【主讲】Yujin Kim (Shanghai Tech University)
【主题】When Do Venture Capitalists Venture? Evidence from Regulation & VC investments in Global Biotechnology Entrepreneurship
【时间】2017年4月19日 (周三) 13：30-15：00
【地点】上海财经大学经济学院楼701室
【语言】英文
【摘要】Venture capitalists (VCs) ideally like to invest in innovations at a nascent stage but this is inherently incorporated with huge risks (Ruhnka and Young 1991, Gompers 1995). Because it is difficult to value novel technologies at an early development stage, VCs may be herding into financing advanced-stage projects for which an archive of scientific knowledge and commercial performance are available that enables a correct valuation (Lerner 2009). A response to this financing gap might be an institutional change that can steer investors towards supporting new innovations at an early stage, providing more information necessary to value young projects. Using the regulatory setting of the Orphan Drug Act (ODA) in the European Union (EU) enacted in 1999, we test these ideas in the fields of biotechnology using a difference in difference methodology and find that VCs are indeed more likely to invest in early-stage technologies in sub-fields disproportionately affected by ODA. In addition, we document corresponding changes in syndication behaviors of VCs and also show that exit performances of VC-backed startups do not get worse as a result of VCs investing into early-stage innovations. Our results suggest that VCs are enabled to make fully-informed decisions as ODA provides additional information necessary to value early-stage technologies. We conclude discussing the role of public policy in correcting the underfinancing of startups at early growth stage in the market for entrepreneurial finance.
