IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

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

Author Info

Listed author(s):
  • Heneric, Oliver
  • Engel, Dirk
  • Champenois, Claire

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.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://www.econstor.eu/bitstream/10419/24009/1/dp0409.pdf
Download Restriction: no

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-09.

as
in new window

Length:
Date of creation: 2004
Handle: RePEc:zbw:zewdip:1610
Contact details of provider: Postal:
L 7,1; D - 68161 Mannheim

Phone: +49/621/1235-01
Fax: +49/621/1235-224
Web page: http://www.zew.de/
Email:


More information through EDIRC

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

Other versions of this item:

Find related papers by JEL classification:
  • L6 - Industrial Organization - - Industry Studies: Manufacturing
  • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
  • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Judith Jordan & Julian Lowe & Peter Taylor, 1998. "Strategy and Financial Policy in UK Small Firms," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(1&2), pages 1-27.
  2. Florida, Richard L. & Kenney, Martin, 1988. "Venture capital-financed innovation and technological change in the USA," Research Policy, Elsevier, vol. 17(3), pages 119-137, June.
  3. Engel, Dirk & Keilbach, Max, 2007. "Firm-level implications of early stage venture capital investment -- An empirical investigation," Journal of Empirical Finance, Elsevier, vol. 14(2), pages 150-167, March.
  4. Engel, Dirk & Fryges, Helmut, 2002. "Aufbereitung und Angebot der ZEW Gründungsindikatoren," ZEW Dokumentationen 02-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Lockett, Andy & Wright, Mike, 2001. "The syndication of venture capital investments," Omega, Elsevier, vol. 29(5), pages 375-390, October.
  6. Almus, Matthias & Engel, Dirk & Prantl, Susanne, 2000. "The Mannheim Foundation Panels of the Centre for European Economic Research (ZEW)," ZEW Dokumentationen 00-02, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Sean Nicholson, 2005. "Biotech-Pharmaceutical Alliances as a Signal of Asset and Firm Quality," The Journal of Business, University of Chicago Press, vol. 78(4), pages 1433-1464, July.
  8. Macmillan, Ian C. & Zemann, Lauriann & Subbanarasimha, P. N., 1987. "Criteria distinguishing successful from unsuccessful ventures in the venture screening process," Journal of Business Venturing, Elsevier, vol. 2(2), pages 123-137.
  9. Gambardella, Alfonso & Orsenigo, Luigi & Pammolli, Fabio, 2000. "Global Competitiveness in Pharmaceuticals: A European Perspective," MPRA Paper 15965, University Library of Munich, Germany.
  10. Chan, Yuk-Shee, 1983. " On the Positive Role of Financial Intermediation in Allocation of Venture Capital in a Market with Imperfect Information," Journal of Finance, American Finance Association, vol. 38(5), pages 1543-1568, December.
  11. Hausman, Jerry & McFadden, Daniel, 1984. "Specification Tests for the Multinomial Logit Model," Econometrica, Econometric Society, vol. 52(5), pages 1219-1240, September.
  12. Jeng, Leslie A. & Wells, Philippe C., 2000. "The determinants of venture capital funding: evidence across countries," Journal of Corporate Finance, Elsevier, vol. 6(3), pages 241-289, September.
  13. James A. Brander & Raphael Amit & Werner Antweiler, 2002. "Venture-Capital Syndication: Improved Venture Selection vs. The Value-Added Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 423-452, 09.
  14. Paul Gompers & Josh Lerner, 2000. "The Determinants of Corporate Venture Capital Success: Organizational Structure, Incentives, and Complementarities," NBER Chapters,in: Concentrated Corporate Ownership, pages 17-54 National Bureau of Economic Research, Inc.
  15. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  16. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  17. Lerner, Josh & Shane, Hilary & Tsai, Alexander, 2003. "Do equity financing cycles matter? evidence from biotechnology alliances," Journal of Financial Economics, Elsevier, vol. 67(3), pages 411-446, March.
  18. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
  19. Steven Casper & Hannah Kettler, 2001. "National Institutional Frameworks And The Hybridization Of Entrepreneurial Business Models: The German And Uk Biotechnology Sectors," Industry and Innovation, Taylor & Francis Journals, vol. 8(1), pages 5-30.
  20. von Burg, Urs & Kenney, Martin, 2000. "Venture capital and the birth of the local area networking industry," Research Policy, Elsevier, vol. 29(9), pages 1135-1155, December.
  21. Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
  22. Georg Gebhardt & Klaus M. Schmidt, 2002. "Der Markt für Venture Capital: Anreizprobleme, Governance Strukturen und staatliche Interventionen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 3(3), pages 235-255, 08.
  23. Amit, Raphael & Brander, James & Zott, Christoph, 1998. "Why do venture capital firms exist? theory and canadian evidence," Journal of Business Venturing, Elsevier, vol. 13(6), pages 441-466, November.
  24. Paul A. Gompers, 2002. "Corporations and the financing of innovation: The corporate venturing experience," Economic Review, Federal Reserve Bank of Atlanta, issue Q4, pages 1-17.
  25. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
  26. Christopher B. Barry, 1994. "New Directions in Research on Venture Capital Finance," Financial Management, Financial Management Association, vol. 23(3), Fall.
  27. Bygrave, William D., 1987. "Syndicated investments by venture capital firms: A networking perspective," Journal of Business Venturing, Elsevier, vol. 2(2), pages 139-154.
  28. Zucker, Lynne G & Darby, Michael R & Brewer, Marilynn B, 1998. "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review, American Economic Association, vol. 88(1), pages 290-306, March.
  29. Robert E. Carpenter & Bruce C. Petersen, 2002. "Capital Market Imperfections, High-Tech Investment, and New Equity Financing," Economic Journal, Royal Economic Society, vol. 112(477), pages 54-72, February.
  30. Pinar Karaca-Mandic & Kenneth Train, 2003. "Standard error correction in two-stage estimation with nested samples," Econometrics Journal, Royal Economic Society, vol. 6(2), pages 401-407, December.
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as
in new window


Cited by:

  1. Rammer, Christian & Ohmstedt, Jörg & Binz, Hanna L. & Heneric, Oliver, 2006. "Unternehmensgründungen in der Biotechnologie in Deutschland 1991 bis 2004," ZEW Dokumentationen 06-03, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

This item is featured on the following reading lists or Wikipedia pages:

  1. Technology Assessment

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:1610. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.