Venture Capitalists and Biotech Industry: An Empirical Investigation in Taiwan

• Main Authors: Yuchin D. SHIH, 施宇擎
• Other Authors: SiKuan Chen
• Format: Others
• Language: en_US
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/86773444347932818011

碩士 === 國立臺灣大學 === 國際企業學研究所 === 92 === With the support of the government in Taiwan, the Biotech industry has continued to grow. Biotech manufacturing and research are knowledge-intensive process involving high-level technical input from scientists, physicians, engineers and researchers. Investors are not able to make informed and wise decisions without first learning about the uniqueness of Biotechnology in terms of investment and information. Because Biotechnology is especially knowledge and capital intensive, relies to an especially high degree on patent rights and law, and usually requires long-term commitments, venture capitalists (VCs) play a very important role for startups in terms of financing and management. VCs are never a homogeneous group. Their perception of risk, attitudes to different industries and criteria for funding ventures are not the same. Many scholars present theories and empirical studies of VCs. Most of them focus on generalized “rules” such as evaluation processes and criteria. However, most studies originate in North America and are not biotechnology-specific but generalized “hybrid” descriptions or theories. In Taiwan, some studies have attempted to fill the gap. Unfortunately, due to the constraints of small sample sizes the studies have failed to provide an adequate description of the nexus locally between venture capital and biotechnology. This thesis is an attempt to fill this gap. The research method for our study is based on theoretical sampling because of the small biotech-focal-VC population in Taiwan. Three VC firms in Taipei, Taiwan were investigated in this study. Data collection methods included the review of archives, interviews, questionnaires and observations. Both qualitative and quantitative research methods are employed. VCs in Taiwan still tend to focus on US firms when searching biotech ventures. Their preferences for venture origination are usually from their own networks such as existing backup-up bankers and investors, referral of other VCs, related brokers, and previous investments. On the average, each venture proposal is screened carefully by more than three professional VCs with a standard process. More than four ventures are passed on to the next stage of evaluation. Our study demonstrates that the venture capital industry in Taiwan tends towards having five characteristics: 1. A later stage of venture proposal is preferred. 2. Biotechnology is a “people business.” 3. A VC in terms of finance is a prescient sponsor rather than an artful dodger. 4. VCs operates as scouts as well as coaches in the biotech industry. 5. IPOs and M&A are preferred for cashing-out stage. The “HITS Network Matrix with Supportive 4P’s” Model and its applications are proposed. Some suggested improvements in Taiwanese government policy, and guidance for biotech entrepreneurs are offered. Additional areas for further research in are also presented.