Cao, Humphrey-Jenner & Suchard: Government ownership and venture performance – Evidence from China


We study the government’s role in VC market in China. The impact of government depends on whether the fund is wholly or partially government-owned at central or provincial level. Partially government-owned VCs improve venture success, e.g., the likelihood of exit via an IPO and the likelihood of exit in mainland China. Investment from provincial government-owned VCs is associated greater exit-success, with such advantage diminishing with more funds. Government-owned funds exhibit worse performance at the fund-level. Our findings suggest that government VCs may benefit through political connections may help VCs, but that excessive government control leads to inefficiencies.


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