External Funding Matters, but Does it Matter Who it Comes from? Exploring the Differential Effects of Different Funding Types on Swedish Biotech Firms

Sammanfattning: The biotechnology field produces astonishing medical innovations with vital transformative potential for modern medicine and society at large. At the same time, biotech is characterized as R&D-intensive, with decade-long product lead times and the need for substantial investment costs. Dedicated biotech firms (DBF) hence depend on interorganizational ties to other actors to access external capital and complementary resources. Different capital providers offer various types of funding that differ in their investment objectives and degrees of engagement. This master thesis seeks to analyze the differential effects of different funding types on DBF performance by empirically investigating the Swedish biotech ecosystem from 2004-2015. The theoretical framework used for analysis combines Entrepreneurial Ecosystem and Entrepreneurial Finance literature. Using an explorative pre-study, we shine light on the dynamic composition of funding along the DBF life cycle. Building on the findings from the pre-study, the main analysis constitutes a series of regression models estimating the effect of the most relevant funding types on performance in terms of growth. We find evidence that the total number of funding ties, funding from the government, and international funding are consistently positively correlated with employee growth. Funding from VCs and corporate alliances only partially show a positive growth impact. We discuss the importance of overcoming the prevalent funding gap and account for different dynamics bringing about the specific capital landscape in Sweden's biotech ecosystem.