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What kind of German biotechnology start-ups do venture capital companies and corporate investors prefer for equity investments?


  • Claire Champenois
  • Dirk Engel
  • Oliver Heneric


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.

Suggested Citation

  • Claire Champenois & Dirk Engel & Oliver Heneric, 2006. "What kind of German biotechnology start-ups do venture capital companies and corporate investors prefer for equity investments?," Applied Economics, Taylor & Francis Journals, vol. 38(5), pages 505-518.
  • Handle: RePEc:taf:applec:v:38:y:2006:i:5:p:505-518
    DOI: 10.1080/00036840500391146

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    Cited by:

    1. Kollmann, Tobias & Kuckertz, Andreas, 2010. "Evaluation uncertainty of venture capitalists' investment criteria," Journal of Business Research, Elsevier, vol. 63(7), pages 741-747, July.
    2. Claire Champenois, 2007. "Dynamique de constitution de l'industrie allemande des biotechnologies et diversité des modèles d'entreprise," Post-Print hal-00765279, HAL.
    3. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    4. Dohse, Dirk & Staehler, Tanja, 2008. "BioRegio, BioProfile and the rise of the German biotech industry," Kiel Working Papers 1456, Kiel Institute for the World Economy (IfW).
    5. Kolympiris, Christos & Kalaitzandonakes, Nicholas & Miller, Douglas, 2011. "Spatial collocation and venture capital in the US biotechnology industry," Research Policy, Elsevier, vol. 40(9), pages 1188-1199.

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