Venture Capitalists Heterogeneity And Investment Performance

Venture investment,which is thought as the bridge between the capital and high-tech innovative enterprises,is primary driver to propel economic development.Worldwide,venture investment usually comes from the venture capital institution and venture capital fund;however,it should realize that venture investment is a technical work of the venture capitalists after all.Researchers have documented that,relative to organization form of the venture investment,the human capital of that exhibits more pronounced explanatory power on the performance of the venture investment.Based on this background,this study investigates the influence of heterogeneity of venture capitalists on investment performance and its mechanism from three aspects,which are professional background,political background and overseas background,respectively.Based on the data of the venture capital projects,individual venture capitalists and invested enterprises,this research reveals a prominent effect of heterogeneity of venture capitalists on investment performance.The main conclusions are as follows: first,venture capitalists with financial background have better performance,which is higher probability of exiting the investment project by IPO,than that with business background.Further study indicates that venture capitalists with financial background are more helpful for the invested firms through their social networks and reputation resources than that with business background.For example,depending on the financial background,the venture capitalists could help invested enterprises finance more quickly and easily in the next round by VC and hire better underwriters,which is conductive to obtaining relatively high IPO price and low underpricing rate,in the process of IPO.Second,the venture capitalists with political background,who have working experience in government departments,present better investment performance than the ordinary venture capitalists.However,it is noteworthy that this conclusion is not established in which the venture capitalists just have working experience of public institution.Compared with ordinary venture capitalists,political-backed venture capitalists are more active in corporate governance and helpful for hiring better underwriters for corporate IPOs.Affected by the political resources brought by the political background,the local investment preference is stronger and the investment style is more independent.Third,the overseas background of venture capitalists will affect the exiting of their investment.Specifically,venture capitalists without overseas background are better at promoting domestic IPOs,while venture capitalists with overseas backgrounds are better at promoting overseas IPOs.By overseas IPOs,the withdrawing probability of the venture capitalists,which possess both working and learning experience abroad,is higher than that of the venture capitalists,which possess either working or learning experience abroad.Compared with the venture capitalists without overseas background,the venture capitalists with overseas background are better at helping domestic firms to finance through equity,but not through debt.Venture capitalists with overseas work experience can help companies achieve lower underpricing rates of IPO.In the process of studying the impact of venture capitalists heterogeneity on investment performance,the endogenous problem is inevitably involved.In order to further distinguish the impact of venture capitalists on investment performance from their "support" or "selection",this study eliminate the selection bias of different venture capitalists in VC time point and the impact of unobservable variables on investment performance through the method of PSM and instrument variable,respectively.At last,all of these results are consistent with previous ones.