Why biotech startups can't afford to skip an internal finance team
Biotech start-ups are at the forefront of innovation, developing groundbreaking therapies and technologies that have the potential to change lives. But the path from a scientific breakthrough to a commercial success is often hindered by financial complexities that are unique to the biotech sector.
Unlike start-ups in other industries, biotech companies need to navigate long R&D cycles, strict regulatory requirements, and significant capital demands. They are often led by visionary scientists who excel in their fields but may lack business experience, meaning these companies also face the challenge of translating their innovations into viable, scalable businesses.
This is where the first finance hire becomes invaluable. They can act as a strategic partner who manages financial operations but also plays a key role in guiding the company through its growth journey and ensuring that the start-up’s bold vision can be turned into a reality.
1. Managing complex financial structures
Biotech start-ups are typically built on a range of diverse financial structures, including venture capital, government grants, and private equity. Each of these funding sources comes with its own set of requirements, from meticulous financial tracking to complying with specific covenants.
EY’s 2025 Biotech Beyond Borders report shows public US/EU biotech revenues rose 6.8% year over year to $205bn in 2024, while more than one-third of companies have under 12 months of cash runway. This shows the need for tighter finance discipline and scenario planning.
This can also jeopardize funding, which is why a seasoned finance professional is essential. They can make sure that all financial transactions are accurately recorded so that compliance is met, and that relationships with investors are maintained and strengthened.
In the long run, this creates a solid foundation for future fundraising efforts. And in a sector where capital is king, particularly VC backing, the role of this kind of finance support cannot be overstated.
2. Strategic financial planning and forecasting
Long R&D cycles and high costs are common in the biotech industry. Unlike other sectors, where revenue can be generated relatively quickly, biotech companies often face years of development before seeing a return on investment. Because of this, financial forecasting is even more important.
An internal finance team brings expertise to your business that can build sophisticated financial models that are capable of projecting long-term costs and cash flow management. These models are needed to make informed strategic decisions that align with the company’s long-term goals and keep the business on track during its growth phases.
In 2025, scenario modelling and AI-assisted forecasting have become the norm, with many biotech CFOs using tools like Pigment or Anaplan to stress-test cashflow under multiple regulatory and market conditions.
3. Navigating regulatory compliance
Regulatory compliance in biotech is a challenge that is ongoing throughout the lifecycle of a business. Internal finance professionals play a key role in making sure that the company adheres to all the relevant financial reporting standards and regulatory guidelines.
This includes preparing for audits, maintaining accurate records, and being transparent in financial operations. With the EU’s Clinical Trials Regulation (CTR) and new ESG disclosure frameworks (CSRD) coming into effect, finance teams are now expected to manage dual layers of compliance: clinical and financial.
By staying on top of these requirements, the finance team can help a biotech business to avoid expensive penalties and delays. This also ensures that the company remains in good standing with regulators.
4. Boosting investor confidence
In a sector where development timelines are long and outcomes can be uncertain, maintaining investor confidence is important for securing ongoing funding. An internal finance team is needed for managing investor relations in a way that freelance or agency teams can’t do. They prepare detailed, accurate financial reports and are responsible for clear and consistent communication about the company’s financial health.
Pitchbook data shows biotech remains one of the top three sectors for European VC investment, but deal sizes are smaller and diligence is tougher. Start-ups with strong finance leadership are raising faster and on better terms.
5. Optimising cost management
Operating within tight budgets is a reality for most biotech start-ups, especially those in the early stages. Revenue streams are often unpredictable, and in this situation effective cost management becomes a key function.
Controlling burn rate has become even more important in 2025, with rising lab costs and inflation adding pressure to already lean budgets. This further solidifies the role of an internal finance team that can make sure resources are used efficiently and that spending is aligned with the company’s strategic objectives. By keeping a close eye on expenses and optimising the business’s financial operations, the finance team helps the start-up to stay financially stable even during the leanest times.
6. Supporting business growth and scaling
As biotech start-ups move from the research phase into commercialisation, their financial needs become more complicated. This calls for strategic insights into how to manage increased financial complexities and plan for future growth opportunities like public offerings or mergers and acquisitions.
In the past 12 months, UK biotech IPO activity has begun to recover after a two-year slump, with several scale-ups preparing for London or NASDAQ listings. Finance leaders are expected to be IPO-ready much earlier. An internal finance team is well-equipped to support this evolution as they provide the financial expertise needed to navigate these new challenges and help the company prepare for the next stage of its journey.
7. Facilitating risk management
An internal finance team can play a major role in identifying risks and developing strategies to help mitigate them. By analyzing financial data, forecasting potential outcomes, and preparing contingency plans, the finance team can see that the company is better equipped to handle unexpected challenges.
Taking a proactive approach to risk management can make the difference between a biotech start-up that thrives and one that fails. The collapse of SVB in 2023 remains a lesson and biotech start-ups in 2025 are diversifying banking partners and strengthening treasury functions earlier in their lifecycle to manage liquidity risks.
8. Enabling focus on innovation
Finally, having an internal finance team allows biotech founders and executives to focus on what they do best: innovation. By delegating financial management to experts, the leadership team can dedicate their time and energy to developing new therapies and technologies. And they can feel confident with the peace of mind that the financial side of the business is in capable hands. This separation of duties improves operational efficiency and drives the company’s core mission forward.
If you’re scaling a biotech company or thinking about joining one, the bar for finance, operations, and growth talent has never been higher. Get in touch with Fin at [email protected]