Publications and Patents in Corporate Venture–Backed Biotech

Elisa Alvarez-Garrido, Managerial Sciences, Georgia State University, and Gary Dushnitsky, Strategy and Entrepreneurship, London Business School

Nature Biotechnology 31, 495–497 (2013)

Excerpt: Biotech startups increasingly turn to corporate venture capital (VC) arms for funding, rather than to traditional venture capitalists. The innovation implications for these startups remain unexplored. Here, we present evidence that the shift in funding patterns is associated with a greater output of scientific publications as well as patenting.

In recent years, life sciences ventures have witnessed a growth in strategic investments by established corporations. As yet, few studies have analyzed whether the increasing funding by corporate VC arms is associated with changes in publication and intellectual property strategy. To fill this gap, we undertook a detailed study of startups’ publication and patent output to see if there was any correlation with corporate VC funding. Both are widely accepted indicators of knowledge creation, yet differ in the legal and commercialization rights they afford.

Our research draws on the universe of US-based biotech companies that have received investment from corporate and/or traditional venture capitalists over a two-decade period. Specifically, we constructed a comprehensive sample of 572 US-based biotech companies founded between 1990 and 2003, and their innovation output through 2011. During the 1990–2003 period, the biotech sector saw substantial activity and startup formation, as well as two waves of VC investment that involved both traditional and corporate investors. Given the lag between the time of patent application and ultimate grant date, we included startups founded up to 2003 and continued to document their innovation output through 2011. This practice allowed us to capture startups’ overall patenting output, as the mean application-grant lag was 4 years, with a standard deviation of 2 years.

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