Although biotech start-ups fail or succeed based on their research, few attempts have been made to examine if and how they strategise in this core activity. Using a unique comprehensive dataset on Danish and Swedish biotech start-ups in drug discovery this paper adopts a Simonean approach to analysing the research strategies of small dedicated biotech firms (DBFs), focusing on three interrelated issues: (i) characterising the problem architectures addressed by different types of DBFs; (ii) testing and confirming that DBFs form requisite research strategies, by which we refer to problem-solving approaches developed as congruent responses to problem architectures; and (iii) testing and confirming that financial valuation of firms is driven by achievements conforming to requisite research strategies. These strategies, in turn, require a careful combination of multiple dimensions of research. The findings demonstrate that Schoonhoven's argument that ‘strategy matters’ is valid not only for the larger high-tech firms covered by her study, but also for small research-based start-ups operating at the very well-springs of knowledge where science directly interacts with technologies. Although more research is needed along these lines, these findings offer new implications for the understanding, management and financing of these firms.