Do venture capitalists have a bias against investment in academic spin-offs? Evidence from the micro- and nanotechnology sector in the UK

Federico Munari and Laura Toschi

Industrial and Corporate Change, 2011, vol. 20, issue 2, 397-432

Abstract: In this article, we analyze whether venture capital (VC) firms have a bias against investment in academic spin-offs based on empirical evidence from the micro- and nanotechnology sector in the UK. We also investigate the characteristics of academic spin-offs to capture the differences in their ability to attract VC funding. Finally, we examine whether the propensity to invest in such kinds of new ventures varies between private and public VC firms. The results of our regression analyses on a sample of 247 new ventures (123 academic spin-offs and 124 other companies) reject the presence of bias in this type of science-based business. They also highlight intellectual property rights, presence of academic--industrial collaborations, scientific reputation of the parent university and type of business model as important factors in the academic spin-off's ability to access VC financing. Furthermore, we show that private VCs devote a weaker attention than public VCs to the university's scientific reputation when deciding to finance academic spin-offs. Copyright 2011 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Date: 2011
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