By Diagnostics World Staff
March 13, 2025 | Altitude Lab, a nonprofit established by biotech company Recursion, has launched a pre-seed venture fund aimed at supporting 10 to 15 early-stage startups navigating the current uncertainty surrounding government funding. Executive Director Chandana Haque hopes other private investment groups will follow suit to bridge the gap left by disrupted Small Business Innovation Research (SBIR) grants, which have historically been crucial in launching startups and securing follow-on investments.
SBIR grants, primarily distributed as funding by the National Institutes of Health (NIH) and the National Science Foundation (NSF), differ from those administered as contracts by the Department of Defense (DoD). These agencies and their grant programs are currently affected by the federal funding freeze, compounded by a Trump-era policy that caps indirect costs on grants at 15%.
Startups that depend on SBIR grants are feeling the impact, with grant review panels being abruptly canceled. This has led to delays in funding access, creating cash flow challenges and forcing biotech companies to reconsider their development plans.
“Every startup I’ve been involved with has been funded by SBIR grants,” says Haque, citing Recursion’s early backing of $3.1 million in SBIR funds before raising a billion dollars in private capital. “That’s the trajectory we expect startups to follow with this type of initial funding.”
High Demand for Pre-Seed Support
Since announcing the pre-seed fund on February 19, Altitude Lab has received over two dozen applications and 50 additional inquiries. The program will provide selected startups with $100,000 to $250,000 in funding, 12 months of lab and office space, mentorship from industry experts, and access to national investment networks.
Altitude Lab collaborates with 250 institutional funds and 50 biotech executives to guide startups through technical milestones and investment readiness. To qualify, founders must be willing to relocate to the BioHive Hub in Salt Lake City, Utah, and have an SBIR submission with an “impact score” of 20 or less—placing them in the top 5% of SBIR applicants.
A U.S.-Specific Challenge
Recursion launched Altitude Lab in 2020, with CEO Chris Gibson, Ph.D., co-leading the pre-seed fund alongside Haque and serial entrepreneur David Bearss, Ph.D., CEO of Halia Therapeutics. Haque emphasizes the urgency of deploying capital efficiently to support startups uncertain about the fate of their expected SBIR funding.
It’s a unique third option in the U.S., where startup founders otherwise must turn to personal savings, family members, or angel investors. While SBIR grants are relatively small—ranging from $250,000 for phase 1 to $3 million for later stages—they enable hiring key personnel and conducting proof-of-concept studies. They account for approximately 3% of federal funding across the NIH, Health and Human Services, and parts of the DoD. Neither Europe nor Asia has such a well-established system for linking government-backed early-stage funding with venture capital.
Broad Scope and Inclusive Focus
Altitude Lab’s pre-seed fund has a straightforward application process: founders submit their SBIR review documents online. The fund broadly supports life sciences startups, including therapeutics, diagnostics, and health tech, and will consider particularly compelling medical devices.
A core mission of Altitude Lab is lowering barriers to biotech entrepreneurship and ensuring diverse leadership. Special consideration is given to underrepresented founders, including women, racial minorities, LGBTQ individuals, refugees, and those overcoming domestic violence.
Haque hopes the federal funding challenges are temporary, given the SBIR program’s role in advancing deep-tech industries, from life sciences to clean energy and defense applications. However, she cautions that private capital alone cannot replace decades of government-backed innovation.
Despite the uncertainty, Haque remains optimistic. The U.S. has excelled in fostering entrepreneurship, she says. “In times of turmoil and change is when we see great innovation and great ideas come forward.”
This article is based on one written by Deborah Borfitz that originally ran on Bio-IT World.com.