U.S. Venture Capital Investment In China And Its Revelation For China’s Venture Capital Industry

Since the U.S. Research and Development Company founded in the United Statesin1946, the global venture capital industry grew significantly. China’s own venturecapital industry started in the mid-1980s, but has experienced explosive growth in thefirst decade of the21century. During this period, foreign venture capital accounted forroughly a quarter of the total venture capital in China, at the same time, they occupied adominant position in many aspects of China’s venture capital industry. Meanwhile,among all the foreign venture capital institutions which invested in China, U.S. venturecapital companies have the largest proportion and also with the most abundant VCinvestment experiences. Therefore, selecting U.S. venture capital investment in China asan object of study will be very typical, and is worth learning for the development ofChina’s venture capital industry.In this paper, by analyzing the developing stage, VC investment performance andstrategy of U.S. venture capital companies which invested in China, the author findssome important factors and investment skills which lead to the success of theseVCs.Specifically, by analyzing the data of the U.S. venture capital investments inChina, it turns out that the following factors have significant positive correlation withU.S. VC investment performance in China: portfolio company intelligence, CEO or topmanager management experience, the overall development of the venture capitalindustry, institution backed venture capital company and the application of modernenterprise operation and management system. Through the study of three specific casesU.S. VC investment in China, it shows the unique strategies of the U.S. venture capitalcompanies on due diligence, value-added services and the exiting choices, which willhelp the Chinese innovative enterprises realize the potential of development in theseareas in domestic VC industry and fill the gap as soon as possible. Finally, taking these conclusions into consideration, this paper boldly proposes suggestions of thedevelopment of China’s domestic VC industry at three different levels: Chinese VCs,Chinese portfolio companies and China domestic VC industry, risk investment careerideas and in the new era, combined with the developing situations of China domesticVC industry in recent years.