Ankit Aggarwal is Executive Director, Healthcare IB, at J.P. Morgan.
In biotech, capital is a lifeline. Scientific progress alone doesn’t bring therapies to patients; sustained funding helps. With long development timelines and high burn rates, biotech companies must navigate capital markets with precision.
I have advised numerous biotech companies, guiding them through capital formation activities via private rounds, IPOs and follow-ons. Drawing from that experience, I’ve put together the framework below, sharing some guidelines for private companies prepping for eventual IPOs.
1. Match capital to maturity.
Every biotech journey starts with science, but success requires pairing it with stage-appropriate capital.
• Early-stage: Primarily funded by VCs, family offices or strategic partnerships.
• Mid-stage: Crossover investors emerge as key players.
• Late-stage: IPOs, follow-ons or structured financings become viable.
Each raise should be milestone-driven. Funding needs to take you through a clear value-inflecting event, such as data readouts or FDA approvals. Misaligned raises may provide temporary relief, but they often derail long-term strategy. In my experience working on these transactions, one key consideration founders often discount is that investors’ interest can be highly governed by clear catalyst timelines and use of proceeds rationale.
2. Manage your crossover round.
Crossover rounds—private financings led by public market investors—have become a biotech rite of passage. These investors validate your story and provide momentum going into the IPO.
But a mismanaged crossover can hurt more than help. Common mistakes include inflated valuations, weak syndicates or fuzzy timelines to key data. Done right, however, a crossover brings institutional credibility and builds IPO demand.
Companies should start early, run a tight process and prioritize long-term holders over fast money. The quality of crossover investors can serve as a signal to the broader market about the company’s potential and credibility. These investors could also support an eventual IPO. In my experience, companies can often struggle with reaching out to the right investor base. They should use their management and board connectivity along with banking relationships to have ongoing dialogue with the prospective investors.
3. Get ‘IPO-ready.’
Being IPO-ready means more than having promising data and a catalyst pathway. Investors are buying into your ability to operate as a public company.
Three dimensions matter:
1. Operational: Audit-ready financials, public company controls and an experienced CFO
2. Governance: Independent board, scientific and financial oversight and equity committee
3. Strategic Narrative: A clear story, milestones and capital deployment
Investors fund conviction. Your S-1 and road show must articulate how capital will create value and why this team is positioned to deliver.
4. Understand market windows and create your syndicate strategy.
Market timing can’t be controlled, but it can be understood. Biotech IPO activity fluctuates with broader macro trends and index performance.
Smart companies monitor public comparables and stay engaged with their banks. They also remain flexible and well-prepared. Companies can consider filing S-1 confidentially and conduct testing-the-waters (TTW) meetings to test the market and investor interest so they are informed before launching a formal IPO road show.
Equally important is who is taking you public. Your choice of lead bank and co-managers affects everything from book building to after-market support. A thoughtful syndicate aligned on long-term value—not just short-term distribution—is essential.
5. Prepare to operate in the public spotlight.
The IPO is not an endpoint. Rather, it’s the beginning of life under scrutiny.
Post-IPO companies must deliver on timelines and communicate clearly. They also need to manage their capital with discipline.
Credibility compounds. Those that meet expectations and execute against milestones are rewarded with follow-on demand and stronger valuation support. Equity research coverage also plays a key role, helping the broader market understand your science and business model.
Build with optionality.
Biotech success is often nonlinear, but capital strategy doesn’t have to be. Companies that plan early, raise strategically and operate transparently increase their odds of accessing capital—and doing so on favorable terms.
A thoughtful approach gives biotech innovators the tools to fund science at scale. In a field where breakthroughs save lives, the ability to navigate capital markets is itself a strategic advantage.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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