Healthtech Startups Must Value Science and IP Over Revenue

For healthtech startups, a company's worth is not measured by its revenue. According to attorney Maître Laurie Becker and accountant Alexandre Chopin of TGS France's innovation division, founders must master different valuation levers in the biotech and medtech sectors.

While the classic startup growth model involves successive funding rounds where founders dilute their stake, investors in healthtech face a longer and more uncertain path. BPI France estimates a typical exit horizon of three to five years for standard startups, but development cycles in health can easily stretch from five to ten years. This is because the journey from research to market involves successive stages: scientific validation, preclinical or clinical trials, regulatory approvals, and finally, industrialization.

The Long Road to Value Creation

In a traditional startup, revenue growth or rapid market capture are major valuation indicators. The logic is different in France's health sector, which generates 90 billion euros in annual revenue. For a biotech or medtech company, several years may pass between the research phase and bringing a product to market. The value chain also often involves multiple actors, from academic research teams originating the innovation to startups developing the technology and industrial partners handling production and commercialization.

This extended timeline means investments are longer-term. Significant value creation can still occur, particularly during a strategic merger with an industrial player, even in the absence of sales.

Valuing Milestones Over Financials

The central question for founders becomes: what should be valued at each funding round? More than a financing plan, it is crucial to value results over means, making intangible assets essential. Proofs of progression become key markers of value creation.

These can include significant scientific results, the validation of key development stages, academic, technical, or industrial partnerships, niche expertise, the quality of the management team, and the securing of intangible assets. As Becker and Chopin state, "The strategy of intellectual property thus becomes a real valuation tool and a structuring element of financial strategy."

Intellectual Property as a Strategic Lever

Filing a patent generally provides strong protection and reassures many investors. However, intellectual property, which is not limited to patents, must above all be mastered and secured. Beyond the filing itself, companies must anticipate questions related to partnerships. The distribution of intellectual property rights on jointly developed innovations must be clearly defined to avoid any weakness during a funding round or strategic operation.

Data protection is also a growing challenge, especially for companies developing solutions integrating artificial intelligence. Some firms may favor industrial secrecy to protect specific processes or hard-to-reproduce technological elements. In the software domain, protecting source code with copyright can complement an overall strategy.

The goal is not only to protect an innovation but to build a coherent set of intangible assets allowing the company to maintain a long-term advantage. For biotech and medtech startups, value creation starts well before the first revenue. It is built at the intersection of science, law, and strategy.