The Real VC Business Model

William Bains

Chapter 11 in Venture Capital and the European Biotechnology Industry, 2009, pp 150-172 from Palgrave Macmillan

Abstract: Abstract The previous chapters have outlined how VCs invest too little (for reasons that do not stack up), and then drive companies to a series of adverse decisions and business outcomes while failing to support the management they have emasculated with contractual arrangements. They appoint the wrong people, chose the wrong business strategies and block the companies’ attempts to do anything about it. It is of course a one-sided story: there are many factors contributing to Europe’s lacklustre biotechnology story, and many factors contributing to the few stars in the continent’s dim sky. But the sections above show that VCs both control the companies and act so as to reduce their chances of success, through underinvestment and poor management. Their influence is so all pervading and their role in the industry so crucial that they must be a significant factor in its failure, and we have identified some of the mechanisms through which this occurs.

Keywords: Business Model; Venture Capital; Hedge Fund; Investee Company; Profit Share (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_11

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DOI: 10.1057/9780230227262_11

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