سرمایه انسانی ویژه مدیریت، سن شرکت و تامین مالی سرمایه گذاری سرمایه گذاری داروسازی بیولوژیک: رویکرد احتمالی

In this article we investigate how specific human capital in biopharmaceutical ventures' management teams impacts the financial commitment of venture capital investors. Further, we explore how this impact changes with the venture's age. We draw on data from 138 VC financing rounds in the US and Europe to show that biopharmaceutical ventures with greater portions of specific managerial human capital in the fields of management, law, medicine, and biosciences acquire more money in venture capital financing rounds, but this effect is contingent on the age of the venture. We discuss the implications of these findings for the literature on VC financing of high technology ventures.

For young ventures operating in high technology sectors, it is essential to acquire venture capital (VC) for financing their early R&D activities (Black and Gilson, 1998 and Gompers and Lerner, 2004). For example, when they were still young ventures, Apple, Microsoft, Google, Genentech, and other highly successful technology-based firms received financial support from VC investors. Since securing VC finance is so crucial for the success of high technology ventures, a substantial body of literature has investigated why some ventures receive finance while others do not (Zacharakis & Meyer, 1998). This research has consistently identified the human capital of the technology ventures' management team as one of the most important factors triggering VCs' investment decisions (Higgins and Gulati, 2003, MacMillan et al., 1985, Mahajan and Lummer, 1993, Tyebjee and Bruno, 1984 and Zacharakis and Meyer, 2000). Although existing work highlights the importance of managerial human capital for VCs' investment decisions, most studies have focused on general human capital – the venture team's overall education and experience (Gimeno, Folta, Cooper, & Woo, 1997) – rather than on specific human capital — education and experience that matters for the particular industry of the venture (Gimeno et al., 1997) and, thus, in a specific context. In high technology sectors where the development of new products is complex and requires a variety of highly specialized competencies (Filippetti & Archibugi, 2010), specific human capital might be an important trigger of VCs' financial commitments. For example, in highly regulated industries such as biopharmaceuticals (Zhang, Baden-Fuller, & Mangematin, 2007), legal competencies within the venture's management team can facilitate the development of new products in accordance with the legal framework. This study explores how specific human capital within biopharmaceutical ventures' management teams impacts VCs' commitment of finance. Specifically, we focus on team members' education in management, law, medicine, biosciences, and chemistry to explain the variance in the amount of money biopharmaceutical ventures acquire in VC financing rounds. Furthermore, our model acknowledges that these impacts might be contingent on the venture's age at the time of the financing round. We test this model with data on 138 financing events covering a total of 1.1 billion $US VC investment. In doing so, we make the following contributions to existing research. First, we expand research on VCs' financial commitments to high technology ventures to include specific human capital components that are important in the context of a particular industry. Focusing on the biopharmaceutical sector, we identify education in management, law, medicine, and biosciences as factors influencing VCs' financial commitments. These findings extend existing work on the role of managers' (general) human capital in explaining VC investment into young ventures (Colombo and Grilli, 2009 and Gimmon and Levie, 2010). Second, the nature of our dependent variable complements existing studies on VC investment in high technology industries. Specifically, the focus of existing research has typically been whether VCs invest in a young venture or not (Deeds et al., 1999, Gompers and Lerner, 2004 and Hall and Hofer, 1993), but this research has rarely investigated the variance in the amount of funding VCs commit to young ventures (Patzelt, 2010). We show that specific human capital of the venture's management team explains how much money VCs commit to young biopharmaceutical firms and, thus, extend existing research. Finally and perhaps most interestingly, we find that even within one industry the influence of human capital on VC investment decisions is not the same for all ventures. Specifically, we find that in our sample this influence changes with the venture's age. This finding acknowledges the complexity of VCs' investment decisions and goes beyond the focus on main-effect relationships which most studies have investigated in the past (Basu et al., 2011, Ferrary, 2009 and Zacharakis and Meyer, 2000). We extend the few studies so far that have taken interactions between VCs' decision cues into account (e.g., Dimov, Shepherd, & Sutcliffe, 2007). The remainder of this article is structured as follows. First, we develop our theory and introduce hypotheses on the link between venture teams' specific human capital and VCs' financial commitments. Subsequently, we describe our data and research method before we present our results. We then discuss those results and how they expand existing work. Finally, we highlight limitations of this study and suggest avenues for future research.

In this paper we introduced a model of VCs' commitment of finance to new biopharmaceutical ventures based on the specific managerial human capital of TMT members. Our results suggest that TMT members' educational degrees in management, law, medicine, and biosciences can provide important signals to VC investors and impact the amount of money committed to the ventures. However, the effects of TMTs' education in management, medicine, and biosciences is contingent on the age of the venture such that only for young ventures the impact is positive, while for older ventures it appears that the impact is even negative. We now discuss these findings in light of existing research on biopharmaceutical ventures and VC financing. First, we expand research on why VCs make financial commitments to high technology ventures. Several studies have analyzed the decision criteria used by venture capitalists in their investment decisions (Hall and Hofer, 1993, MacMillan et al., 1987, MacMillan et al., 1985, Robinson, 1987 and Tyebjee and Bruno, 1984). For example, an early study by MacMillan et al. (1985) explored which criteria distinguish successful ventures from unsuccessful ones in getting VC funding. Further, Zacharakis and Meyer (1998) showed that VCs do not have a strong understanding of their own decision process and are subject to a variety of biases, and Zacharakis, McMullen, and Shepherd (2007) analyzed the influence of national institutions upon venture capitalists' decision policies. Despite the substantial work on VC decision making, the decision policies of VC managers are far from being fully understood, and several researchers have called for more exploration of why VCs make financial commitments (Zacharakis and Meyer, 1998 and Zacharakis et al., 2007). We contribute to these studies by focusing on a specific industry – the biopharmaceutical sector – and analyzing which TMTs acquire more money in venture capital financing rounds than others. Second, our study contributes on the discussion about how general managerial human capital in comparison to specific managerial human capital (Becker, 1993) impacts the venture funding decision. We investigate the variance in the amount of VC funding for young ventures by focusing on specific managerial human capital represented by the educational specialization of the TMT members. This approach is consistent with Tyebjee and Bruno (1984) who found that the most important criteria in venture capitalists' assessment of new ventures are the skills of the venture management. Recently, Colombo and Grilli (2009) analyzed 439 Italian technology-based firms and found that the human capital of managers in terms of their work experience affected their access to venture capital financing. In another study, Gimmon and Levie (2010) tracked 193 high-technology startups in the Israeli Technology Incubator Program to show that business management expertise and academic status attracted external investment. Therefore, it appears that for acquiring venture capital in high-technology sectors specific managerial human capital is an important signal of the firm's quality for investors (Colombo and Grilli, 2009 and Gimmon and Levie, 2010). We complement these studies in focusing on a specific context – the biopharmaceutical sector – and showing how sector-specific managerial human capital – managers' education in management, law, medicine, and biosciences – influence VCs' financial commitments. Interestingly, this work suggests that specific managerial human capital and the venture's age have a conjoint effect on the amount of VC funding acquired. That is, we show that the impact of specific managerial human capital on the money biopharmaceutical ventures acquire in venture capital financing rounds is different for young and old ventures. This study therefore supports the notion that researchers should acknowledge the complexity of VCs' decision policies (Basu et al., 2011 and Zacharakis and Meyer, 2000) by going beyond the analysis of main effects only. Our findings show that the focus on this main-effect relationship is too limited to understand VC's investment decisions; these decisions are also dependent on VC's conjoint considerations of decision criteria — such as specific managerial human capital within the TMT and the venture's age. For young ventures, our results suggest that an education in management, medicine, and biosciences is beneficial, but for older ventures it appears that there is a negative effect on VC funding. That is, the more specific managerial human capital in these fields the TMTs' education signals to VC investors, the less money they commit to the venture as the venture matures. While this effect for older ventures is at first sight an unexpected finding, existing literature provides a potential explanation. Using a sample of 102 young service and manufacturing firms, Chandler and Hanks (1998) found that financial and human capital can to some extent substitute for each other in explaining new venture performance. The authors explain this finding by experienced founders' abilities to raise capital from multiple sources. Similarly, in our study one might assume that VCs commit less money to ventures with TMTs that have sufficient competencies to move the product to market by raising capital from other sources than the VC, e.g. from alliance partners. In contrast, those older ventures that lack certain TMT competencies might need more money for their less efficient R&D process, or to acquire talents that supplement the missing competencies. Future research can make important contributions by exploring whether this explanation is indeed valid. Finally, we would like to mention our non-findings. H1e and H2e were not supported as we do not find a statistically significant effect for education in chemistry in the main-effect and the interaction model. Additionally, H2b is not supported. Education in law was not significantly related to VCs' financial commitments in the interaction model. Although non-findings do not “prove” that hypothesized relationships are not in the data (perhaps the sample size of 138 financing rounds might be a too small data set to detect weak relationships), we want to offer some explanations for why the hypothesized effects may indeed not be there (or too weak to detect given our sample size). For example, it may be that signaling competencies in chemistry – in comparison to an education in management, medicine or bioscience – is less important for acquiring venture capital. Chemistry is particularly important for very early stages of product development (drug discovery), and perhaps many firms in our sample had completed these steps already such that VC investors assume that these competencies are present in the venture. Further, since chemistry is important in early research, perhaps VCs do not value this competency embedded in the TMT but rather assume that it is present (or not) as a basic skill at the level of research employees. With respect to the non-significant interaction between education in law and firm age, this type of specific managerial human capital might provide an important signal throughout the R&D process such that organizational legitimacy gained over time cannot compensate for it. For example, in later stages of ventures' development the negotiation of favorable alliance terms is crucial for the venture's future development (Lerner and Merges, 1998), and lawyers may be particularly valuable in such negotiations. As all studies, this one has limitations that future research hopefully addresses. First, there are limitations to the generalizability of our results. As our sample only includes firms that work within the biopharmaceutical industry sector, our results may not be generalizable beyond the context of the sample. Detecting and explaining industry sector or country differences would likely make an important contribution to the literature. Second, our sample includes only 138 financing rounds and we focus only on ventures receiving venture capital. Specific effects for ventures who have not received venture capital might be different. Thirdly, as we only analyze the VC funding process in later stages of the venture, it might be interesting to pay attention to earlier stages in the VC funding process in future work. Maybe with available funding from various sources ventures are able to hire qualified managers, which in turn facilitated the acquisition of more capital. Moreover, the funding process of young ventures might be different as those ventures usually have a different team structure (e.g., a smaller team and less experienced managers). Therefore, perhaps in young ventures the idea is more influential than the team for VC funding decisions. Future work should analyze early stages of the VC funding process. For example, a longitudinal study could focus on cause and effect relationship between the competencies of the venture team, the idea, and the amount of VC funding. Fourth, with respect to R squares of our models, we acknowledge that the values reported are not particularly high. Therefore, there might be other factors that explain the variance in the dependent variable of our study. For example, future research could analyze other person specific attributes (e.g., team members' work experience) or company specific factors (e.g., existing networks, innovativeness of the venture's idea, and institutional effects) on the investment amount VCs commit to new ventures in financing rounds. Those factors might increase the explanatory power of a model. The interaction effects reported in our models, however, explain about 3% of the variance in the dependent variable (compare Model 2 and Model 3), which is consistent with most studies in the strategy literature (Aguinis, Beaty, Boik, & Pierce, 2005). Finally, future research could also analyze if the level of education of team members within a particular area of specialization has an effect on the VC funding decision. It would be interesting to see, e.g., if VCs value a master's degree in law more than a bachelor's degree in law. Although our data suggest that the level of education across all TMT members and specializations does not impact the VCs' commitments, perhaps there are specialization-specific effects. Going forward studies can acquire larger data bases than available for the current research to test the impact of level of education for specific specializations. In conclusion, there is a long-standing debate on the factors triggering the VC financial decision making process. So far, researchers have predominantly focused on main-effect models to explain the variance in venture's successful acquisition of VC. The current paper explores the effect of specific managerial human capital by focusing on the educational specialization of TMT members and shows that particular aspects of specific managerial human capital explain why some ventures acquire more money in VC financing rounds than others. We further show that this effect changes with venture age. These findings support a contingency perspective on VC decision making and suggest that managers can maximize the money acquired in VC financing rounds by building up a team with the specific managerial human capital needed to move their venture's products along the value chain.