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The Spatial Clustering of Science and Capital: Accounting for Biotech Firm-Venture Capital Relationships

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  • Walter Powell
  • Kenneth Koput
  • James Bowie
  • Laurel Smith-Doerr
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    Abstract

    This paper focuses on the spatial concentration of two essential factors of production in the commercial field of biotechnology: ideas and money. The location of both research-intensive biotech firms and the venture capital firms that fund biotech is highly clustered in a handful of key US regions. The commercialization of a new medicine and the financing of a high-risk start-up firm are both activities that have an identifiable timeline, and often involve collaboration with multiple participants. The importance of tacit knowledge, face-to-face contact, and the ability to learn and manage across multiple projects are critical reasons for the continuing importance of geographic propinquity in biotech. Over the period 1988-99, more than half of the US biotech firms received locally-based venture funding. Those firms receiving non-local support were older, larger and had moved research projects further along the commercialization process. Similarly, as venture capital firms grow older and bigger, they invest in more non-local firms. But these patterns have a strong regional basis, with notable differences between Boston, New York and West Coast money. Biotechnology is unusual in its dual dependence on basic science and venture financing; other fields in which product development is not as dependent on the underlying science may have different spatial patterns. Cet article porte sur la concentration spatiale de deux facteurs de production cles dans le domaine commercial de la biotechnologie: a savoir, les idees et l'argent. La localisation et des entreprises aforte intensitede recherche-developpement du secteur de la biotechnologie, et les societes de capital-risque qui financent la biotechnologie, s'avere tres concentree dans une poignee de regions cle aux E-U. La commercialisation d'un nouveau medicament et le financement d'une creation d'entreprise ahaut risque sont, tous les deux, des activites qui ont une date limite, et necessitent souvent une collaboration avec de multiples partenaires. L'importance de la connaissance tacite, du contact direct et de la capacite d'apprendre et d'administrer de multiples projets sont des raisons essentielles pour l'importance continuelle de la proximite geographique dans la biotechnologie. Sur la periode de 1988 a 1999, plus de la moitie des entreprises americaines du secteur de la biotechnologie ont profite du capital-risque local. Les entreprises qui beneficient du soutien externe etaient plus vieilles, plus grandes, et ont fait plus avancer davantage des projets de recherche le long du processus de commercialisation. De la meme maniere, les societes de capital-risque investissent plutot dans des entreprises externes, au fur et a mesure qu'elles vieillissent et s'agrandissent. Les fondements d'une telle distribution s'averent fortement regionaux, avec de notables differences pour ce qui est de l'argent provenant de Boston, de New York et de la Cote de l'ouest. La biotechnologie est hors du commun etant donnesa double dependance de la science de base et du capital-risque; il se peut que d'autres domaines oule developpement des produits ne depend pas de la science sous-jacente aient une distribution geographique differente. Dieser Aufsatz befasst sich mit der raumlichen Konzentration zweier wesentlicher Faktoren bei der Produktion auf dem kommerziellen Gebiet der Biotechnologie: Ideen und Geldmittel. In den USA treten Standorte forschungsintensiver Biotechnologiefirmen und der Risikokapitalunternehmen, die ihre finanzielle Grundlage bereitstellen, stark gehauft in wenigen Schlusselregionen der USA auf. Die Kommerzialisierung eines neuen Arzneimittels und die Finanzierung eines hochriskanten 'start-up's' stellen Aktivitaten in einer klaren zeitlichen Abfolge dar, die oft die Zusammenarbeit mit mehreren Teilnehmern verlangt. 'Tacit knowledge', personlicher Kontakt und die Fahigkeit, zu lernen und mit mehreren Projekten gleichzeitig zurecht zu kommen, sind dabei entscheidende Grunde fur die Bedeutung raumlicher Nahe im biotechnologischen Bereich. Im Zeitraum 1988-1999 wurden mehr als der Halfte der Biotechnikfirmen der USA Finanzmittel von lokalen Risikokapitalunternehmen zur Verfugung gestellt. Firmen, die nicht lokale Unterstutzung genossen, waren alter, grosser und hatten ihre Forschungsprojekte bereits weitgehend kommerzialisiert. Auch Risikokapitalunternehmen investieren mit zunehmendem Alter und zunehmender Grosse mehr in nicht-lokale Firmen. Doch diese Muster variieren regional deutlich und zeigen klare Unterschiede zwischen Bosten, New York und den Finanzinstituten der Westkuste. Biotechnologie ist ungewohnlich in ihrer Doppelabhangigkeit von Grundlagenwissenschaften und der Finanzierung durch Risikokapital; andere Sektoren, in denen die Produktionsentwicklung nicht so stark von Grundlagenforschung abhangt, mogen durchaus andere raumliche Muster aufweisen.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Regional Studies.

    Volume (Year): 36 (2002)
    Issue (Month): 3 ()
    Pages: 291-305

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    Handle: RePEc:taf:regstd:v:36:y:2002:i:3:p:291-305

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    Related research

    Keywords: Biotechnology; Venture Capital; Networks; Spatial Agglomeration;

    References

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