Series B and Beyond: Financial Strategies for Scaling BioTech Companies

Securing Series B funding is a major win for BioTech companies, but what comes after can be the real challenge. So, what happens next? Well once the check clears, it’s all about scaling up, especially when it comes to managing financials. At this stage, companies are usually gearing up for clinical trials, expanding their teams, and getting everything in order for potential IPOs.

It’s exciting but also tricky—especially if you’re not prepared for the financial challenges that come with growth. Let’s dig into how BioTech companies can effectively manage their financials as they scale post-Series B.

Why Series B Funding is a Game Changer

Series B is where things start to get real for BioTech companies. At this point, early research and development have shown enough promise to attract serious investors, and now it’s time to take things to the next level—namely, getting products ready for market. This often means pouring more money into clinical trials and ramping up production.

In 2024, companies like Beacon Therapeutics and Formation Bio raised big Series B and D rounds, reflecting strong investor confidence in areas like gene therapy and AI-driven BioTech. These funds are critical, but how a company deploys them can make or break its success. Without the right financial strategy in place, even well-funded companies can run into cash flow issues.

R&D Spending: The Driving Force Behind BioTech Growth

Research and development (R&D) is the lifeblood of BioTech companies. It’s no surprise that a big chunk of Series B funding usually goes straight into R&D efforts. In fact, Biopharma R&D spending is expected to increase by 11% year-over-year, even as the overall funding environment slows down. This growth is largely fueled by companies trying to push preclinical and clinical-stage programs forward, especially in fields like immunology and oncology.

A great example of this is Formation Bio, which raised a Series D round in 2024 to further its AI-powered drug discovery efforts. Their focus on using machine learning for biologics development is just one example of how innovation is driving R&D spending across the board. But as companies scale, the question becomes: how do you keep this spending under control?

Getting IPO-Ready: What Does It Take?

For many BioTech companies, Series B is just a pit stop on the way to an IPO. But making that leap isn’t just about having a big pipeline and a shiny new product. You’ve got to prove that your company is operationally and financially sound.

According to EY’s 2024 BioTechnology Report, being IPO-ready means more than just solid financials—it’s about scaling your operations and ensuring you’re in compliance with regulatory bodies. This is where a lot of companies run into issues. Most early-stage BioTechs start with something like QuickBooks for financial management, which works fine for a while. But once you start heading toward an IPO, you need more sophisticated tools to handle everything from financial reporting to multi-entity consolidation. This is where systems like NetSuite come into play.

At this stage, outsourcing your financials doesn’t cut it anymore. You need an in-house finance team that knows the ins-and-outs of complex reporting requirements and compliance issues.

See why Viracta Therapeutics also went down this route with this quick case study video.

Making Your Series B Capital Work for You

Deploying Series B capital wisely is a balancing act. On the one hand, you’ve got clinical trials to fund, and on the other, you’ve got operational costs that start to add up as the company scales. The key is making sure you stretch those dollars as far as possible while still hitting your milestones.

One strategy we see is BioTech companies partnering with contract research organizations (CROs) to manage the high costs of clinical trials. By outsourcing certain functions, you can extend your cash runway and focus internal resources on core business activities. According to ICON’s analysis, strategic outsourcing has been one of the main ways BioTechs manage clinical trial costs and keep things moving forward. However, managing these vendor relationships is essential to ensure costs don’t spiral out of control.

Vendor Management and CRO Costs: A Necessary Evil?

Managing vendor and CRO costs is one of the biggest challenges for growing BioTechs. After Series B, companies often find themselves juggling multiple partners, including CROs, vendors, and third-party software providers. If you don’t have a solid financial system in place, these relationships can get expensive—fast.

Most companies at this stage turn to cloud-based ERP solutions like NetSuite to handle their financials. While these platforms cover a lot of ground, they’re not always designed to manage vendor and CRO payments out of the box. Tools like Auxilius, which focuses on CRO management and R&D spend, can streamline the accounts payable process for life sciences companies. However, as with many third-party solutions, seamless integration with larger ERP systems can sometimes be a challenge. If you’re scaling quickly, ensuring that all systems communicate effectively is essential to prevent duplicative work—or, worse, missed payments.

Financial Gaps: What’s Missing from Current ERP Systems?

Even with systems like NetSuite in place, there are still some significant gaps in functionality, particularly when addressing BioTech’s unique needs. Here’s where many companies find themselves scrambling:

• AP Automation: While systems like NetSuite handle basic AP tasks, they struggle with automating accounts payable at scale. For example, NetSuite can’t easily convert invoices from emails into bills ready for approval. Solutions like Prendio and Coupa are often used by companies to bridge this gap, as they provide better integration with procurement processes and improve invoice matching capabilities.

• Expense Reporting: Expense reporting remains a challenge for many ERP systems, especially for biotech companies that need to comply with regulations like the Sunshine Act. Tools like Concur are often used to manage these requirements, though some companies have found success with Expensify for less regulated environments.

• Budgeting and FP&A: Most ERP systems allow you to import a budget, but for complex scenario planning or maintaining multiple budget versions, additional tools are needed. Adaptive and Planful are popular options that integrate well with NetSuite to provide more robust financial planning and analysis capabilities.

Looking Ahead: Planning for the Next 3-5 Years

Scaling post-Series B isn’t just about hitting short-term goals; it’s about planning for long-term success. As companies grow, they need to ensure that their financial systems can keep pace with that growth. This often means investing in additional software solutions, outsourcing where it makes sense, and closely managing vendor relationships to maintain cost efficiency.

BioTech companies that have a clear roadmap for the next three to five years are the ones best positioned for success. This includes mapping out potential system upgrades, planning for additional rounds of funding, and keeping a close eye on vendor and CRO costs. It’s a lot to manage, but the companies that do it well will have a leg up when they hit their next milestone—whether that’s Series C funding or an IPO.

Next Steps

Scaling your BioTech company post-Series B isn’t easy, but with the right financial strategy in place, it’s more than doable. If you have any questions about managing your finances as you grow, feel free to reach out!