Policies For Investment Of Venture Capital And Private Equity In The Chinese Internet Industry

The thesis introduces a quantitative decision framework for actors in the venture capital industry with a focus on the internet market to estimate success chances of early ventures.For this,the thesis relies on five core contributions.First,a framework for entrepreneurship is proposed from the synthesis and extension of literature on entrepreneurial success frameworks.The proposed framework describes entrepreneurial activities through the connections between entrepreneurs,investors and regulators and their environment.Second,the structure conduct and performance of the internet industry and the influence of venture capital is analyzed.The thesis identifies several structural and behavioral mechanisms that facilitate aggressive strategies and concentrated outcomes and introduces a novel way of estimating HHI index from website rankings to quantify the resulting high concentration levels in desktop and mobile market segments.From the analysis of the industry environment as well as the structure and performance,the thesis suggests a number of success factor candidates and determines their significance on a novel dataset of Chinese internet startups.Five success factors are shown to be significant.Positive factors are an investment by one of the BAT companies,Baidu,Alibaba and Tencent and whether the startup had first mover advantage.Significant negative effects have been observed for new ventures that have closed series A funding deals within their first year of operation,startups that have returnee founder and startups operating in a highly fragmented market.A number of data science models are tested with these inputs to create a predictive model for startup success that achieves 80% accuracy on a separate test set.Special consideration is given to the central role of the entrepreneur,and research published in the course of this thesis is the first to show the existence of the persistence of entrepreneurial success among Chinese internet entrepreneurs,i.e.previously successful entrepreneurs are likely to succeed again,while previously failed entrepreneurs are likely to fail again,no matter whether the entrepreneur is re-starting in the same or in a different segment of the industry.In addition,the more ventures were founded and the more of them were successful,the longer entrepreneurs tend to wait to obtain the first investment when they start a new venture,while novice and previously failed entrepreneurs tend to acquire the first investment earlier.As the fifth contribution,these findings are finally consolidated into concise policy advice for the main entrepreneurial actors,entrepreneurs,investors and policy makers to increase the efficiency of the venture capital used to create innovate startups and a competitive technology landscape in China.