The Biotechnology Cluster in San Diego : An Analysis of IPO Activity and Probability of Success for Firms

The biotech cluster in San Diego is dominated by small firms, with approximately 73% of the firms employing between 1 to 49 employees. Among the main important sources of financing for the biotech companies are venture capital and initial public offerings. In spite of the aggregate increase in the number of firms and employees in the biotech cluster, there is a high degree of heterogeneity at the level of individual firms.This paper uses of the data on the firms that have initiated an IPO offering between 1990-2000, and analyzes how the probability of “success” for these firms depend on various firm's characteristics. I use two “success” measure and the empirical results indicate that the probability of success is positively influenced by the number of employees and the IPO amount