Study On Investment Network And Performance Of Venture Capital In China

Venture capital(VC) generally invests in unlisted small and medium enterprises, especially in emerging high-tech enterprises, to seek high-reward with undertaking high-risk. Venture capital network is a joint investment form which shares information and knowledge but decentralizes risk. Venture appreciation thinks, joint investment will help enterprises add value. This paper aims to study the structural characteristics of Chinese venture capital network, and how these features affect the performance of the venture capital network.In this paper,176 venture capital firms headquartered in Beijing and their 1813 investment events during January 1,1989 to December 31,2012 have been selected as samples, with successful exit rates and IPO or not as performance proxy variables. The structural characteristics of Chinese venture capital network are researched with social networks analysis, and how the investment network characteristics affect the performance is analyzed using multiple linear regression and Logit regression. Results are:(1) venture capital network presents the core-periphery model with a small network density, the majority of venture capital institutions did not establish close links with other institutions; the investment activities in core region started around several leading VC institutions. (2) The empirical results of effects on performance of VC institutions show that the roles of degree centrality and closeness centrality on successful exit rates are positive, and the impact of betweenness centrality on successful exit rates is negative. (3) The empirical results of effects on the performance of start-up companies show that degree centrality has negative impact on companies’IPO, while the effects of closeness centrality and betweenness centrality on the IPO of start-ups are positive.At the same time, in order to further verify the impact of venture capital institutions on performance of start-ups,270 listed companies in GEM during September 17,2009 to March 31,2014 are selected as samples, and how VC shareholders of listed companies affect their revenue growths is tested, and found that the higher proportion of VC stock holdings, the higher revenue growth of start-ups.