Abstract

http://ssrn.com/abstract=2196223
 
 

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Foreign VCs and Venture Success: Evidence from China


Mark Humphery-Jenner


UNSW Australian School of Business; Financial Research Network (FIRN); Centre for International Finance and Regulation (CIFR)

Jo-Ann Suchard


University of New South Wales (UNSW) - School of Banking and Finance; Financial Research Network (FIRN); Centre for International Finance and Regulation (CIFR)

2013

Journal of Corporate Finance, 2013, Vol. 21, No. 1, pp. 16-35

Abstract:     
This paper analyzes the role of foreign VCs in driving venture success in emerging markets. We analyze a comprehensive data-set of 4753 portfolio companies from China. We test whether the presence of a foreign VC increases the likelihood that a portfolio company is successfully exited. We find that the presence of a foreign VC does not per se significantly increase the likelihood of a successful exit. However, the likelihood of a successful exit increases if the foreign VC collaborates with a joint venture (JV) partner. Further, the impact of foreign VC backing depends on the nature of the VC, with foreign VCs tending to perform better when investing in late-stage companies and when they are diversified across industries. If a foreign VC successfully exits an investment, then, compared with a domestic-VC, it prefers to exit via a M&A or secondary-buyout than via an IPO, reflecting the significant lock-up periods associated with VC-backed IPOs in China, the difficulty of achieving a foreign listing, and the difficulty listing a start-up on Chinese markets.

Number of Pages in PDF File: 43

Keywords: venture capital, private equity, China, cross-border investment, internationalization, IPOs

JEL Classification: G24, G34

Accepted Paper Series


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Date posted: January 4, 2013 ; Last revised: December 4, 2013

Suggested Citation

Humphery-Jenner, Mark and Suchard, Jo-Ann, Foreign VCs and Venture Success: Evidence from China (2013). Journal of Corporate Finance, 2013, Vol. 21, No. 1, pp. 16-35. Available at SSRN: http://ssrn.com/abstract=2196223

Contact Information

Mark Humphery-Jenner (Contact Author)
UNSW Australian School of Business ( email )
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Centre for International Finance and Regulation (CIFR) ( email )
Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Jo-Ann Suchard
University of New South Wales (UNSW) - School of Banking and Finance ( email )
Sydney, NSW 2052
Australia
61 2 9385 5876 (Phone)
61 2 9385 6347 (Fax)
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Centre for International Finance and Regulation (CIFR) ( email )
Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

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