The patterns of venture capital investment in the UK bio-healthcare sector: the role of proximity, cumulative learning and specialisation

Rosiello, Alessandro and Parris, Stuart (2009). The patterns of venture capital investment in the UK bio-healthcare sector: the role of proximity, cumulative learning and specialisation. Venture Capital, 11(3) pp. 185–211.

DOI: https://doi.org/10.1080/13691060902973016

Abstract

This paper focuses on the patterns of venture capital (VC) investment in dedicated biotech firms (DBFs) in the therapeutic and diagnostic sectors (bio-healthcare). We use a database of 655 UK bio-healthcare deals to map the geographical flows of VC investment and measure the co-location of investors and DBFs. Then, using 20 face-to-face interviews with venture capitalists (VCs) and DBF firms in Cambridge and Scotland, we study the strategic motives underlying the colocation of investors and investee companies and reflect on the catalytic role VCs play in context of the Scottish and Cambridge bio-clusters. From the viewpoint of VC-related policies, we find that our study is more in line with arguments stressing the attractive power of ‘investor-ready’ opportunities (Mason and Harrison 2003) than supply-side approaches that take for granted VC presence at the core of high-tech clusters. In line with Avnimelech, Rosiello, and Teubal (2008), we propose that VC policy should be consistent with the wider strategic objectives of innovation and technology policy.

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