Entrepreneurs: A Study of Indian Biotechnology Industry
9.6 Conclusions and Policy Implications
142 V. Kathuria and V. Tewari
9 Venture Capitalist’s Role in Choosing Entrepreneurs 143
4Source: Nature Biotechnology, University of Toronto (http://www.nature.com/nbt/
supplements/index.htmlaccessed on 17.01.2005).
5Source: India Biotechnology compiled by Swiss Business Hub India (2003).
6Modern Biotechnology consists of medicine (biopharma), fuel production (biofuels), farm- ing and food preparation (bioagri), forensics, environment (bioservices) and improvement of nutritional value, flavour, texture and the shelf life of fermented foods (bioindustrial).
7Source: Same as 4.
81 US$≈45 INR as on April 2006.
9Gompers and Lerner (2001) define VC firms as independent, professionally managed pools of equity capital invested in high growth companies. VC firms are typically created on the basis of funds raised from banks, pension funds, businesses and private individuals and that are invested over a limited time span of about ten years on average. VCs eventually exit the companies they invest in.
10Jumpstartup, a US based VC, entered India in 2000 At the time of entry, it was a privately managed US$ 45 million firm styled along the lines of Silicon Valley VC firm (The Hindu, 2000).
11ICICI ventures is another dominant VC predominantly investing in Biotechnology and have even set up a Biotechnology park in Hyderabad, Genome Valley.
12The criterion is not abrupt. The discussion with Jumpstartup also yielded that a firm having started operations in the past 3–4 years will be termed as a start-up.
13Since industry consists of firms of different sizes, taking log would reduce the heterogeneity with respect to size and will correct for heteroscedasticity problem also.
14The data for alliances have been captured in three different forms—the company-alliances, which shows the number of other companies this firm has alliances with; the institute-alliances highlighting the number of R&D institutes the firm has collaborated for further research; and marketing-alliances, the alliances with the marketing agencies for marketing its products. It is to be noted that marketing alliances will have less relevance for a start-up.
15Industry alliances are used as a proxy for R&D due to non-availability of data. The relation works like this—a firm performing more R&D will be able to enter into alliance much faster.
16Of the 18 important national research laboratories for life sciences research, 8 are located in two Southern cities only—Hyderabad (5) and Bangalore (3). Similarly, of the three important bio-clusters for networking—two are in South India—one each in Hyderabad and Bangalore.
17In place of R&D expenditure, one could use patents data, which as mentioned, are a strong driver for VC selection (see for example, e.g. Engel and Keilbach, 2007; Flingstein, 1996; Lerner, 1995; Powell and Brantley, 1992; Powell et al., 1996). Since we did not have access to the data, we could not use it.
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