Milestones don't build businesses. Customers do.

Working with life science entrepreneurs at SmiLe Venture Hub in Lund, we see how scientific and technical development is carefully planned around milestones and financing requirements. The commercial journey can be considerably less predictable, and its costs are sometimes underestimated. This becomes particularly consequential when the intended customer, business model, or exit strategy has not been sufficiently explored early in the company's development.

The customer determines what creates value

For an early-stage biotech developing a therapeutic asset, the customer may be a pharmaceutical company looking to license or acquire it. Its decision will depend on scientific evidence, clinical potential, competitive positioning, and how the technology fits its pipeline and commercial interests. A successful exit may happen long before the startup brings a medicine to market.

In medtech, the expectations of potential buyers can differ considerably. Strategic acquisitions may also occur before commercial launch, but for most companies, clinical adoption, reimbursement potential, or recurring sales become important to building value. In diagnostics, commercial demand may depend on whether the information leads to an actionable clinical decision. Supporting pharmaceutical clinical trials or developing companion diagnostics can offer alternative commercial pathways.

These differences have direct consequences for financing. A biotech company pursuing licensing may concentrate its resources on generating evidence for that transaction. A medtech company planning independent commercialisation must also finance reimbursement, market development, sales, implementation, and customer support. In our experience, these costs are frequently underestimated in early forecasts.

Companies can raise sufficient capital to complete clinical studies and obtain regulatory approval, only to discover that meaningful market penetration requires considerably more time and financing. Their next investors or potential acquirers may expect commercial evidence that was never adequately accounted for in the original development plan, creating a financing gap precisely when the technology is ready to enter the market.

A financing strategy should work backwards from the intended commercial outcome, considering what value each milestone creates, for whom, and the capital required before that value can be realised.

The first market deserves a fresh assessment

Market selection belongs in the same discussion. For a drug-development company, clinical development, regulatory strategy, pricing, and the interests of potential licensing partners all influence where and when a product should enter a market. Pharmaceutical launch sequencing matters because pricing decisions in one country can influence commercial opportunities elsewhere.

Medical technology presents different considerations. Europe has common regulatory frameworks, while reimbursement, procurement, and clinical adoption differ between countries. Even within Sweden, healthcare regions have different purchasing processes and priorities. A CE mark enables a medical device to be placed on the European market, but commercial penetration requires additional evidence, capabilities, and capital.

Sweden, Europe, and the United States are familiar starting points for Swedish life science companies. Their suitability deserves the same critical assessment as any other major business decision, especially considering the time and capital required to achieve commercial traction, scale, or an exit.

Other geographies may offer more suitable combinations of clinical need, development capabilities, regulatory conditions, pricing opportunities, and commercial partnerships. International clinical experience can support subsequent development, provided the evidence meets the requirements of the intended markets. For a biotech pursuing licensing, the priorities of a prospective pharmaceutical partner may be more decisive than establishing an independent market presence.

For entrepreneurs, making these assessments early can change the development strategy, financing requirements, and partnerships they pursue. It calls for commercial judgement and access to people with direct knowledge of the relevant markets, including those beyond the familiar routes.

The commercial value of international relationships

Understanding the customer becomes more complicated when that customer, or the market in which they operate, is outside a company's immediate reach. For incubators, relationships with international industry and innovation environments are an important source of the commercial knowledge needed to support entrepreneurs.

At SmiLe, our relationships with international pharmaceutical companies give us insight into how established industry evaluates external innovation, from therapeutic priorities and clinical evidence to strategic fit and partnering requirements. Through focused corporate-startup meetings, longer-term partnerships, and open innovation activities, we connect entrepreneurs directly with industry while gaining a deeper understanding of how companies identify, evaluate, and develop external technologies. This knowledge helps inform strategic decisions long before a potential partnership or acquisition.

We also work with universities and innovation organisations across Europe to develop incubation capabilities, entrepreneurship programmes, and commercialisation processes. Our experience supporting the establishment of a new life science incubator in Finland, alongside collaborations with universities in Central and Northern Europe, illustrates how sharing practical expertise can create lasting relationships. These exchanges broaden our understanding of different markets and connect entrepreneurs with expertise and opportunities beyond their immediate environment.

Cross-border collaboration is equally important when commercialisation challenges are shared across countries. Through a Nordic initiative in women's health, we work with partners to address barriers involving clinical evidence, financing, and market access. Our recent contribution to discussions at the European Parliament on fragmentation in women's health innovation reflects the same practical concerns.

Mario Draghi's report on European competitiveness has highlighted the consequences of fragmented markets for companies seeking to scale. For life science entrepreneurs, these challenges influence where to develop clinical evidence, which partners to engage, how to finance commercialisation, and which customers to pursue. Our international relationships help us bring experience from different markets into those decisions.

Looking beyond the next milestone

Scientific breakthroughs, regulatory achievements, financing rounds, and successful exits remain important measures of progress. Their commercial significance, however, depends on decisions made much earlier about customers, markets, and the evidence needed to create value.

Founders need the freedom and knowledge to question established development pathways, while investors and incubators need to recognise that different business models require different financing strategies and measures of progress. This is why international industry relationships and collaboration between innovation environments have become an important part of our work at SmiLe.

The customer may be a pharmaceutical partner, a healthcare provider, or a future acquirer, operating in Sweden or elsewhere in the world. Understanding what each customer values should shape development, financing, and market strategy from the very beginning.

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