The Guiding Effect of Government-guided Venture Capital on Private Capital
- CONG Feifei, LI Yao & GU Wenchen
- Shanghai University of Finance and Economics, 200433.
What are the distinguishable effects for the venture capital industry derived from China's governmentguided venture capital (GVC) development? We study the GVC's guiding effects on private venture capital (PVC) from the prospects of investment scale and structure. We use the issuance of provincial GVC fund policy as exogenous events and perform the difference in difference (DID) test based on the data from PEdata. We find on the macro level, the participation of GVC increases both the finance and investment scales of the whole venture capital industry; and on the micro level, the involvements of GVC leads the investment of PVC towards more mature enterprises in earlier stages of financing and towards high-tech companies. Additionally, the improved access to stated-owned capital brings more efficiencies in value-added effects of private capital. Compared to the unregistered PVC, enterprises invested by registered PVC have 7.63 more patents every year, which corresponds with the hypothesis of certification. This paper contributes to the study of GVC's guiding effects.
- Government-guided Venture Capital, Private Venture Capital, Guiding Effects, Certification Function