An Empirical Research On The Impact Of Venture Capital Network On Growth Ability Of The Start-ups

Venture capital industry in China ushered in an era of all-round development in the case of strong macroeconomic situation and suited, scientific and perfect VC operational mechanism over the past years. Due to the rapid advance of globalization process and the adverse exterior economic environment, it also has experienced the trend of network development. Foreign researches almost unanimously proved that a quality VC network is conducive to the optimal allocation of innovation resources, the rapid growth of innovative business and the sound development of innovation economy at the same time. Because of this, questions maybe brought out:what about the quality of VC network in China? Whether it has the same effect or not? However, there is very little empirical research literature that relates to Chinese VC network. Drawing on the theory of venture capital and social network, this paper focuses on how the VC institutions affect the growth ability of the start-ups from the perspective of VC network. As a result, it may have the great worth for comprehending VC network, allocating innovation resources and developing VC industry in China.This paper is divided into six chapters as below:Chapter1is an introduction, which elaborates the background, research objectives, relevant concepts, research method and possible originalities in this paper.Chapter2is a literature review. By reviewing details of CV network and business growth ability, the research topics and research methods of this paper are put forward.Chapter3is a theoretical analysis. The theoretical framework is shaped by summing up venture capital theory and social network theory.Chapter4is a research design, which refers to the research hypothesis as well as research model, research sample and data sources resulted from the preceding two chapters. Chapter5is an empirical research. This paper uses UCInet6.212software to process the network data and makes a comparative analysis of the static VC network, which lays the foundation of empirical research behind. Then, it uses Stata11.2software to run statistical analysis and discuss the results.Chapter6is a conclusion. By summarizing the empirical research, this chapter is done with research conclusions, research limitations, the improvement direction of follow-up researches and suggestions for the development of VC industry.In the empirical analysis, this paper uses all venture capital events from1999to2012obtained through third-party database to build the static VC network, which is used for comparative analysis. Then,10-year venture capital events including the year of the IPO are used to build the dynamic VC network for running statistical analysis. Based on the above analyses and empirical findings, following conclusions can be reached:Firstly, there appears a lower relational density of Chinese VC network and a less relevance between venture capital institutions, which means VC network in China is lack of cohesion. At the same time, there are obvious differences on rights of venture capital institutions with diverse positions in the network.Secondly, the venture capital institutions with central position in the network can surmount information obstacles, expand the scale of resource conformity and fulfill strategy effectively, which brings further value-added services for the start-ups. Those with stable and high-quality relationships are in favor of the growth of the start-ups as well.Thirdly, the government background is shown to be a covert superiority, which reflects positively on development of the start-ups. The venture capital institutions’ time of obtaining employment seems to be negative correlation with the growth ability of the start-ups, probably because plenty of young venture capital institutions established by well-rounded team or sophisticated institution have sprung up in resent years.Although VC network has been a research hotspot recently, it doesn’t come into shape in China, where there is no research about the effect of VC network and how it helps the start-ups. Differed from others, the innovations of this paper may be demonstrated as follows: First of all, this paper extends the research on the effect of VC network in China and verifies that the venture capital institutions with high network properties are conducive to the growth and development of the start-ups.Next, combining static perspective and dynamic perspective, this paper comparatively analyzes Chinese VC network from macro, middle to micro levels and pays attention to the influence of venture capital institutions’ network properties on the growth ability of the start-ups from the perspective of network position and network relation.At last, distinguished from other researches, it’s the overall data that used to build Chinese VC network. Meanwhile,10-year venture capital events including the year of the IPO are used to build the annual VC network to reflect the dynamic change course of network relation.