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This chapter analyses how capital is raised and employed by a sample of 28 European biotechnology companies listed on Europe’s new stock markets from 1996 to 2000. We find that biotechnology companies rely heavily on IPO proceeds in order to finance their growth. We compare the behaviour of European firms to a sample of comparable U.S. firms. The analysis reveals that European companies tend to raise more capital at the IPO and to invest more aggressively in the short-run, whereas U.S. biotech firms tend to have more cash available before the IPO and invest more conservatively in the short-run.