While biotech companies carry a lot of all-or-nothing R&D risk, their “product market fit” is all but guaranteed. Their addressable market size is well known based on patient numbers and how much they can charge nationalized healthcare agencies and insurance companies based on quality of life improvements is well understood. Once they have premarketing approval, they’re all but guaranteed an exit to one of the pharmaceutical giants. The most promising ones get acquired in phase II before efficacy is even 100% demonstrated.
Look no further than IPOs: on HN we lament all the unprofitable public tech companies but the average biotech IPOs pre-revenue! Before it’s even legal for them to sell a product! That’s increasingly been the case since the 80s due to the exhaustion of small molecules and other low hanging fruit.
In practice, scientific due diligence is harder to fake than aspirational user growth numbers which are far easier to game (case in point: Reddits ongoing bullshit). The FDA isn't going to let anyone put a dozen people at risk of death in phase I trials without a level of due diligence that puts all VCs to shame.