Previously, we highlighted Perlstein Lab’s burn rate from 2014. We’ll revisit that post and discuss our expenses for January through May 2015. We aim to give guidance to new entrepreneurs and ideas to existing biotech companies. We may not make the best decisions, but we are always learning and figuring out better ways to more efficiently manage our company.
While the tech startup community opens the hood on their budgets, biotech startups tend to be shrouded in stealth. Bruce Booth aka Life Sci VC and the Atlas portfolio blogger syndicate are exceptions and admirably crunch the data and dispense advice, but they tend to focus on market caps, funds and valuations rather than the brass tacks of booting up a founder-led biotech startup in the critical first 24 months of existence.
Let’s take a look under our hood. Almost halfway through 2015 and we’ve spent $447,114.72.
2015 Company Spending by Category
Payroll is our biggest expense with 4 PhD’s, a Data Guru, and support staff. We’ve converted Tamy from part-time to full-time and brought on web development specialist Christy Collins to maintain the website.
Overhead includes rent at QB3, utilities, and the autoclave that costs us $40/run. Overhead and Payroll (and Taxes) are fairly fixed costs and do not change much from month-to-month.
Other includes legal fees, marketing, and travel to conferences. The last few months have seen an increase in Travel as we display our data to the world.
Lab Supplies fluctuates over time. If we’re not buying big equipment, we spend between $6,000 to $21,000 per month for items like chemical compounds, sealing film, and 384-well plates, which are our most expensive purchases. Smaller purchases include fly food, cell culture dishes, and a Stereozoom microscope from eBay.
That low amount relative to total spending is a testament to model organisms, which are inexpensive to maintain. You can see how Lab burn rate compares with our Company burn rate:
We purchase from many suppliers, but over time we are consolidating these as we learn which companies have fair pricing and excellent customer service. Our favorite suppliers include E&K Scientific, Pipette.com, Molecular Devices, and Amazon. We can’t stress enough how important it is to have good relationships with suppliers. It will result in lower prices and better customer service, saving time to focus on other tasks.
Here are Three Lessons Learned in 2015, so far:
- Some money will be wasted or you’ll end up on the unlucky side of a transaction. $50 here, and maybe $1500 there. Expect it, learn, and move on. As Ethan likes to say, “It’s the cost of doing business.”
- Maintain healthy relationships with suppliers. Poor customer service can cost your company valuable time. Low cost should not be your only reason to buy from a supplier. A purchase might save you $100, but if it costs your company an hour to place the order and follow-up on it, you just lost time for your company. How much is that time worth?
- Understand the benefits and pitfalls of service providers/CROs. We got burned when facilities whose finances or operations depended on academic resources or grant funding abruptly shut down without completing all deliverables. We also got burned by CROs that failed to deliver on schedule. While we obviously save money becoming experts on techniques or assays that could be outsourced, the cost of project management is non-zero, both in terms of failed deliverables as well as time wasted not doing in-house research.
This post was created by our HappiLabs Virtual Lab Manager, Tom Ruginis.