Balancing the business and science sides of your biotech startup is no easy feat, and one of the best ways to set yourself up for success is by conducting market research. Whether you’re validating your product, figuring out who your ideal customers are, or preparing to raise funds, a strong research strategy is your roadmap. In this guide, we’ll walk through the key steps to conduct effective market research tailored to biotech startups.
Customer discovery for biotech startups
Customer discovery is the heart of your primary market research activities. It’s all about understanding the real pain points, behaviors, and needs of your potential users. Here’s how to approach it with clarity and purpose:
- Conduct targeted interviews. Speaking directly with your potential customers is one of the most effective ways to understand their needs. But, it’s not just about asking questions, it’s about listening to what they don’t say as much as what they do say.
Here’s how to get the most out of those conversations:- Ask open-ended questions. Avoid questions that lead your respondents. Instead of asking, "Do you like this product?" ask, "What challenges do you face with your current solution?" This helps get to the heart of the issue.
- Use rank-order questions. Instead of asking, "Which feature do you like best?" try, "Rank these five features from most to least important to your research." This uncovers deeper preferences and priorities.
- Look for nonverbal cues. Sometimes, people say one thing, but their body language says another. If someone says they like your product but seems disengaged or pauses before answering, take note. Are they truly enthusiastic, or are they just being polite?
- Actions speak louder than words. Prospects might say, "Your product seems easy to use." But, ask them to interact with it and observe. Do they breeze through it? Or do they hesitate at every step, struggling to find their way? How they use your product matters more than how they say they feel about it.
- Incentivize participation. People are more likely to participate in interviews or surveys if there’s something in it for them. Offer relevant perks such as discounts, early product access, or exclusive content to encourage participation.
- No Yes/No answers. Yes or no questions often don’t give you much insight. Instead of "Would you use this?" try asking, "How do you currently approach this challenge?"
- Failing to understand the bigger picture. Your product is part of a bigger picture. Ask questions that get at the broader context. What products are they already using? What budget constraints exist? Who else is part of the decision-making process?
- Don’t just talk to one type of stakeholder. Patients, doctors, payors, and sales representatives all influence purchasing decisions. Talk to all these groups to get a fuller picture.
- Analyze user behavior. Don’t just rely on verbal feedback. Watch how potential customers interact with prototypes, tools, or competitor products. Actions often reveal more than words.
- Understand the decision-making process. Who influences the purchasing decisions in this product category? Is it the healthcare provider, insurance company, family, or community? Knowing this helps you tailor your approach.
- Track information sources. How do they stay informed about products or services in your space? Through social media, peer recommendations, or research publications?
- Be careful about representation. Don’t just sample a small group. Make sure you’re getting feedback from a diverse cross-section of your target market. If your data is skewed, your decisions will be, too.
Focus groups vs. surveys: Pros and cons for biotech startups
When gathering feedback, you’ll likely turn to surveys and focus groups. Each has its strengths and weaknesses, so it’s helpful to understand when to use each method.
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Pros
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Cons
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Focus groups
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In-depth discussions: You get real-time reactions, which can be more insightful than written surveys. Group dynamics can also spark ideas you might not have anticipated.
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Groupthink: Sometimes people in groups may hold back or agree with the majority opinion, leading to less honest feedback.
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Rich qualitative data: Listening to participants' thoughts, frustrations, and ideas provides a deep understanding of their mindset.
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Time and cost: Organizing and running focus groups can be time-consuming and costly, especially if you’re paying for participants.
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Surveys
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Scalable: Surveys allow you to collect feedback from a larger group, making it easier to gather data at scale.
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Less depth: While surveys provide numbers, they don’t always explain why respondents feel the way they do.
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Quantifiable data: You can easily analyze results with statistics, making it straightforward to spot patterns and trends.
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Survey fatigue: If your survey is too long or repetitive, people may drop out before finishing.
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Tips for conducting focus groups and surveys
For focus groups, keep groups small (5-10 participants) for more focused discussions, have a skilled moderator to guide the conversation and ensure everyone has a chance to speak, and choose diverse participants to get a broad range of opinions.
For surveys, keep them short and to the point, incentivize responses with perks like discounts, gift cards, or early access to your product, use services like SurveyMonkey or Google Forms for easy survey creation and data collection.
Biotech startup funding research
Market research isn’t just about validating your product, it’s also a crucial part of attracting investors and securing funding. Beyond gathering direct feedback from your customers, you can leverage existing secondary data to better understand your market, your customers, and the broader biotech ecosystem. Let’s break it down and show you how to align your research with your funding goals.
- Size the market opportunity. Investors are all about the numbers. They want to see that your biotech startup has a significant and growing market. So, how do you make sure you're presenting the right data?
- Use data from trusted sources. Leverage resources like NIH funding trends, industry reports, and competitor analysis tools like PitchBook, Crunchbase, and Tracxn. These can help you gauge market size and growth potential.
- Calculate Total Addressable Market (TAM) and Serviceable Available Market (SAM). What’s the market opportunity you’re going after? How many people can you realistically reach with your product, and what are they willing to pay? Take time to understand your TAM and SAM.
Learn more: How to Calculate TAM and SAM - Highlight emerging trends. Investors want to hear about the trends that will propel your startup forward. Is there a new regulatory shift that benefits your product? Or a technological advancement that’s accelerating your market? Make sure you can connect these dots and demonstrate the "why now" of your business. This isn’t just about showing how your product fits today’s market but also why it’s poised for growth in the future.
- Understand market dynamics. Look at how your industry has evolved over time. What factors have caused shifts in demand? Have there been technological changes, cultural shifts, or regulatory changes that are pushing your market forward or causing headwinds? Understanding these dynamics will help you articulate your startup’s potential to investors, hires, and customers.
- Research investor priorities. Knowing what investors care about is key to securing funding. Venture capital firms and biotech-focused investors often have specific interests and goals. Understanding these can help you tailor your pitch and make your startup more appealing.
- Identify investors who have funded similar startups. Look at the investors who’ve supported companies similar to yours. What types of biotech startups have they invested in? This gives you an insight into what they’re looking for and whether your startup aligns with their portfolio.
- Know what milestones investors expect. Investors often have certain milestones they want to see before putting money into your company. This could include preclinical results, regulatory approvals, or early traction in the market. Make sure you know these benchmarks and can demonstrate your progress toward achieving them.
- Understand how they assess risk. Biotech startups are inherently risky, but investors are looking for ways to mitigate that risk. Research how they evaluate risk. Do they prefer startups with proven technology or a solid team? How much importance do they place on market validation? The more you understand this, the better you can frame your company in a way that addresses their concerns.
Learn more: How to Build Better Biotech Financial Systems
- Competitive landscape analysis. A strong competitive analysis is essential not just for attracting investors, but also for crafting your go-to-market strategy. Investors want to see that you understand the market, the competition, and where you fit into the bigger picture.
- Analyze competitor pricing and positioning. What are your competitors charging? How do they position their product in the market? Knowing this helps you determine if there’s a gap for your product and how you can differentiate your offering.
- Spot market gaps. Every startup solves a problem or fills a need. So, what’s missing in the market that your biotech startup addresses? By identifying these gaps, you can show investors exactly where you fit and why there’s a demand for your product.
- Track industry partnerships and acquisitions. The biotech space is constantly evolving with mergers, acquisitions, and partnerships. Keep an eye on these shifts—they can indicate opportunities for your startup, whether it’s in terms of potential collaborations or changes in the competitive landscape that could work in your favor.
Learn more: How to Use ChatGPT for Competitor Analysis
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Market research is just one piece of the puzzle. Scaling your biotech startup also requires efficient procurement, supplier management, and lab operations. The ZAGENO lab supply marketplace is here to help biotech startups streamline lab supply ordering, optimize procurement processes, and reduce costs—so you can focus on what really matters: innovation.
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