Initial public offering and financing of biotechnology start-ups: Evidence from Japan

This study explores the initial public offering (IPO) and financing of biotechnology start-ups in Japan. Using a unique data set, we find that biotechnology start-ups initially backed by venture capital (VC) firms and those originating from universities are more likely to go public within a shorter period. Moreover, we find that neither staged financing nor syndication by VC firms is associated with higher IPO value relative to investment. Furthermore, we provide evidence that the timing of IPOs does not depend on equity market conditions in the biotechnology industry, whereas IPO value tends to depend on equity market conditions. We discuss the factors that explain these findings, which contradict findings in previous studies of VC investments.