Stimulating Start-up Investment Through Government-Sponsored Venture Capital:Theory and Chinese Evidence

Government-sponsored venture capital(GVC)has been used to support financially constrained start-ups as an important policy tool in China.Typically,to motivate the social capital to invest in start-ups,GVC provides subsidies for them to bridge the funding gap in the early-stage venture capital market.However,the effect and mechanism of GVC affecting social capital investment have not been clearly studied.In this paper,the authors not only develop a game model to analyze this issue in theory,but conduct an empirical study by analyzing the 14741 records matched by propensity score matching(PSM)of Chinese venture capital market data from 2011 to 2021.The proposed findings are as the follows.Firstly,the subsidies offered by GVC will simultaneously increase the returns and risks of investments in start-ups of social capital with more volatile incentive effect of GVC.The incentive effect of GVC is only effective when the returns resulting from the subsidies outweigh the risks they introduce.In the context of the Chinese venture capital market,the incentive effect of GVC is effective.Secondly,the incentive effect of GVC is more pronounced in high-tech industries,which can be attributed to the signaling effect facilitated by GVC.In this context,the subsidy mainly helps social capital to bear the costs associated with screening potential investments.Thirdly,the incentive effect of GVC is more significant in underdeveloped venture capital markets,which can be explained by the“virtuous cycle”effect,in which GVC plays a pioneering role in establishing a more robust early-stage market trading system.By examining these three points,this study contributes to a better understanding of how GVC can effectively guide social capital investment,especially in the Chinese landscape.

Venture Capital Syndication under Social Network Theory:Literature Review and Prospect

As an important channel for start-ups to obtain R&D funds and external knowledge and information resources,and as one of the key methods for investment institutions to leverage scale and synergy effects to enhance investment returns,venture capital syndication holds significant research value in the field of venture capital.This paper reviews the literature,summarizing the motivations behind the formation of joint investment networks,the conceptual characteristics of the three core theories of social network theory,and the empirical research on venture capital syndication within the framework of social network theory.It also highlights the existing research results,identifies gaps,and anticipates future research directions.

How time-inconsistent preferences influence venture capital exit decisions?A new perspective for grandstanding

Considering that the assumption of time consistency does not adequately reveal the mechanisms of exit decisions of venture capital(VC),this study proposes two kinds of time-inconsistent preferences(i.e.,time-flow inconsistency and time-point incon-sistency)to advance research in this field.Time-flow inconsistency is in line with the previous time inconsistency literature,while time-point inconsistency is rooted in the VC fund’s finite lifespan.Based on the assumption about the strategies guiding future behaviors,we consider four types of venture capitalists:time-consistent,time-point-inconsistent,naïve,and sophisticated venture capitalists,of which the latter three are time-inconsistent.We derive and compare the exit thresholds of these four types of venture capitalists.The main results include:(1)time-inconsistent preferences acceler-ate the exits of venture capitalists;(2)the closer the VC funds expiry dates are,t`he more likely time-inconsistent venture capitalists are to accelerate their exits;and(3)future selves caused by time-flow inconsistency weaken the effect of time-point inconsist-ency.Our study provides a behavioral explanation for the empirical fact of young VCs’grandstanding.

Venture Capital是风险投资还是创业投资?

风险投资(VentureCapital,简称VC),是一种风靡全球的投资方式。中国政府上世纪90年代末进行广泛推动,其间引起了中国政府部门、实务界、企业界、研究界登的关注,但关于VentureCapital的译名的问题在大陆始终有所争议。事实上,VentureCapital的五个阶段的种子期、初创期、成长期、扩张期、成熟期无不涉及到较高的风险,具体表现有项目的筛选、尽职调查、后期监控、知识产权、选择技术、公共政策、信息高度不对称、道德品质、管理团队、商业伙伴、财务监管、环境、税收、政治、沟通平台、上市推荐等。VentureCapital的投资区别于其他类别的投资就在于其的“高风险”性,“创业投资”仅仅代表了“风险投资”过程中的一部分。“创业投资”、“创新投资”是“子集”,“风险投资”是“总集”。因此,将VC翻译成风险投资是可以真正地、最好地、完整地体现出普及、警示和发展等方面的作用的。

Analysis of China's venture capital

Analyzes the necessity and possibility of developing venture capital in China, puts forward a train of thoughts as to how to develop China′s venture capital.

Study of Venture Capitalist Compensation Structure Based on Reputation Model

The development of venture capital has drawn much attention, and many qualitative analysis and discussions have been proposed. A quantitative model is proposed based upon Reputation Model. The present compensation structure of U. S. venture capital limited partnerships is analyzed and a kind of new compensation structure is proposed. The relations between the venture capitalist’ s effort level and the two compensation structures are given . The comparison of analytical results proves that the present compensation structure in U.S. may not be the best choice, and that the proposed one can give a better motivation for venture capitalist’s management action.

The Dynamic Model of Allocation Control in Venture Capital

The allocation of control and stock in venture capital is the key point of the venture capital project.This paper develops a dynamic model of control and stock and profoundly analyses how to allocate the control between the entrepreneur and the venture capitalist.The model reveals the relationship of control and stock's structure,the time and the degree of imparting the control to the entrepreneur or the venture capitalist,the condition of retracting the control and compensation accordingly.

Incentive Contracts for Venture Capital Syndication

Aiming at the incentive problems of venture capital syndication at the second and later stages, an game model is set up by principal agent and incentive theory, given that the lead venture capitalist has already some knowledge of the project quality from his initial funding of the project. Under symmetric and asymmetric information, the model analyzes how the optimal syndication contracts induce venture capitalists to truthfully reveal their information to each other, and vary with the level of venture capitalists＇ expertise and information in evaluating projects.

Venture capital in Japan and enlightenment to China

In the business world, there have always been people are willing to start business, and other people are willing to back them and share the risks and rewards of enterprises, so in a sense, there has always been entrepreneurship and venture capital （VC）. Despite of Japanese VC has gone through ups and downs, Japanese VC continues to lead Asia and is second only to U.S. Japanese government has recognized the economic benefits of fostering the creation and development of venture finns, and has applied themselves assiduously to the task of creating a supportive environment. This paper provides some context for understanding the Japanese venture capital industry. Then it set forth an evolution of Japanese venture capital. The heart of the paper is devoted to discussion of the key features of Japanese venture capital. This includes information concerning the size of the industry, the players, and the nature of the Japanese venture capital investment. This is followed by an analysis of some of the obstacles to a more vibrant Japanese venture capital industry which gives us some enlightenment to Chinese venture capital development now. This paper also shows that the relative of the US, the Japanese venture capital industry is a young, small industry. In a word, it shows that there is still a substantial space for further development, which makes VC is still a promising industry in Japan.

The Role of Venture Capital in Supporting the Development Process of Innovative Start-Ups:Evidence From the Italian Market

This research paper investigates the role of Italian venture capital in supporting innovative start-ups in their early-stage process,which is usually focused on the creation of a new product or the development of a new service.The aim of the study is to observe and assess the key economic features of innovative start-ups funded at the beginning of the early-stage by venture capital funds and thereafter analyze the level of development of target companies at four years since the capital injection.The sample of deals created to describe this dynamic process is composed by investments realized between 1996 and 2012 and,in this way,according to the chosen methodology,it is representative of Italian venture capital role and contribution in the years from 1996 to 2016.The authors used for their empirical study a proprietary database,Venture Capital Monitor—VeMTM.Through the analysis of collected data,the paper describes the strategic importance of venture capital investments in early-stage opportunities both for target companies and the Italian socio-economic environment,and finds aggregate values of reference to quantitatively define the socio-economic outcome of this kind of operations.A final further contribution is provided by comparing the present results to the ones of two previous studies conducted by the authors.

China Venture Capital Review

Based on our joint survey with Zero2ipo.com, Ltd, we have gathered data from 175 domestic and foreign venture capital companies, and mainly focused on 125 companies (92 domestic and 33 foreign) in large scale. According to our research,

China Moves to Boost Venture Capital

The Chinese government recently announced measures to stimulate venture capital(VC)in an effort to sustain the ongoing entrepreneurial wave,To increase investment in cash-starved startups,China will nurture more VC investors,strengthen policy support,

A Prey- Predator Model for Venture Capital Investment

The Rosenzweig-Macarthur Model is used to partially explain Venture Capital investment cycles. Investment opportunities and the experience of the investors, represent the prey and predator respectively. Stability analysis with respect to the interior equilibrium point is performed and dynamics of the system are investigated using numerical simulations and results are presented. The model shows that parameter variation affects the stability of the system and it experiences bifurcations. The results show that stability analysis is useful to provide a Venture Capitalist with the stability ranges of parameters in the system, to improve the quality of the investment process.

Research on Tax Preference Policy of Venture Capital

In the last few decades, the economy increased rapidly, but the rapid growth is at the cost of high consumption of resources and high pollution of environment. It is imperative to transform the economic growth pattern. Tax policy relating to venture capital is very important to build innovative country and encourage the development of venture capital. Based on the background, the paper researches the tax preference policy of venture capital in developed countries and in our country, and draws relevant conclusions.

Comparative Study on Venture Capital among U.S.A., Japan and China

This essay, through comparing venture capital in China＇s modernization with U.S.A., Japan, summarizes the different characteristics of venture capital of the United States and Japan, and thinks that China＇s present modernization, as a flag of developing countries, has already entered middle period of industrialization, according to the experience of U.S.A., Japan and reality of China. The technological progress mode has already been changed from technology import to technological innovation stage at this time. In order to encourage innovations, we must develop venture capital in a more effective manner. The national conditions have determined the technology import of China, which must start with a high points, this is the most important condition of target to choose. The venture capital of China in system transitional period should use U.S.A.＇s experience for reference even more on the capital source to pay close attention to the capital sources of the government and bank. Once the government guides and starts the market, the folk capital will show the natural instinct of the capital automatically Risk investment is the embodiment capitalized personality spirit, in order to dispose such ambitious culture. We need the reform of the system as well as dispose risk investor＇s stratum at present.

Who Are the Elites in the Venture Capital Industry?-Investigation of Elite-Club Boundary in a Co-Investment Network

Existing research suggests that elite clubs exist in venture capital markets,but a standard for determining their size and composition is lacking.This paper addresses this challenge by using the weighted k-means sorting algorithm to construct a research framework for elite clubs.Validating the framework with investment events data from China’s venture capital market(2001-2018),intriguing findings emerge.The ranking of Venture Capitalists(VCs)follows a power-law distribution,providing evidence for elite clubs’existence.The analysis identifies a turning point in the score curve,serving as a valuable indicator for club boundaries.Elite clubs demonstrate relatively high stability,maintaining advantages and elite status in future competitions.Empirical validation confirms the proposed framework’s superior stability compared to existing methods.Importantly,elite club members outperform non-elites significantly.This paper effectively identifies elite clubs in the Chinese venture capital market,helping other VCs recognize potential partners,access high-quality information,and enhance investment performance.

Economic policy uncertainty and firms’investments in venture capital funds:Evidence from China

The latest business practice in the Chinese venture capital(VC)market involves the active participation of non-financial firms,as limited partners,in VC funds.Exploiting a unique hand-collected dataset from China,we find that economic policy uncertainty is positively related to the propensity of firms to participate in VC funds.Cross-sectional tests show that the positive effect of policy uncertainty on the likelihood of participating in VC funds is enhanced by industrial growth opportunities.Furthermore,economic consequence tests show that participating in VC funds is conducive to improving investment efficiency,increasing innovation performance and promoting product diversification.This study advances our understanding of firms’investment decisions and the VC industry development amid economic policy uncertainty.

The Status Quo Analysis of New Ventures in China

New venture has developed as an important topic in entrepreneurship research. In this paper we analyze the status quo of new Ventures in China from four aspects： capital demand scale of new ventures, the characteristics and motivation of entrepreneurs, the attitude of new ventures toward the intervention of venture capital firms and the external environmental factors of hindering new ventures. The data in this research come from 104 ventures in four cities （Peking, Shanghai, Changchun and Shenyang） in China. The empirical analysis indicates that there are many problems in the development of the new ventures in China.