A Research On The Syndication’s Behavior Of Venture Capital In China

With a large number of enterprises successfully listed overseas as Sina, Kingdee, Sohu and abound joint investment case is successful, as an important driving force behind venture capital institutions, as well as joint investment strategy gradually people known. Although the venture capital in China started late, only20years of history, but it has a rapid development in the emerging markets of China.Scholars are quite detailed theoretical study of all aspects of the field of venture capital. The research focuses on the contractual arrangements in the investment process, information asymmetry, and investment patterns. The published thesis focuses primarily on the relationship between start-ups and venture capital organizations. Compared to Western scholars, Chinese scholars for venture capital research is still in its infancy, look at the scope of the study of literature on the domestic, Chinese scholars’study on the venture capital is mainly concentrated in venture capital theory introduced, function of venture capital, venture capital exit mechanism, as well as recommendations for the development of China’s venture capital.Syndication as the main strategy of venture capital’in recent years, its related research, especially domestic research there are still a lot of gaps. Based on this, this paper conducted a brief review of the literature and put a theoretical analysis of syndication, then explore whether there exist syndication behavior in the field of domestic venture capital, focusing on its motivation and performance. Finishing more than1,700venture capital firms’information from the China Venture Source database, there is7478investment event data, thus designed an empirical model for research.This article uses the Logistic model to examine the relevant factors and how they affect the syndication strategy of the venture capital company."Syndication or not" and "collaborators’quantity" are dependent variable, both can reflect the syndication broad applications in the field of venture capital, and the factors affecting them include two categories, the characteristic elements of the start-ups and financing project:industry, financing nature, stage of development, locations, financing scale; the characteristic elements of venture capital firms:age, the total funds under management, the number of historical investment, whether to invest in local enterprises. Next, using a multiple regression model analysis the impaction of syndication to the performance of start-ups, dependent variable for listed start-ups is ROE and the characteristics of the venture capital firm variables and other control variables are independent variables.The empirical results show that syndication’s characteristics in our country are quite similar with other countries. Syndication can basically be explained by financial theory and resource-based theory, but the explanatory power is limited. Syndication is more likely to occur in the following industries:education、 resident services and other services、 wholesale and retail trade, and in real estate industry、 financial industry and mining industry, financing projects are more conducted by a venture capital company alone. The larger the financing scale of the project, venture capital firms are more inclined to joint investment with other companies. Stages of development and financing nature of the entrepreneurial enterprise have no significant impact on the formation of syndication. For venture capital firms, the young, the less investment experience investment company more easily co-investment with other companies. Project in different places did not significantly affect to choose separate investment or joint investment. It is worth noticing that the larger venture capital firms but the stronger the joint willingness to invest. The same time, the empirical results do not fully support the investment mode affect the performance of start-ups.The innovation lies in this article:conduct an empirical study on the motivation and performance of the joint venture capital investment strategy, with some convincing results can provide reference information for the venture capital firm’s investment decisions、 investment regions、 industries, and whether select to co-invest, it has a strong significance in control of the individual risk investment strategy formulation; it can also provide convincing statistics for start-ups try for financing projects; besides, it can our provide some reference to the proposed development of the venture capital industry and guide for government regulation of industry and macroeconomic. Our inadequacies is:when study the relationship of characteristics of the venture capital firms and the size of joint investment, only concerned with the characteristics of the lead investor, and cannot join with the follow investor, which can be remedied in future research.