3 Key Takeaways
- Your IP is your goldmine – For most biotech and medtech companies, intellectual property (IP) is the primary asset—often making up most of the enterprise value. Competitors, cybercriminals, and nation-state actors are targeting these assets, even in early stages.
- The “security later” myth is costing you deals – Investors are increasingly seeing weak security as a deal-breaker during due diligence. Regulatory failures can cost millions to remediate.
- Resilience now rivals innovation – Investors increasingly allocate capital to companies that can demonstrate not just breakthrough science, but also the security, integrity, and resilience to protect it.
Security Is a Business Decision—Not a Technical One
Security decisions often get framed as technical, complex, or something to worry about later. That mindset is dangerous—especially in life sciences, where what you don’t protect can cost you your next round, your IP rights, or your company’s future.
In reality, early-stage biotechs and medtechs face three unavoidable truths:
- Your intellectual property is the business — and likely the only real asset you own.
- You’re already a target — from competitors, cybercriminals, and even foreign intelligence services.
- Investors are watching — and asking questions you must be ready to answer.
The risk environment has shifted. Today’s adversaries aren’t just hackers in basements. They include:
- Ransomware gangs targeting IP-rich companies for extortion
- Foreign actors stealing trade secrets to boost their own biotech industries through espionage and foreign interference
- Contract partners and employees who, as insider risks, might mishandle, steal, or deliberately leak sensitive information
You may not stop every threat—but you can become a harder target. And that makes you a safer bet for investors.
Security Creates Value—and Investors Know It
Here’s what most founders miss: Security doesn’t just protect value. It creates it.
Early-stage companies that build in basic controls gain:
- Faster fundraising – Clear controls speed due diligence.
- Smoother partnerships – Big pharma won’t risk IP leaks from weak links.
- Fewer regulatory delays – Secure-by-design systems reduce audit findings.
It’s not about locking everything down—it’s about stage-appropriate controls that prove you can grow responsibly.
Surveys show over 70% of life science investors now flag data integrity and IP protection as top decision factors. That’s because the risk is real: trade secret theft costs the global economy more than $1 trillion annually, and life sciences firms are prime targets.
Nation-state actors, insider risks, and ransomware gangs are no longer fringe concerns—they’re active threats. This isn’t hypothetical. It’s a competitive filter—and investors are paying attention.
When IP Protection Becomes a Business Valuation Driver
From my experience helping companies navigate security challenges, there are four critical stages where security transforms from “nice to have” to “deal or no deal.”
A. Discovery Stage:
Many founders assume they’re “too early” for security. In reality, premature public disclosure or leaks can destroy patent eligibility and future value.
Case Study: A European gene therapy startup lost patent protection after a postdoc shared results at a conference before filing. The resulting “prior art” invalidated their core IP, forcing an 18-month delay and a complete pivot.
Whilst many medtechs and biotechs fail at this conceptual hurdle, they still have valuable information and data assets with some residual value. A resonable investor might ask “How do you prevent premature disclosure of trade secrets? What’s your invention disclosure process?”
5 Tips to manage information security risks during discovery:
- Enable conditional access controls and sensitivity labels for IP documents using existing tools.
- Implement NDAs for everyone, including advisors and part-time collaborators.
- Create invention disclosure workflows to track who invented what, when.
- Run brief security inductions focused on IP protection basics.
- Most early-stage companies already pay for Microsoft 365 tools like Purview through their E5 subscription (or AWS, Google equivalents). These tools are designed to manage these risks, but they’re never turned on!
B. Prototyping Phase:
Outsourcing and collaboration introduce new risks. Without strong IP protection clauses and access controls, your designs and data can walk out the door. Here are two examples:
Case Study 1: A Boston medtech company discovered a manufacturer had shared CAD files with competitors. Weak contracts and lack of controls cost them millions in lost advantage.
Case Study 2: A European medtech startup outsourced prototyping to an overseas partner. Within months, a similar device appeared in local patent filings. Weak contracts and open file sharing enabled the leak. Surveys indicate that over half of life science firms have experienced IP leakage during collaboration or outsourcing.
If your business is at this stage in the lifecycle, I think its perfectly reasonable that a potential investor might ask: “What IP protection clauses are in your supply chain contracts? How do you audit third-party access to sensitive data?”.
Tips to manage risks in outsourcing and prototyping
Here’s five simple actions you can do to manage your prototyping risk:
- Upgrade vendor contracts with IP protection, confidentiality, and audit clauses.
- Implement data loss prevention policies to prevent sensitive IP sharing via email or chat.
- Use secure collaboration portals with controlled access.
- Conduct regular access reviews for sensitive information.
- Use a secure, timestamped invention disclosure log—this can be as simple as storing cryptographic hashes of documents with trusted timestamps to prove originality and timing.
C. Clinical Validation:
Data integrity and regulatory compliance become paramount. According to FDA enforcement summaries, a significant portion of warning letters cite documentation and data integrity deficiencies.
Case Study: One oncology trial faced a clinical hold after inspectors found inadequate data controls, costing $1.8 million in remediation and a 14-month delay.
As life science companies progress to clinical validation, regulatory scrutiny really steps up. Investors start asking tough questions like “Do you have FDA compliant data management systems? Can you demonstrate audit trail capabilities for trial data?”.
If you can’t satisfy a regulator, your commercialisation timeline might be set back by one to two years, and your additional cash burn could send you under.
Don’t wait until the last minute to factor in security – there’s a reason why the FDA and TGA adopted ‘secure by design’ principles.
Tips to manage security and integrity risks at the Clinical Stage:
- Encrypt all clinical trial data using built-in cloud platform features.
- Develop data integrity SOPs aligned with regulatory expectations.
- Assess CRO security practices before signing contracts.
- Prepare incident response plans for data breaches or integrity issues.
D. Scaling Phase:
At this stage, due diligence intensifies. Investors want proof you can scale—securely, not just scientifically.”
That means showing your approach to information security, data integrity, and resilience to recover from disruption or compromise is well thought out and consistently applied.
Case Study: A US-based biotech lost millions in valuation after a researcher emailed unpublished gene-editing data to a competitor before patent filings. The company lacked basic NDAs and data loss prevention controls. Industry studies suggest that premature disclosure or insider risks resulting in inadvertant publication are a leading cause of patent novelty disputes.
Potential investor questions:
- “How do you manage privileged access to trade secrets and sensitive clinical data?”
- “What happens if someone in your supply chain is compromised?”
- “Can you detect and respond to insider threats before they damage your valuation?”
Scaling Stage Actions:
- Formalize your security program with written policies and governance.
- Implement privileged access management for sensitive IP and trial data.
- Establish vendor risk assessment processes.
- Provide regular employee security awareness training.
What Investors Now Ask (And What You Need to Answer)
Today’s investors aren’t just evaluating your science—they’re evaluating your ability to protect it. Here’s what they want to know:
- Are your information security controls appropriate for your risks?
- Can you demonstrate good data integrity?
- How do you protect global operations? What controls are in place for international CROs and suppliers?
- Are you compliant with export controls?
- How do you manage insider risk?
- How do you protect your data and IP with contract manufacturers and research partners?
The Bottom Line: Security as a Strategic Advantage
In 2025, security isn’t just about prevention—it’s about acceleration. When you can show your IP is protected, your data integrity is sound, and your partners are secure, you’re demonstrating the kind of operational maturity that makes you investable.
Companies that invest in security early don’t just avoid disasters—they grow faster:
- Faster fundraising: Mature security speeds up due diligence.
- Higher valuations: Strong IP protection earns investor premiums.
- Partnership acceleration: Pharma and CROs want secure collaborators.
- Regulatory efficiency: Better data integrity, fewer delays.
- Competitive edge: While others scramble to patch gaps, you’re moving forward.
In a world where cybercriminals, competitors, and foreign governments all want your IP, the question isn’t whether you can afford to invest in security—it’s whether you can afford not to.
References:
- Deloitte, “2024 Global Life Sciences Outlook”
- PwC, “Biotech and Pharma Investor Survey 2023”
- FDA Warning Letters Database
- World Intellectual Property Organization (WIPO) Reports
- Office of the Director of National Intelligence, “Annual Threat Assessment 2024”
- Ponemon Institute, “Cost of a Data Breach Report 2024”
- Various industry case studies and market analyses
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