Set Up a Small Lab Earlier Rather than Later, it Will Pay Back the Investment
A biotech company usually starts with the idea phase. Most of the work there is a matter of validation, involving a great deal of reading, searching the literature for related projects, reaching out to scientists in the field, engaging lawyers to investigate the patent landscape, and other items unrelated to laboratory work. Once that is done, it is a definitely a good idea to hire a scientist or two prior to engaging one or more CROs to carry out early stage laboratory work. Effectively managing the relationship with a CRO, particularly when projects have a high chance of failure due to unknown factors, really does require a scientist with a deep knowledge of the details.
Projects undertaken with a CRO can be high friction when, as is often the case in startups, the goal is a moving target or there is little in the literature that can be used as guidance when any particular protocol or study or experiment fails. There are any number of smaller projects, such as quick cell studies, or the optimization of a finicky assay, that are an exercise in frustration to run via a CRO, even a small and responsive one. Turnaround will be slow, and it may be quite hard to gain enough access to staff and inner workings at the CRO in order to fully understand why a specific small task is not proceeding as expected.
Since having scientists on hand is already a good idea, why not put together a small lab to carry out the smaller projects that will be painful to run via a CRO? Yes, using a CRO is a good choice over the cost and time required to assemble the necessary facility and staff to carry out in vivo and other expensive studies in the first year or two of startup development. But it really doesn't cost that much in the grand scale of things to build a lab for one to three scientists that is equipped for small cell studies, protein studies. Having such a lab space for the small and fiddly tasks with high failure rates, such as assay optimization, will pay for itself when compared to trying to run that work via a CRO.
The key to a cost-effective first laboratory for a biotech company lies in finding a shared lab space that already has the basic infrastructure in place: water; gas; cabinets and freezers; electrical for the heavier equipment; regulatory compliance; access to shared equipment for the larger, more expensive items; and so forth. Just setting up basic infrastructure and furniture in a building not already converted into a lab space is an expensive, time-consuming proposition. Fortunately most larger cities, and even smaller cities with significant universities, have some sort of incubator or lab space rental concerns that can offer suitable accommodations for a few years at reasonable rates.
Given that space, one can purchase the few pieces of equipment needed, perhaps second-hand given the thriving marketplace for used lab machinery, and that will prove to be the largest cost of setup. Then forge ahead! It will become obvious when a larger and more capable laboratory is required, in order to take on more of the work that previously ran through CROs.