Coaching small biotech companies into success: The value-adding function of VC

ETLA publication no 1032, 2006

Terttu Luukkonen
Mari Maunula

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.

Download publication 37 pages in PDF (150 KB)

What's new

Blogs

  • Biotekniikan teemaviikkoa vietetään nyt kolmanteen kertaan
    Written by

    puh. 050 404 5166

    Suomen Bioteollisuus ry on nyt kolmatta kertaa järjestämässä yhteistyökumppanien kanssa Biotekniikan teemaviikkoa osana ympäri Eurooppaa vietettävää European Biotech Week:ia 25.9-1.10.2017. Teemaviikon tarkoituksena on tehdä biotekniikkaa tutuksi koululaisille, opettajille, toimittajille ja suurelle yleisölle. Myös opiskelijat on huomioitu mm. BioFinland Pitching Competition -kilpailulla, jossa kilpaillaan parhaan bioalaan liittyvän liikeidean esittelystä. Suomessa on…
  • Suomen CHEMBIO TULEE – TULE MUKAAN!
    Written by
    Kuka voittaa vuoden 2017 BIOFINLAND palkinnon? Se ja moni muu asia selviää ChemBiossa! ChemBio Finland 2017 Helsingin messukeskuksessa keskiviikkona ja torstaina 29.-30.3.2017 tarjoaa laajan kattauksen kemian ja bioalan seminaareja ja verkostoitumismahdollisuuksia. ChemBio on muotoutunut alan suurimmaksi sidosryhmätapahtumaksi Suomessa – laita siis päivämäärät heti kalenteriin ja ilmoittaudu mukaan (http://chembio.messukeskushelsinki.fi/) - edellinen…
 

Events