Crafting a Bankable Business Plan for Biotechnology and Deep-Tech Start-Ups
Updated: Oct 5
For biotechnology and deep-tech start-ups, preparing a business plan is crucial at pivotal moments in the company’s journey. This often occurs when grant funding is ending, a technology needs to move beyond proof of concept, manufacturing must be scaled, or external investment is required.
Yet, there is a significant distinction between having a business plan and having a bankable business plan.
A conventional business plan may describe the technology, market opportunity, management team, and intended route to market. In contrast, a bankable business plan must go considerably further. It must demonstrate, with credible assumptions and defensible numbers, how the opportunity can become a financially sustainable business. It should also explain why an investor, lender, or funding institution should commit capital to it. For science-based ventures, this distinction is even more critical.
A Good Technology Is Not Yet a Good Business
Deep-tech and biotechnology companies frequently originate from universities, research organizations, and technically focused founding teams. Their greatest strength is often the technology itself. However, technical excellence does not automatically translate into commercial viability.
Research on biotechnology commercialization repeatedly highlights the challenges of moving technologies from research into industrial and market application. Tawate, Gupta, and Jain identified multiple distinct commercialization processes and three “valleys of death” in biotechnology. This research underscores that commercialization involves considerably more than completing R&D.
Similarly, studies on high-technology start-ups identify financing, commercialization, market development, management, and other capabilities as interconnected challenges rather than isolated problems.
This is why investors are not simply asking, “Does the technology work?” They are also inquiring:
Who will buy it?
Why will they buy it?
What will they pay?
What will it cost to manufacture and sell?
How much capital is required?
What milestones will that capital achieve?
When does the business generate revenue?
Can it achieve an acceptable margin?
What additional funding rounds will be required?
Ultimately, what return can reasonably be generated from the investment?
A bankable business plan needs to answer these questions.
What Makes a Business Plan “Bankable”?
Bankability should not be confused with producing a longer document or a more sophisticated-looking financial spreadsheet. A bankable business plan is one in which the commercial, operational, and financial assumptions are sufficiently developed, internally consistent, and evidence-based. This allows an external party to assess the opportunity and make an informed funding decision.
The commercialization strategy and financial model must tell the same story. For instance, if the commercialization strategy states that regulatory approval will take three years, the financial model cannot assume significant commercial revenue in year one. If a manufacturing facility requires R30 million in capital expenditure, this cannot disappear from the cash-flow forecast. If distributors receive a 30% margin, the revenue model must reflect it. If the product requires clinical validation, certification, technology transfer, or manufacturing scale-up before launch, the costs and timelines need to be incorporated.
For biotechnology businesses, the relationship between financing strategy and business strategy is especially important. Research examining early-stage biotechnology financing has specifically identified realistic valuation and an appropriate operating model as fundamental challenges for emerging biotech companies.
The Financial Model Is Not an Appendix
One of the most common weaknesses we encounter in early-stage business plans is inadequate financial information. A company may provide a five-year revenue forecast but little information explaining where the numbers came from. Revenue might increase from R2 million to R50 million without showing the number of units sold, selling price, manufacturing capacity, customer adoption assumptions, or market penetration required to achieve that growth. That is a forecast, but it is not yet a financial model.
A credible financial model should allow an investor to follow the economic logic of the business from the underlying assumptions through to revenue, costs, cash requirements, and eventual profitability.
Depending on the business, this should typically address:
Revenue drivers, pricing, and expected sales volumes
Cost of goods sold and gross margins
Staffing and operating expenditure
Capital expenditure and manufacturing requirements
Regulatory, product development, validation, and certification costs
Working capital
Cash-flow requirements and cash runway
Funding requirements and timing
Break-even analysis
Profit and loss, balance sheet, and cash-flow projections
Scenario and sensitivity analysis
Valuation and potential investor returns
These numbers matter because financial sustainability is itself a commercial milestone. A longitudinal study of 354 cleantech companies examined revenue generation, profitability, and retained earnings as three important milestones in progressing through the commercialization “Valleys of Death.”
In other words, raising capital is not evidence that a business model works. Ultimately, the venture must demonstrate a credible pathway towards generating and retaining economic value.
Assumptions Need to Survive Scrutiny
Early-stage companies will inevitably have incomplete information. A biotechnology start-up may not yet know its final manufacturing cost. A medical technology company may have limited information on commercial-scale yields. A new industrial biotechnology process may not yet have operated at the intended scale.
This does not mean that financial modeling should be postponed until all the information is available. Experienced commercialization specialists can develop reasonable estimates using comparable technologies, industry benchmarks, manufacturing norms, published information, supplier quotations, market data, and accepted industry rules of thumb. These assumptions can then be clearly identified and tested through sensitivity and scenario analysis.
This is very different from inventing numbers to complete a spreadsheet. The purpose is to make uncertainty visible and measurable.
For example, rather than simply assuming a 60% gross margin, the model can examine what happens if the actual margin is 50%, 40%, or 30%. Rather than assuming market entry in 18 months, the model can examine the effect of a 12-month regulatory delay. Instead of presenting one apparently precise company valuation, different development and commercial scenarios can be modeled.
For an investor, understanding what must go right and what happens when something goes wrong can be as important as the headline financial forecast.
Commercialisation Strategy Comes Before the Revenue Curve
Another common mistake is developing the financial projections before establishing how the product will actually reach customers. A credible commercialization strategy needs to identify the target customer, market segment, route to market, pricing strategy, sales channel, regulatory pathway, manufacturing approach, partnerships, reimbursement or procurement requirements where applicable, and the milestones required to reach commercial launch.
The choice of business model can materially change the economics of a biotechnology venture. For example, licensing technology to an established industry player creates a fundamentally different cost structure, risk profile, and revenue model from manufacturing and selling the product directly. Recent biotechnology literature similarly emphasizes that selecting the appropriate B2B or B2C business model is an important component of successful commercialization.
The financial model should therefore be the numerical expression of the commercialization strategy, not a separate exercise undertaken at the end of writing the business plan.
Common Weaknesses in Deep-Tech Business Plans
Through our work assessing technologies, developing commercialization strategies, conducting techno-economic assessments, and preparing business plans and financial models, we repeatedly encounter similar weaknesses. These include:
Technically excellent solutions with poorly defined customer problems
Market sizes presented as large global figures without identifying the realistically addressable market
Unrealistic market-share assumptions
Insufficient competitor analysis
No clearly articulated unique value proposition
Pricing based on what the company hopes to charge rather than what customers will pay
Underestimation of regulatory and scale-up timelines
Inadequate provision for working capital
Manufacturing costs based on laboratory rather than commercial scale
Revenue forecasts disconnected from production capacity
Funding requirements that are not linked to specific value-creating milestones
The team is another frequent weakness. Investors invest in both the opportunity and the people who must execute it. A business plan should therefore demonstrate not only scientific expertise but also whether the company has access to the commercial, regulatory, manufacturing, financial, and management capabilities required for the next stage of development.
Valuation Needs to Be Connected to Risk
Early-stage biotechnology and deep-tech valuation is difficult because conventional company valuation approaches may not adequately capture technical, regulatory, and development risk. A valuation should not simply be a number inserted into the fundraising section because that is what the founders believe their company is worth. The valuation needs a rationale.
Depending on the technology and stage of development, this may involve discounted cash-flow approaches, risk-adjusted net present value, comparable transactions, venture capital methods, milestone-based valuation, replacement-cost considerations, or combinations of approaches.
Importantly, valuation should change as risk is retired. For drug-development companies, for example, research has shown that successfully crossing major development milestones can materially affect company valuation. This reinforces an important principle for deep-tech entrepreneurs: fundraising should be linked to milestones that increase the value of the business.
The question is not only, “How much money do we need?” but also, “What will this funding allow us to prove, and how will achieving that milestone change the risk and value of the company?”
The Business Plan Should Withstand Due Diligence
One useful way of thinking about a bankable business plan is to regard it as the beginning of due diligence rather than the end of business-plan writing. Every important statement should invite the next question. For example:
If the market is worth R5 billion, what portion can the company actually address?
If the company expects a 50% gross margin, what evidence supports the manufacturing cost?
If the product is cheaper than its competitors, is that advantage sustainable?
If commercialization requires R20 million, is that enough to reach the next value inflection point?
If the company expects profitability in year four, how much cumulative cash is required before it gets there?
If the valuation is R100 million, what supports that valuation?
A strong business plan anticipates these questions and provides defensible answers.
From Scientific Opportunity to Investable Proposition
Deep-tech ventures face particular challenges because commercialization can involve long development timelines, specialized infrastructure, substantial capital requirements, and significant technical and market uncertainty. Peer-reviewed research describes these characteristics as contributing directly to the extended Valley of Death faced by technology ventures.
This makes rigorous business planning more important, not less. At Maravion, our approach is to connect the different elements of the investment case: the technology, intellectual property, market opportunity, unique value proposition, commercialization strategy, regulatory and manufacturing pathway, team, financial model, funding requirement, and valuation.
A bankable business plan should ultimately demonstrate a logical chain:
Technology → Product → Customer → Market → Commercialization → Revenue → Margin → Cash flow → Funding requirement → Value creation
If one of those links is weak, investors will find it.
Do Not Take an Incomplete Investment Case to Funders
Entrepreneurs sometimes approach investors too early with an attractive technology but an underdeveloped commercial and financial case. That can be costly. A funding application or investor meeting is not simply an opportunity to obtain money. It is also an assessment of whether the management team understands its own business.
A weak financial model, poorly supported valuation, unclear unique value proposition, or unrealistic commercialization strategy can undermine confidence in an otherwise strong technology. Before presenting a biotechnology or deep-tech opportunity to funders, founders should therefore be able to answer three fundamental questions clearly:
Why this technology?
Why this business?
Why should someone invest in it now?
A good business plan explains the opportunity. A bankable business plan demonstrates how the opportunity can become a viable, financeable, and valuable business.
For deep-tech and biotechnology companies seeking investment, that distinction matters.
Conclusion
In summary, crafting a bankable business plan is essential for biotechnology and deep-tech start-ups. It requires a clear understanding of the technology, market, and financial landscape. By addressing the common weaknesses and ensuring that the business plan withstands scrutiny, we can position ourselves for success in securing the necessary funding and driving innovation forward.
References
[1] Tawate S, Gupta R, Jain K. “Development of a Technology Commercialization Model for Indian Biotechnology Firms.” IEEE Transactions on Engineering Management. 2022;69:1878–1890. DOI: 10.1109/TEM.2019.2939417.
[2] Gbadegeshin SA, Al Natsheh A, Ghafel K, et al. “Overcoming the Valley of Death: A New Model for High Technology Startups.” Sustainable Futures. 2022;4:100077. DOI: 10.1016/j.sftr.2022.100077.
[3] Abouarab B, Bazarian C, Ben Chaouch Z, et al. “Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences.” Orphanet Journal of Rare Diseases. 2023;18. DOI: 10.1186/s13023-023-02753-y.
[4] O’Reilly S, Mac an Bhaird C, Greene FJ. “The role of equity capital in speeding cleantechs across the ‘Valley of Death’.” International Small Business Journal. 2024. DOI: 10.1177/02662426241267813.
Additional literature: Linton JD, Xu W. “Understanding and Managing the Biotechnology Valley of Death.” Trends in Biotechnology. 2021;39(2):107–110. DOI: 10.1016/j.tibtech.2020.06.013.
Kampers LFC, Asin-Garcia E, Schaap PJ, Wagemakers A, Martins dos Santos VAP. “From Innovation to Application: Bridging the Valley of Death in Industrial Biotechnology.” Trends in Biotechnology. 2021;39(12):1240–1242. DOI: 10.1016/j.tibtech.2021.04.010.
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