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Initial Public Offering and Financing of Biotechnology Start-ups: Evidence from Japan

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  • HONJO, Yuji
  • NAGAOKA, Sadao

Abstract

This paper explores the initial public offering (IPO) and financing of biotechnology start-ups in Japan. Using a unique data set, we find that biotechnology start-ups initially backed by venture capital (VC) firms and those originating from universities are more likely to go public within a shorter period. Moreover, we examine whether two investment methods used by VC firms?staged financing and syndication?affect the market value of equity at the IPO. The results reveal that these methods do not create a higher value of biotechnology start-ups at the IPO. Furthermore, we provide evidence that the timing of IPOs does not depend on market conditions in the biotechnology industry, whereas the market value of equity tends to depend on market conditions.

Suggested Citation

  • HONJO, Yuji & NAGAOKA, Sadao, 2015. "Initial Public Offering and Financing of Biotechnology Start-ups: Evidence from Japan," IIR Working Paper 15-20, Institute of Innovation Research, Hitotsubashi University.
  • Handle: RePEc:hit:iirwps:15-20
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    More about this item

    Keywords

    Biotechnology; Initial public offering; Market value; Staged financing; Start-up; Syndication;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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