Influencing Factors Of VC Exit Returns

Venture capital refers to the investment behavior supported by professional investment companies or venture capitalists to provide unlisted SMEs with great potential in the start-up period,growth stage or the reorganization stage.The cycle of VC including raising,investing,managing and exiting.In which,the exit of VC refers to the withdrawal of venture capital in certain forms,to achieve capital appreciation or reduce the loss.The exit of VC is the last link of the VC fund cycle,which determines the realization of venture capital investment income.In this paper,we mainly study the influencing factors of venture capital exit returns.In research methods,we combine theoretical analysis and empirical analysis.Firstly,we introduce the basic concepts of VC and the exit of VC.Then we elaborate relevant theories of the return analysis of the VC.On this basis,we analyze and explain the main influencing factors of the return of VC.Considering there are several types of exit route for venture capitalists,we focus on the IPO route of exit in our study for the following reasons.On one hand,IPO is often viewed as the ideal route of exit for venture capitalists,because the returns realized by IPO is significantly higher than any other routes of exit.On the other hand,GEM as the second board market in China mainly serves science and technology small and medium enterprises,which providing a channel for venture capital IPO exit.In view of the relevant empirical research is limited,it is necessary to conduct a special study.As for sample selecting,this study is based on the observation of IPO events for VC-backed enterprises in Shenzhen growth enterprise market(GEM)which took place during 2011 to 2015.Through empirical analysis,we draw the following main conclusions:the size of VC institutions to influence exit returns are not statistically significant;VC with State-owned background,and VC without State-owned background,the exit of return was no significant difference,but the exit returns of foreign background VCs are significantly higher than those with no foreign background;Early rounds investment tend to have lower exit returns;exit of the high-tech industry,returns were significantly higher than in traditional industries,but the situation vary a lot within the high-tech industry.This study will provide a reference for IPO investment valuation and analysis.