Research on the impact of venture capital on the operating performance of startups

• Main Author: SUN, Ziqiang
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Venture capital; Startups; Operating performance; Impact; Entrepreneurial and Small Business Operations; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/etd_coll/315; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1305&context=etd_coll
• Institution: Singapore Management University

Venture capital can not only realize its own capital appreciation, but also promote the development of startups and boost the development of high-tech industries; therefore, it has obvious positive externalities. With the development of venture capital in China, the impact of venture capital on the operating performance of startups gradually attracts widespread attention. This paper investigates the impact of venture capital on the operating performance of startups and conducts an in-depth discussion on the problem formulation, empirical relationship, cause and effect analysis, and countermeasure suggestions. The main research contents include: The first part is the introduction, which analyzes the research background, purpose and significance, research methodology, technical routes, etc., reviews the relevant theories of research objects, the impact of venture capital on operating performance of startups, and relevant literature at home and abroad, and compares and analyzes the development processes of venture capital at home and abroad, in order to lead to the research problems of this paper. The second part is the empirical analysis, which uses the public data of Chinese GEM listed companies to conduct an empirical analysis of the impact of venture capital on the operating performance of startups and draw relevant conclusions, pointing out that adverse selection is the main reason for the formation of these impact relationships and conducting an in-depth discussion. The third part is the cause and effect analysis, which mainly elaborates the causes of the market-based selection of risk appetite, information asymmetry, and principal-agent mechanism for adverse selection, and analyzes the adverse selection effects of the possibility of increasing venture capital for startups, lemon market, and valuation bubble by making use of adverse selection. The fourth part is the countermeasure analysis, which puts forward countermeasures and recommendations for venture capital, startups, and other participants in the capital market based on the mutual impact between venture capital and operating performance of startups in order to deepen the application value of this paper. The empirical analysis of this paper demonstrates that the venture capital is negatively correlated with the operating performance of startups due to the adverse selection. This conclusion has positive practical guidance value for the venture capital, startups and other participants in the capital market to strengthen their strategic responses.