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http://hdl.handle.net/10419/63824
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| Title: | | Coaching' small biotech companies into success: the value-adding function of VC  |
| Authors: | | Luukkonen, Terttu Maunula, Mari |
| Issue Date: | | 2006 |
| Series/Report no.: | | ETLA Discussion Papers, The Research Institute of the Finnish Economy (ETLA) 1032 |
| Abstract: | | The paper reports an empirical study on the non-financial value-added provided by Venture Capital investors to their investee firms. This study will use a four-class grouping of the various non-financial value-adding capabilities provided by VC firms, namely, scouting, monitoring, signalling and value-adding services. The study examines biotechnology industry in Finland. Finland has a dual system with independent (partially ever-green) VC companies and public or semi-public VC organisations. Additionally, informal VCs are fairly active. Whether the different types of VC organisation aim, are able and indeed do deliver nonfinancial value-added, in addition to their financial input, is the central focus of this study. The paper has an evolutionary perspective on Venture Capital according to which VC promotes a variety of experimentation with new technologies, especially through the foundation of new firms oriented to experimentation and development of new ideas. At the same time, VC industry fulfils a selection function in its role as a financial intermediary. The study data have been collected through interviews, conducted at the end of 2005, with the total population of small and medium-sized, VC-backed biotech companies established in Finland since 1986. Central findings of the study include an observation that all three VC types did provide value-added in the meaning outlined above. Nevertheless, there were clear differences between them in terms of the overall perceived value-added as well as in their activity profiles. Informal investors were found to have the highest overall value-added and kept closest contacts with their investee firms. |
| Subjects: | | Venture Capital, Biotechnology |
| JEL: | | O16 G24 O38 L65 |
| Document Type: | | Working Paper |
| Appears in Collections: | | ETLA Discussion Papers, Research Institute of the Finnish Economy
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