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The purpose of this paper is to discuss how venture capital institutions can use their syndicated investment network to help listed companies to achieve better performance in mergers and acquisitions (M&A) activities.

This paper builds a fixed effect unbalanced panel regression model to study the impact of venture capital network on the M&A performance of listed companies.

Evidence indicated that the stronger the information resource acquisition ability of venture capital institutions in the network, the better the listed company's M&A performance supported; the stronger the information resource control ability of venture capital institutions in the network, the better the listed company's M&A performance supported; the higher the participation of venture capital institutions, the more significant the positive impact of information resource acquisition and information resource control abilities on M&A performance in the network.

The data in this paper are from China's Growth Enterprise Market (GEM), other markets may be considered in the future research studies.

The research conclusions of this paper affirm the positive role played by venture capital institutions through syndicated investment in eliminating information asymmetry in M&A of invested companies. The information resource acquisition and control abilities and participation degree of the venture capital network have positively promoted the M&A performance of the invested enterprises.

The conclusions of this paper not only provide useful supplements to existing research literature on venture capital network functions and corporate M&A but also have certain guiding value for venture capital institutions and start-ups to better use venture capital practices to improve their capabilities and performance.

Prior literature indicates that syndication enhances the likelihood of ventures’ successful exits; however, it has neglected the differences among venture capital (VC) investor types. In fact, there are various types of VC investors with distinctive objectives. Therefore, by focusing on ventures backed by corporate venture capital (CVC) and independent venture capital (IVC) investors, the purpose of this paper is to investigate how the relative influence among a heterogeneous group of VC investors in a syndicate affects the likelihood of the venture’s successful exit.

A sample of 1,121 US ventures that received funding from both CVC and IVC investors during 2001 and 2013 are collected. Then, a Cox proportional hazards model is applied to analyze the likelihood of a successful exit (i.e. initial public offering or acquisition).

The relative reputation of CVC investors vis-à-vis their IVC co-investors in a syndicate is negatively associated with the likelihood of the venture’s successful exit. This negative relationship is exacerbated when CVC investors are geographically close to the focal venture, and it is weakened when CVC investors syndicate with IVC investors that they have collaborated in the past.

First, this paper advances VC syndication literature by demonstrating that syndication does not positively affect the likelihood of a venture’s successful exit unless key syndicate members seek to pursue going public or acquisition strategy. Second, this paper also reveals when CVC is beneficial from the ventures’ perspective. CVC participation facilitates ventures’ successful exits as long as reputable IVC investors are present in the syndicate. Third, this study contributes to the multiple agency perspective by showing that formal governance mechanisms affect ventures’ conduct and performance as well as informal sources of power.

The purpose of this paper is to advance a holistic model of venture capital (VC) firms’ syndication decisions in an emerging economy. When considering syndication with local partners, VC firms consider multiple sources of risk related to firm-specific characteristics (life-cycle, operational and political). In conjunction with these risk factors, they also consider their own capabilities, namely, their knowledge breadth and knowledge depth. Knowledge breadth stems from a VC firm’s network position and knowledge depth is a result of its prior industry expertise. Together, these capabilities have competing impacts on VC firms’ desire to syndicate. From one perspective, VC firm capabilities may help deal with risk such that syndication may not be perceived as necessary. Alternatively, VC firm capabilities may signal attractiveness to a local partner and allow the VC firm to syndicate more easily.

Fuzzy-set qualitative comparative analysis is conducted on a sample of 111 US VC firms investing in China between 1993 and 2010.

Lower VC firm capabilities are associated with a tendency not to syndicate with a local partner when venture risk factors are low. This pattern may arise because of such VC firms’ relative lack of experience with partnership management or weaker appeal to local partners.

This study is one of the earliest attempts to develop a neo-configurational perspective within the VC literature and thus contributes to a more nuanced understanding of international VC firms’ strategic behaviour in emerging economies by examining multiple risks and capabilities simultaneously and in conjunction.

The venture capital syndication brings in various resources for the portfolio firms, which positively affects those firms’ performance, while conflicts within syndicates also have negative impact on the portfolio firms’ performance. This study aims to explore the two opposite effects of the venture capital syndication on the portfolio firms’ operations. Drawing on Ma et al.’s (2013) power source match perspective, the authors examine the effect of (mis)match of power source between ownership and status on the portfolio firms’ performance.

The study uses panel data from two professional databases containing information about the venture capital-backed firms in China. The fixed effect model is applied to analyze the data.

This study found that power source match in the venture capital syndicates works positively on the portfolio firms’ performance. This positive relationship is weakened when there is ownership-dominated power source mismatch present.

This study suggests that when new ventures search for venture capital, it is better to allocate greater ownership to the venture capital providers with high-status power, so that ownership power and status power can have a proper match to increase the coordination among venture capital providers, thereby helping portfolio firms perform better.

This study looks into the performance of a portfolio firm when there is power a (mis)match in a venture capital syndication, extending the current literature in this area where only the performance of the venture syndications is examined.

Syndicated investments in startups within a particular industry follow an evolutionary path consistent with models of industry growth and evolution. Some industries spend a long time gestating, while others grow and mature quickly. Entry into ecommerce industry segments has both characteristics. What spurred the sector's slow emergence and subsequent quick rise? One obvious answer is the development of the Internet in the mid-1990s. However, a competing possibility is that the diffusion pattern resembles an epidemic among venture capital firms. This chapter examines how the existing structure of the VC syndication network in the US enabled such an epidemic. Consistent with existing theory on the spread of a disease in a small world, this study argues that the incidence of investments in ecommerce startups was a function of prior investments located on shortcuts in the network. The time frame is 1980 to just before the NASDAQ boom in 1999.

The purpose of this paper is twofold to examine the factors that contribute to local bias of venture capital in China and to explore the relationship between local bias and performance of venture capital institutions.

Local bias was measured in line with the model developed by Cumming and Dai (2010). Regression techniques were performed for our long-term cross-sectional data to analyse the potential determinants of local bias. This is followed by the Probit model to test the relationship between local preference and successful exit.

The overall finding indicated that local bias in China increased over time. The stiff competition among venture capital institutions reduced local bias, but the enhanced innovation capabilities of a particular geographical area amplified local bias because of the knowledge spillover effect. Finally, the results suggested that venture capital institutions with less local bias enjoy a greater likelihood of making successful exits.

This study used successful venture capital exit as a proxy for venture capital institution’s performance because of the unavailability of information such as internal rate of return. Future research should try to adopt other way of measuring venture capital institution’s performance.

This study sheds light on the various possible causes of local bias that the policymakers need to be aware of. Despite the rapid rise of China’s venture capital market in recent years, venture capital institutions have yet to make inroads into the local high-tech industry. This study implies to the policymakers that to reverse this trend, they should formulate policies that foster the long-term performance of venture capital institutions, mitigate the severity of local bias and raise the competitiveness of the Chinese venture capital market.

Because of data limitations, there is currently lack of prior empirical research on local bias of Chinese venture capital institutions based on large-scale data. This study intends to fill the gap.

The purpose of this paper is to explore the networking effects of venture capital (VC) firms on portfolio companies. VCs can bring specific skills and abilities to their ongoing relationships with their portfolio companies and thus add value by influencing key portfolio company operations. High levels of engagement also translate into giving advice and support, helping with the team culture, creating strategic alliances, or exercising corporate governance. A particular mechanism through which these support services are delivered is syndication investment.

Using network theory tools the paper investigates the effects of syndication on VC firm performance.

The paper finds that networked VC firms are better placed to benefit from their investments.

The paper sheds light on the importance of network relationships in the venture capital industry.

U.S. venture capital financings of U.S. entrepreneurial firms with up to 213 observations are consistent with the proposition that convertible preferred equity is the optimal form of venture capital finance. This paper introduces new evidence from 208 U.S. venture capital financings of Canadian entrepreneurial firms. In contrast to U.S. venture capital investments in U.S. entrepreneurial firms, U.S. venture capitalists finance Canadian entrepreneurial firms with a variety of forms of finance. The differences between domestic and international U.S. venture capitalist financing structures are not attributable to differences in the definition of the term ‘venture capital’. The data point to the importance of institutional determinants of venture capitalist capital structures within the U.S. and abroad. Among other things, the data indicate that U.S. venture capitalists often do not choose convertible preferred shares in the absence of tax considerations in favor of that financing vehicle.

This study is based on the development of predictive classification for the success of a venture capital (VC) deal derived from both qualitative and quantitative indicators.

Decision tree analysis has used for devising the success model of VC deal. Various deal characteristics are considered in this study as the observable component of success.

The finding of this analysis indicates that the success of the deal does not only depend on the final outcome like post company valuation (POST_COMP), realised revenue (RREV) but also depends on various observable contractual characteristics like syndication, use of convertible security and ownership percentage with some noticeable deal features.

This study increases the further scope of study on a contractual mechanisms such as allocation of cash flow right and control right in the deal contract between venture investor and entrepreneur firm. This could give a better understanding of success path of a venture deal.

This study has attempted to derive a performance model based on observable attributes of a VC deal.

Private equity funds invest in high‐risk projects and firms. One aspect of investing in small‐ to medium‐sized enterprises and in participating in buy‐out transactions is managing risk at the pre‐investment stage. The purpose of this paper is to document existing pre‐investment risk management practices of European and Indian fund managers, to explore if vijayamathirz techniques differ based on legal system and in developing markets (India), and determine if fund size affects risk management practices.

This study analyzes risk management preferences at the pre‐investment stage among funds that operate in common and civil law countries. Data was collected using a survey instrument.

The results indicate few differences. Where differences are found, they appear related to issues concerning asymmetric information and market structures. Legal systems do not appear to be a significant explanatory factor in determining how private equity funds manage risk at the pre‐investment stage.

The results are useful to fund managers in improving their existing pre‐investment risk strategies. Fund sponsors may use this study to benchmark their existing and future fund managers.