The Birth of German Biotechnology Industry: Did Venture Capital Run the Show?

37 Pages Posted: 14 May 2004 Last revised: 11 Sep 2018

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)

Abstract

The goal of this paper is to point out the role played by private equity investors (venture-capital companies and corporate investors) in the emergence of a new biotechnology industry in Germany in the second half of the 90's. This analysis takes into account the different business models and business fields to be found in the biotechnology industry. Based on theoretical arguments, a great relevance of VC-companies in financing young innovative biotechnology firms developing health care applications and technology platforms is expected, whereas corporate investors like pharmaceutical and chemical industries should play a more important role in financing supplier companies. Corporate investors are also expected to be significantly present in the equity financing of health care biotechnology companies. Empirical results from descriptive and multivariate analyses confirm all hypotheses but one: surprisingly, corporate investors invested only marginally in the equity funding of biotechnology firms developing new health care products or services.

Published in Applied Economics, Vol. 38, No. 5, 2006 under the title of "What Kind of Biotechnology Start-Ups Do Venture Capital Companies and Corporate Investors Prefer for Equity Investments?".

Keywords: Start-ups, Biotechnology, Venture Capital, Discrete Choice

JEL Classification: G32, L21, L6

Suggested Citation

Champenois, Claire and Engel, Dirk and Heneric, Oliver, The Birth of German Biotechnology Industry: Did Venture Capital Run the Show?. Applied Economics, Vol. 38, No. 5, pp. 505-518, 2006, ZEW - Centre for European Economic Research Discussion Paper No. 04-009, RWI: Discussion Paper No. 16, Available at SSRN: https://ssrn.com/abstract=546068 or http://dx.doi.org/10.2139/ssrn.546068

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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