Promoting Life Science Venturing and Innovations: Developing National Innovation Systems

Alexander Styhre
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Alexander Styhre: University of Gothenburg

Chapter 6 in Financing Life Science Innovation, 2015, pp 162-204 from Palgrave Macmillan

Abstract: Abstract The two previous chapters emphasized the pre-investment and the post-investment activities of the venture capital investors and stressed that venture capital firm do not only provide finance capital but also participate in extensive managerial and governance activities in the firm to ensure that their investment in health care innovations will be highly valued after the ten-year investment period has passed. In this view, also supported by the venture capital studies literature, venture capital investors are by no means passive rentiers awaiting their capital to grow in secure investments but instead the venture capital investors are active professional knowledge workers that support and constitute the entrepreneurial function of competitive capitalism. The empirical material reported here does not support common criticism that venture capital investors are overtly risk-averse and unwilling to invest capital in risky but high-growth potential sectors. As roughly three-fourths of the venture capital funds are written off and only a five to ten percent of the entire capital stock invested accounts for the taxable income in these firms, there is on the contrary evidence of risk-taking being too high. After the Internet boom and bust of the early millennium, there has also been a substantial decline of the number of venture capital firms being active in the market, indicating the shortage of professional skills in venture capital investment, in turn being one explanatory factor for the perceived lack of venture capital.

Keywords: Innovation System; Venture Capital; Private Equity; Institutional Logic; Venture Capital Investor (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-39248-0_7

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DOI: 10.1057/9781137392480_7

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