Portfolio Strategies of Life Science Venture Capital Firms in North America and Europe

Motivated by the different development paths of the life science industries in North America (USand Canada) and Europe, we examine portfolio strategies of venture capitalists (VC) active in both markets. Based on data on the portfolios of 88 VCs financing a total of 1050 life science ventures, we find significant differencesbetween the strategies of North American and European VCs. European life science VCs have a highertendency to invest in North America than vice versa. Moreover, European VCs invest more in life science venturesserving traditional markets such as therapeutics and diagnostics, whereas North American VCs focus moreon emerging markets such as medical technology and healthcare/IT. Contrary to work on non-industry specialisedVCs, we do not find significant differences between North American and European VCs with regard toinvestee stage diversification. We discuss how our findings can be explained by the different development stagesof the North American and European life science industries.