Venture Capital in China and India: Does Business Form Matter?

Forthcoming, Vanderbilt Journal of Transnational Law 2020

NUS Law Working Paper No. 2019/017

NUS Centre for Asian Legal Studies Working Paper 19/04

31 Pages Posted: 12 Sep 2019

See all articles by Lin Lin

Lin Lin

National University of Singapore (NUS) - Faculty of Law

Umakanth Varottil

National University of Singapore (NUS) - Faculty of Law

Date Written: September 11, 2019

Abstract

This paper re-evaluates the importance of business organizational forms with regard to venture capital funds by exploring two major Asian markets, China and India. Evidence suggests that the limited partnership is the leading business form among Chinese venture capital funds. On the other hand, Indian venture capital funds are predominantly organized as private non-charitable trusts. These findings challenge the orthodox view that the limited partnership is the preferred business form for venture capital funds. Instead, Indian venture capital funds have used the trust vehicle effectively and regard it as a functional equivalent to limited partnerships. This paper argues that the choice of business form is not the sole determinant of a vibrant venture capital market due to the presence of multiple functional equivalents that can substantially satisfy the goals of investors and fund managers. This paper advocates for a more nuanced analysis that takes into account peculiar local factors when considering if a particular business form should be introduced to facilitate the development of a venture capital market.

Keywords: Venture Capital, China, India, Limited Partnership, Trust

Suggested Citation

Lin, Lin and Varottil, Umakanth, Venture Capital in China and India: Does Business Form Matter? (September 11, 2019). Forthcoming, Vanderbilt Journal of Transnational Law 2020; NUS Law Working Paper No. 2019/017; NUS Centre for Asian Legal Studies Working Paper 19/04. Available at SSRN: https://ssrn.com/abstract=3451627 or http://dx.doi.org/10.2139/ssrn.3451627

Lin Lin (Contact Author)

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

Umakanth Varottil

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

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