500,000 range, a number significantly higher than what I expected. At those levels of funding, it is difficult for an investor not to perform more due diligence, require more concrete business plans, and have a more formal process in place, all of which contribute to the phenomenon discussed. In the world of biotech, where the return could be years away, the risk is likely to keep most angels away.

So what is a young biotech startup to do? For starters, patience is always a good virtue. It could take a couple of years to raise sufficient funding and a ton of meetings. One suggestion in the article is to approach individual angels as opposed to angel groups. They are more likely to provide the small amounts of funding that many entrepreneurs need to get started. The alternative - you just might have to find a rich friend or relative.