Public Markets and Underinvestment

William Bains

Chapter 6 in Venture Capital and the European Biotechnology Industry, 2009, pp 73-85 from Palgrave Macmillan

Abstract: Abstract VC exists because it promises to invest in bright new companies and give them the cash to grow, thus generating share price rise and the chance of substantial profit on their investment. The sections above show (in rather tedious detail) that it does not do so, and that the ‘gap’ in finance in Europe is in fact a reflection of this. I have argued that this is not because companies are not there to invest in, nor that the science, management, entrepreneurial drive or other features are not ready to feed the VC machine with raw stock. I have also touched on how underinvestment increases biotech companies’ chances of failure. This is not because European VCs have less funds than US ones: fund sizes across all stages of the fund life cycle are similar [17]. So why should VCs pursue this policy?

Keywords: Venture Capital; Initial Public Offering; Biotech Company; Public Market; Absolute Return (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-22726-2_6

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DOI: 10.1057/9780230227262_6

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