Setting up a research lab is a time-consuming and capital-intensive endeavor. Because of that, many early-stage bio start-ups flirt with the idea of postponing that step and running early experiments through contract research organizations and that’s (partially) the wrong approach.
Outsourcing experiments might feel like a safer and faster plan in the short term, but in most cases, it will cost you time and money long term, and could even create major roadblocks for your development path.
The most logical reason for developing as much in-house as possible is that you want to be fully in control of developing critical know-how for your company. Methods or protocols you are establishing now that will feed into many downstream processes are very critical and you want to make sure that any nuance is well documented in case you are running into reproducibility or incompatibility issues down the line. Contract research organizations will provide documentation as well but not as detailed as your own lab notes. Often these organizations have high turnover rates too and it will be almost impossible to track down researchers that have worked on your project in case you are missing critical information. 
Another simple explanation is that you will be able to iterate and troubleshoot much faster. Finding a good lab space and purchasing critical instruments will create an initial downtime and you are forced to deal with a lot of operational tasks that prevent you from doing any technical work but once everything is set up you will make up for the ‘lost’ time likely within the first year. Most experiments are multi-step processes and with little oversight, it’s very difficult to see what went wrong and when. In your own lab, on the other hand, you can intervene much faster when things go south and implement additional steps to rescue or make the most out of failed experiments. In many cases, you also want to be able to pivot experiments according to interim results and this will again only be possible if done in-house. 
A less obvious rationale for setting up your own lab early on is that you will create a very different working culture. At such an early juncture of a company, it can be a huge driving force to have everyone working together in a lab or workspace. Having the co-founders working along with everyone else and seeing how much they care about developing the technology is a big morale boost for the team. This will create a more flat company environment where everyone sees each other more or less as peers and no one shies away from bringing in creative input, something that can develop into a big asset for the company.
Not setting up your own lab and running all your experiments through third parties might also not look great in front of your investors. If you look at this from their perspective, you transfer the money they trust you with to a third party to do the work you should be doing yourself.
This doesn’t mean that outsourcing experiments is absolutely the wrong strategy. It can be a very helpful and sometimes the better alternative for well-established processes or experiments for which you have developed solid protocols. Most contract research organizations don’t do a great job at discovery or development work but can be very useful for scale-up and routine experiments to free up your team to do more critical work. Or if you are building a virtual discovery engine it might make a lot more sense to progress hits through third parties.
If you had great experience outsourcing experiments, have a good work relationship with contractors, or require experiments that are impossible to set up in-house at this stage and think this is the right strategy – go for it!
But if you are just starting out and don’t know if setting up a lab early on really makes sense for you, think critically about what know-how should be developed in-house. Make sure you plan beyond the first year, and take creating the right company culture seriously early on – all this will compound over time.
Thanks to Bianka Seres, and Matt Krisiloff for reading drafts of this post.
 When working with bigger CROs, they will also not care about your data/samples as much as anyone from your team would. In most cases, they will do a plug-and-play that first into their own workflow and get you the results. The techs are processing 100+ samples from other companies at the same time – they will care more about hitting their quota in time than going the extra mile for your samples.
 This doesn’t mean you would need to buy all the fancy equipment from the start. Even just renting a small bench space and running more expensive experiments on common-use equipment or buying instrument time at a university facility can go a long way.