Venture Capital Performance in China

51 Pages Posted: 21 Nov 2013

See all articles by Qing (Sophie) Wang

Qing (Sophie) Wang

Jiangxi University of Finance and Economics- School of Finance

Hamish D. Anderson

Massey University - School of Economics and Finance

Jing Chi

Massey University - School of Economics and Finance

Date Written: November 20, 2013

Abstract

This study investigates the determinants of venture capital (VC) performance in China. We focus on the impact of VC reputation, political connections, and managing partner/founder’s experience on the performance of domestic and foreign VC investments. After controlling for VC age, portfolio firm age, syndicate size, VC industry competition, and a number of other factors, we find little correlation between VC reputation and investment performance in the Chinese market. In contrast, we find that the institutional characteristics such as political connections of VC firms and managing partner/founder’s prior experience as managers and investment bankers are crucial to domestic VC success, but these have little impact on foreign VC performance. In particular, if a domestic VC firm is politically connected, or a managing partner/founder has more management experience or has previously worked as an investment banker, a portfolio firm is more likely to have an IPO exit through the Chinese mainland stock markets, and these VCs are also likely to speed up a portfolio firm’s exit through IPOs in China.

Keywords: Venture Capital, Performance, Emerging Market, China

JEL Classification: G24, G28

Suggested Citation

Wang, Qing (Sophie) and Anderson, Hamish D. and Chi, Jing, Venture Capital Performance in China (November 20, 2013). Available at SSRN: https://ssrn.com/abstract=2357728 or http://dx.doi.org/10.2139/ssrn.2357728

Qing (Sophie) Wang (Contact Author)

Jiangxi University of Finance and Economics- School of Finance ( email )

Shuanggangdong Street
Nanchang, Jiangxi 330013
China

Hamish D. Anderson

Massey University - School of Economics and Finance ( email )

New Zealand

Jing Chi

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
Palmerston North,, 4442
New Zealand
+64 6 3569099 Ext. 84048 (Phone)
+64 6 350 5651 (Fax)

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