Temporal Changes in the Spatial Distribution of Venture Capital Investment to Biotechnology Companies Within the United States
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East Tennessee State University Digital Commons @ East Tennessee State University Electronic Theses and Dissertations Student Works 5-2008 Temporal Changes in the Spatial Distribution of Venture Capital Investment to Biotechnology Companies within the United States. Rocky Graziano Bilotta East Tennessee State University Follow this and additional works at: https://dc.etsu.edu/etd Part of the Technology and Innovation Commons Recommended Citation Bilotta, Rocky Graziano, "Temporal Changes in the Spatial Distribution of Venture Capital Investment to Biotechnology Companies within the United States." (2008). Electronic Theses and Dissertations. Paper 1902. https://dc.etsu.edu/etd/1902 This Thesis - Open Access is brought to you for free and open access by the Student Works at Digital Commons @ East Tennessee State University. It has been accepted for inclusion in Electronic Theses and Dissertations by an authorized administrator of Digital Commons @ East Tennessee State University. For more information, please contact [email protected]. Temporal Changes in the Spatial Distribution of Venture Capital Investment to Biotechnology Companies Within the United States _____________________ A thesis presented to the faculty of the Department of Technology and Geomatics East Tennessee State University In partial fulfillment of the requirements for the degree Master of Science in Technology _____________________ by Rocky Graziano Bilotta May 2008 _____________________ Dr. Marian Clark, Chair Dr. Ke Chen Dr. Ting-Heng Chu Keywords: Biotechnology, Venture Capital, Investments, GIS ABSTRACT Temporal Changes in the Spatial Distribution of Venture Capital Investment to Biotechnology Companies Within the United States by Rocky Graziano Bilotta The objective of this research is to investigate temporal changes in the spatial distribution of venture capital investments to biotechnology companies within the United States. Data included venture capital to biotech investments from 1995 to 2005. Venture capital and biotech data from the Money Tree Report, were gathered, analyzed, and mapped to show if a spatial relationship exists. The research examined venture capital investments at both the individual and the aggregated levels. At the individual level, the research examined whether the amount of investments a biotech company receives are influenced by physical distance to its closest investor, number of venture capitalists, time, region, sequence, company size, stage of development, etc. The research also included an aggregated study examining the changing patterns of investments in metropolitan areas. This research further enhances knowledge on the spatial distribution of investments. 2 DEDICATION The time and effort put into this thesis is dedicated to the faculty and staff at ETSU, especially: Dr. Ke Chen, Dr. Andy Clark, Dr. Marian Clark, Dr. Ting-Heng Chu, Dr. Keith Johnson, Dr. Michael Marchioni, Dr. Paul Sims, Dr. Mick Whitelaw, and Dr. Chunhua Zhang. You all have contributed greatly to my education and experience here at ETSU. To the Geography and Geology professors at the University at North Carolina at Pembroke: Dr. Dennis Edgell, Dr, Martin Farley, Dr. Lee Phillips, and Dr. Thomas Ross. Thank you for getting me interested in the field and for your continued help and guidance. To my old friends and the new ones I have made during my educational career, thanks for making the journey fun. To my family, thank you for providing me the time and support needed to complete this thesis. And, to my wife, I do not know where I would be without you. 3 ACKNOWLDGEMENTS I would like to extend my deepest thanks and appreciation to the members of my graduate committee: Dr. Marian Clark, Chairperson; Dr. Ke Chen; and, Dr. Ting-Heng Chu, for their continued guidance, direction, and support during the writing and completion of this thesis. Also, a special thanks to Graduate and Professional Student Association (GPSA), Dr. Linda Garceau, and Dr. Keith Johnson for providing me the funding needed to present this research at the 2008 Association of American Geographers (AAG) Conference held in Boston, Massachusetts. In addition, I would like to thank my family and friends for allowing me the time and support necessary to complete my education and this thesis. 4 CONTENT Page ABSTRACT .......................................................................................................................... 2 DEDICATION ...................................................................................................................... 3 ACKNOWLEDGEMENTS .................................................................................................. 4 LIST OF TABLES ................................................................................................................ 8 LIST OF FIGURES .............................................................................................................. 9 Chapter 1. INTRODUCTION ......................................................................................................... 10 2. REVIEW OF LITERATURE ....................................................................................... 13 Brief History of Venture Capital................................................................................ 13 Significance of Venture Capital Investments ........................................................... 16 Prosperity of the Biotechnology Industry ................................................................. 19 Biotech Companies Dependency on Venture Capital Investments .......................... 20 Spatial Influence of Venture Capital Investments .................................................... 22 3. HYPOTHESES, DATA, AND METHODOLOGY ..................................................... 24 Hypotheses ................................................................................................................ 24 Data ........................................................................................................................ 27 5 Chapter Page Methodology ............................................................................................................. 30 Geographic Information Systems (GIS) ............................................................. 31 Statistical Analysis Software (SAS) ................................................................... 35 Regression Model ............................................................................................... 37 4. RESULTS ..................................................................................................................... 40 5. CONCLUSION ............................................................................................................. 54 REFERENCES ..................................................................................................................... 56 APPENDIXES ...................................................................................................................... 59 APPENDIX A: Venture Capital Investors of United States Biotechnology Companies From Around the World (1995 – 2005) .................................................................... 59 APPENDIX B: Distribution of Biotechnology and Venture Capital Firms Within the San Francisco Bay Area (1995 – 2005) ........................................................................... 60 APPENDIX C: Distribution of Biotechnology and Venture Capital Firms Within the Boston Metropolitan Area (1995 – 2005) .................................................................. 61 APPENDIX D: Locations of Biotechnology Companies From Q1 of 1995 - Q2 of 2000 ...................................................................................................................... 62 APPENDIX E: Locations of Biotechnology Companies From Q3 of 2000 - Q4 of 2005 ....................................................................................................................... 63 APPENDIX F: Percentage Growth of Biotechnology Companies From Q1 of 1995 - Q2 of 2000 to Q3 of 2000 - Q4 of 2005 .................................................................... 64 6 Chapter Page APPENDIX G: Biotechnology Companies - Received $10 Million or Greater in Investments ............................................................................................................... 65 APPENDIX H: Biotechnology Companies - Received $10 Million or Greater in Investments ............................................................................................................... 66 APPENDIX I: Biotechnology Companies - Received $10 Million or Greater in Investments ............................................................................................................... 67 VITA ..................................................................................................................................... 68 7 LIST OF TABLES Tables Page 1. Overall Biotechnology Firms Statistics (1995 – 2005) ................................................... 41 2. Aggregated Count of Biotech Firms by Regions ............................................................ 43 3. Single Statistics Related to the Amount of Dollar Value ............................................... 45 4. Aggregation of Capital by Regions ................................................................................. 47 5. Regression Model ..........................................................................................................