The paper deals with 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. Our 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 venture capital companies (VCC) in financing young innovative biotechnology firms developing health care applications and technology platforms is expected, whereas corporate investors like incumbents in pharmaceutical and chemical industries may play a more important role in financing supplier companies. The empirical analysis is based on 378 biotechnology firms, founded between 1995 and 1999. Descriptive results emphasize a crucial importance of the access to venture capital provided by venture capital companies: VCC are venturing partner of 42 percent of healthcare developer in their early stage. Opposite to that, corporate investors are marginally involved as venturing partner of high risk projects. The observed pattern also holds in a multivariate analysis which controls for some core variables as determinants of equity funding. The result for corporate investors differs from observations in the US for collaborative arrangements. Therefore, country specific settings may matter.
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Document Type: Research Article
Center for Sociology of Organizations (CNRS/IEP Paris), 19 rue Amélie, 75007 Paris, France
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI Essen), Hohenzollernstr. 1-3, D-45128 Essen, Germany
Centre for European Economic Research (ZEW), Mannheim P.O. Box 103443, D-68034, Mannheim, Germany
Publication date: 20 March 2006
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