Are your financial systems (or lack thereof) empowering your biotech finance team and scientists, or are they holding them back? Is your startup ready to be called up to the big leagues by being investor-ready at any given moment? At the 2024 Finance and Accounting for Bioscience Companies Conference, Erik Smith of 92Bio and Lindsey Fitzgerald of ZAGENO shared tested strategies for creating financial systems and processes that fuel innovation and growth from inception to IPO. Here are key tips from their discussion on how to create a strong foundation to keep you ready for whatever comes next.
Biotechs operate in a unique landscape where funding is unpredictable, compliance requirements are stringent, and scaling is both a goal and a challenge. Well-designed processes and systems can be the difference between chaos and control.
With limited resources and a lean team, startups often begin with tools like Excel or QuickBooks, which work for a while but lack scalability. Implementing systems such as an ERP (Enterprise Resource Planning) system such as NetSuite’s starter edition or a similar platform early on can save you from costly upgrades down the line.
Learn more: Simplifying R&D Accounting
If you’re not ready for an ERP, that’s okay. Smith recommends considering intermediate tools like Smartsheet for document flow or using an Professional Employer Organization (PEO) for payroll and HR needs. These tools strike a balance between simplicity and efficiency, setting your team up for future success without overcomplicating your processes too early.
Learn more about scalable systems: 10 Tips for Scaling Your Lab Operations
A survey conducted during Fitzgerald and Smith’s panel at the conference showed that 67% of attendees need help most with spend analysis, followed by 3-way match and workflow efficiency, and order tracking.
The immediate solution? ABA (always be automating).
Automation helps reduce manual errors, administrative burden, and free up time for strategic tasks. Streamlining purchase orders, vendor management, and approvals creates operational efficiencies that benefit the entire team. Platforms like the ZAGENO lab supply marketplace simplify lab supply procurement, consolidating vendor interactions and providing transparency over spending.
Here’s where to start:
Starting small? For everyday operations, focus on automating key bottlenecks, such as spend tracking and approvals.
Read more: Real-Time Spend Information That Benefits the Lab
Compliance is often seen as a hurdle, but it doesn’t have to slow you down. Establishing clear workflows for audits, vendor contracts, and spending approvals early not only reduces headaches but also builds investor confidence. Automation tools and meticulous record-keeping can help you stay compliant without sacrificing operational speed. While it’s tempting to prioritize speed over structure in a startup, skimping on compliance early can lead to major headaches later. Whether you’re preparing for a fundraising round, an acquisition, or an IPO, your financial controls and compliance processes must hold up under scrutiny.
To simplify compliance:
Read more: Procurement Peace of Mind: How to Stay Compliant and Streamline Your Lab
Securing venture capital or preparing for an IPO requires you to showcase not just your science but your operational maturity. Investors want to see that your finances are transparent, scalable, and well-managed, as well as feel confident that you’ve thought through your company’s financial needs and risks.
“[Investors] care about how you're going to use their money. That's the main question for finance. Everything else is science.”
— Erik Smith, Associate Director of Finance, 92Bio
To impress investors:
Read more: Virtual Data Rooms: The Unsung Hero of Biotech Financing
When it’s time to transition from private to public, your day-to-day operations will shift dramatically. Start building your IPO team or working with consultants experienced in IPOs well in advance.
Finance isn’t just about numbers; it’s about enabling every part of your company to succeed. Building relationships with your scientists, operations team, and executive leadership can ensure your financial systems align with broader company goals. Involving key stakeholders early in system implementations, for example, can help ensure buy-in and smooth adoption.
Scaling a biotech company is a journey filled with challenges, but laying a strong financial foundation can make all the difference. By implementing scalable systems, automating processes, and prioritizing compliance, you’ll be well-positioned to navigate growth milestones and attract the attention of investors. Whether you’re preparing for your next funding round or laying the groundwork for an IPO, taking these steps early will set your company on the path to success.
For more strategies to streamline biotech financial systems, watch the complete discussion, “Close Process, Auditing, and Spend Analysis Tracking through Automation.”
Contact ZAGENO today for a demo of biotech’s one-stop marketplace for lab supply management.
Erik Smith is the Associate Director of Finance for 92Bio, managing accounting, procure-to-pay (P2P), and operations for the early-stage biotech company. He has experience with several successful startups from early inception to acquisition. At each company, Erik has implemented and built out systems aimed at bringing efficiency and scalability to critical workflows.
Lindsey Fitzgerald is a Director of Sales at ZAGENO, responsible for accounts at top biotech and pharma companies and helping drive growth with a robust understanding of SaaS, B2B marketplaces, business intelligence systems, procurement automation and digitization, P2P, and ERP systems. Leading a team of seasoned sales professionals at ZAGENO, Lindsey is a key contributor to ZAGENO's growth and overall success.