The Imprint of Founders on Biotech Firms

This paper examines the profile of founders of Danish and Swedish biotech firms and the imprint they have left on their new firms. Drawing on unique data from the SCANBIT database at CBS, offering full coverage of all biotech firms in Scandinavia specialized in drug discovery (DDF), we examine the background of founders in terms of prior organizational affiliation with e.g. pharmaceutical firms, other biotech firms or universities. Similarly profiling is made of all members of the board of directors from the first year of the company and of all inventors behind the discoveries for which firms have filed patent applications. A pattern is identified whereby university-dominated founder teams to a much higher extent mobilize university inventors for external R&D collaborations, as compared to industry-dominated founder teams. Swedish DDFs acquire their overall stronger academic affiliation through this general mechanism whereby university-dominated founder teams “clone” themselves unto the composition of inventors. Using regression models we examine effects on the financial performance of firms of compositions of founders, boards and inventors, separately and in various configurations. The composition of founder backgrounds is found to have an enduring, significant effect on the performance of DDF, but in most cases only when appearing in specific configurations with inventor compositions. Elements of a best practice regarding the combination of founder and inventor attributes emerge from this analysis. It is also found that such best practice differs across DDFs distinguished by two distinct research strategies.