An Empirical Analysis Of The Existence, Influencing Factors And Consequences Of Local Preferences Of Venture Capital Institutions

With the establishment of the gem in China in 2009,domestic venture capital investment activities are in full swing,the venture capital institutions with different capital background,different size and different management style have entered the public field of vision and actively seek investment opportunities.A large number of foreign practice and theory have explained the important relationship between venture capital activity and innovation.In the trend of China's economic transition and the emerging economic growth point,it is necessary to play a more and more important role in the play of venture capital.Scholars in developed countries have studied venture investment early in various aspects and angles.However,because of China's venture investment from the beginning of this century,the government began to turn to market operation,and the development is not yet mature,and the national system,culture,custom and so on are different from the western developed countries.We can not simply copy the experience and conclusion of foreign studies.There have been some achievements in the research on venture capital in China.However,there are few studies around the phenomenon of "local preference" in China's venture capital institutions.This paper uses the professional venture capital database and borrows the concept of "local preference" in financial geography,and makes a more micro perspective on China's venture investment machine.The investment behavior of construction is studied.In the first part,this article begins with the background of the present situation of China's venture capital market,and expounds the significance and main content of the study around local preference,and summarizes the contribution of this article.In the second part,this article combs the relevant theories of the local preference phenomenon,and summarizes some deficiencies in our research in the summary.In the third part,combined with the existing literature,this paper theoretically analyzes the existence,influence factors and consequences of local preferences,and puts forward relevant assumptions.In the fourth part,this paper,in order to test the proposed hypothesis,uses a professional venture capital database,and aims at the defects of the existing domestic literature construction index methods.On the basis of the classic foreign literature,this paper builds its own index of local preference degree of the venture investment institution.There is a relatively obvious local preference phenomenon,that is,relative to our country's venture capital institutions prefer investment projects in this region.This paper then carries out an empirical study on the possible factors of local preference,and mainly investigates the three aspects of the characteristics of venture capital institutions,the characteristics of investment behavior and regional characteristics.The more robust results are found,the greater the scale of the venture capital institutions and the more rich experience in investment,the less obvious local preference is,and the local preference index of the foreign investment background is lower than that of the joint venture and local capital.Enterprises in high and new technology industries,venture capital institutions prefer local investment to reduce the geographical distance to reduce the risk of asymmetric information;the joint investment behavior among venture capital organizations share the risk sharing the resources,thus expanding the investment scope to reduce the local preference;the strong innovation strength of the local region,More potential investment projects and fewer competitors make venture capital institutions invest more locally.At the end of this paper,we find out the deep-seated consequences of local preference phenomenon,and find that the higher local preference of the venture capital institution leads to the lower risk withdrawal rate.This paper thinks that it may be in the case of venture investment,on the one hand,the quality of the project selection caused by the selection of regional single investment is poor.The effect is greater than the improvement of the information advantage for local investment;on the other hand,it may be easier to create "overconfidence" in the face of local investment and reduce the performance of its venture capital.The fifth part is the summary and deficiency of the full text.This article hopes to describe the characteristics of China's overall venture capital activities to a certain extent through the above work,and discuss the mechanism behind it,so as to improve the research on venture investment and make some contribution to optimize the strategy of venture investment.