Moving Beyond the Valley of Death: Regulation and Venture Capital Investments in Early-Stage Biopharmaceutical Firms / Yujin Kim, Chirantan Chatterjee, Matthew J. Higgins.

Format:

Book

Author/Creator:

Kim, Yujin.

Contributor:

National Bureau of Economic Research.

Chatterjee, Chirantan.

Higgins, Matthew J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25202.

NBER working paper series no. w25202

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Moving Beyond the Valley of Death

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

Can regulation reduce risks associated with investing in early-stage firms? Using the passage of the European Orphan Drug Act (EU-ODA), we examine this question in the biopharmaceutical industry. We provide causal evidence that venture capitalists (VCs) are more likely to invest in early-stage firms operating in sub-fields disproportionately affected by EU-ODA. The switch to early-stage investments appears strongest among VCs that previously faced greater levels of information asymmetry. We also find that the level of syndication declined for early-stage investments and exit performance improved. We conclude discussing the implications of our findings for public policy, entrepreneurship and innovation.

Notes:

Print version record

October 2018.