[go: up one dir, main page]

  EconPapers    
Economics at your fingertips  
 

Venture capitalists' selection process: the case of biotechnology proposals

K. Baeyens, T. Vanacker and Sophie Manigart

Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School

Abstract: The paper analyses venture capitalists’ selection process in biotechnology ventures. Biotech ventures operate in an extremely risky environment making this an interesting research setting. The majority of venture capitalists exclude certain biotech sectors ex-ante because of regulatory uncertainty, the long development process to a market ready product and the difficulty to understand the technology. The more thorough due diligence process focusses on financial, market and technology criteria. Management team capabilities are more important for later stage investors, whereas early stage investors expect to have an impact on the future recruiting of professional managers. Despite the higher risk of biotech investments, we find no evidence that VCs require higher hurdle rates or more complete contracts for these investments, compared to investments in other technology-based companies. The most important reason for not reaching an investment agreement is disagreement over valuation, due to large differences in risk perception between entrepeneurs and venture capitalists and the lack of a standard valuation tool for biotech projects.

Keywords: venture capital; selection process; biotechnology (search for similar items in EconPapers)
Pages: 28 pages
Date: 2005-11-05
New Economics Papers: this item is included in nep-ent, nep-ino and nep-tid
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.vlerick.be/en/2589-VLK/version/default/ ... vlgms-wp-2005-17.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.vlerick.be/en/2589-VLK/version/default/part/AttachmentData/data/vlgms-wp-2005-17.pdf [301 Moved Permanently]--> https://www.vlerick.com/en/2589-VLK/version/default/part/AttachmentData/data/vlgms-wp-2005-17.pdf)

Related works:
Working Paper: Venture capitalists’ selection process: the case of biotechnology proposals (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vlg:vlgwps:2005-17

Access Statistics for this paper

More papers in Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School Contact information at EDIRC.
Bibliographic data for series maintained by Isabelle Vandenbroere ().

 
Page updated 2024-12-04
Handle: RePEc:vlg:vlgwps:2005-17