Do venture capitalists have a bias against investment in academic spinoffs? Evidence from the micro and nanotechnology sector in the UK

In this paper, we analyse whether venture capital (VC) firms have a bias against investment in academic spin-offs based on empirical evidence from the micro- and nanotechnology sector in the UK. We also investigate the characteristics of academic spin-offs to capture the differences in their ability to attract VC funding. Finally, we examine whether the propensity to invest in such kinds of new ventures varies between private and public VC firms. The results of our regression analyses on a sample of 247 new ventures (123 academic spin-offs and 124 other companies) reject the presence of bias in this type of science-based business. They also highlight intellectual property rights (IPRs), type of business model and the university‟s scientific prestige as important factors in the academic spin-off‟s ability to access VC financing. Furthermore, we showed that private venture capitalists devote a stronger attention to academic-industrial collaborations when deciding to finance academic spin-offs.