What Kind of German Biotechnology Start-Ups Do Venture Capital Companies and Corporate Investors Prefer for Equity Investments?

Posted: 9 Nov 2009

See all articles by Claire Champenois

Claire Champenois

Center for European Economic Research (ZEW)

Dirk Engel

University of Applied Sciences Stralsund; Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Oliver Heneric

Center for European Economic Research (ZEW)

Date Written: 2006

Abstract

The paper deals with the role played by private equityinvestors (venture capital companies and corporate investors) in the emergenceof a new biotechnology industry in Germany in the second half of the 90's. Ouranalysis takes into account the different business models and business fieldsto be found in the biotechnology industry. Based on theoretical arguments, a great relevance of venture capitalcompanies (VCC) in financing young innovative biotechnology firms developinghealth care applications and technology platforms is expected, whereascorporate investors like incumbents in pharmaceutical and chemical industriesmay play a more important role in financing supplier companies. The empirical analysis is based on 378 biotechnology firms, founded between1995 and 1999. Descriptive results emphasize a crucial importance of the accessto venture capital provided by venture capital companies: VCC are venturingpartner of 42 percent of healthcare developer in their early stage. Opposite to that, corporate investors are marginally involved as venturingpartner of high risk projects. The observed pattern also holds in amultivariate analysis which controls for some core variables as determinants ofequity funding. The result for corporate investors differs from observations inthe US for collaborative arrangements. Therefore, country specific settings maymatter. (Publication abstract)

Keywords: Equity financing, Economic growth, Access to capital, Biotechnology industry, Startups, Venture capital, Private financing

Suggested Citation

Champenois, Claire and Engel, Dirk and Heneric, Oliver, What Kind of German Biotechnology Start-Ups Do Venture Capital Companies and Corporate Investors Prefer for Equity Investments? (2006). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1502538

Claire Champenois (Contact Author)

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Dirk Engel

University of Applied Sciences Stralsund ( email )

Zur Schwedenschanze 15
Stralsund, DE 18437
Germany

HOME PAGE: http://www.fh-stralsund.de

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, DE 45128
Germany

Oliver Heneric

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

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