The Impact Of Venture Capital Firms' Network Capability On Their Investment Performance

Due to the universality and importance of the syndicatded investment in the venture capital practice at home and abroad,venture capital syndication has been an important research area.Since the beginning of the twenty-first century,co-investment network has become a new research focus in the domain of venture capital with the development and improvement of the theory and methods of social network analysis.However,although foreign scholars have made??some pioneering contributions in this field,domestic related researches are very rare.Considering the fact that international comparison studies have shown that there exist many differences among venture capital markets of different countries,Research conclusions about Europe and the United States do not necessarily apply in China,and thus it is essential to study the China's co-investment network of venture capital.Specifically,this paper investigates the impact of venture capital firms' network capability on their investment performance,which is an investor's major structural attribute in the co-investment network.I first explore the functions of venture capital network from four aspects,which include diffusion and dissemination of information,learning,sharing and access to resources,and status and signaling.Based on the above work,I further analyze the influence of venture capital firms' network capability on their investment performance,from the perspective of resources acquisition and resource utilization capability respectively and taking four aspects of project selection,project evaluation,project monitoring and value-added services into account,and propose hypotheses according to the theoretical analysis.Subsequently,I gather data from CV Source Database for empirical tests.I use the width of network resource,quality of inter organizational connection to measure network capability,and I also use exit way to measure the investment performance.Empirical results show thatventure capital firms of higher network capability are more likely to exit via IPO or exit successfully.The investment phase positively modarate the relationship between network capacity and investment performance.Compared with the late stage,the relationship between resource acquisition capability and investment performance is stronger in the early stage.Compared with the early stage,the relationship between resource utilization capability and investment performance is stronger in the late stage.To sum up,the contributions of this paper are shown as follows:First,I find that the venture capital firm's resource acquisition capability has a significantly positive impact on its investment performance,indicating that the higher resource acquisition capability venture capital firm owns,the higher its investment performance.Second,I find that the venture capital firm's resource utilization capability has a significantly positive impact on its investment performance,indicating that the higher resource utilization capability venture capital firm owns,the higher its investment performance.Third,I find investment phase positively modarate the relationship between network capacity and investment performance.Compared with the late stage,the relationship between resource acquisition capability and investment performance is stronger in the early stage.Fourth,I find investment phase positively modarate the relationship between resource utilization capability and investment performance.Compared with the early stage,the relationship between resource utilization capability and investment performance is stronger in the late stage.