The Syndication Between Cross-border Venture Capital And China’s State-owned Venture Capital

The report of the Nineteenth National Congress of the Communist Party of China clearly put forward the idea of "speeding up the construction of an innovative country".Many international experiences have proved that the venture capital is an important way to promote scientific and technological progress and technological innovation,and it is one of the key elements for the sustainable development of the national economy.At present,the world’s venture capital markets not only show the increasing proportion of cross-border venture capital in global venture capital,but also show the characteristics of many government departments setting up venture capital projects to participate in the market directly or indirectly.In view of the above two typical characteristics,domestic and foreign scholars have carried out in-depth research,but the research results of linking cross-border venture capital with state-owned venture capital still need to be expanded and supplemented.This paper chooses the syndication to link the cross-border VC and state-owned VC which investment way is most important in the venture capital market.From the perspective of regional culture,the paper tries to reveal the influence of regional culture on cross-border VC from both theoretical and empirical perspectives,and to select China’s state-owned VC as the internal logic of joint investment partners,and on this basis to evaluate the syndication’s effectiveness.On the one hand,this paper enriches and expands the academic research in cross-border VC and state-owned VC,on the other hand,it also provides practical services for Chinese venture capital to better "go global" in the future.Specifically,first of all,from the perspective of regional culture,this paper is based on the forensic theory,political connection theory and commitment escalation theory of state-owned venture capital,combined with the alien disadvantages of cross-border VC,respectively,from the project screening of cross-border VC investment,the investment provides enterprises with resource endowment and post-investment risk sharing.It analyzes the impact of regional culture on the formation of cross-border VC and state-owned VC joint investment,and explains the deviation of cross-border VC from selecting state-owned VC joint investment from a cultural perspective.The impact of effectiveness,the corresponding research hypothesis is proposed.Secondly,through the private equity database to retrieve all co-investments of cross-border VC in China,construct an econometric model of cultural influence on cross-border VC and stateowned VC co-invest and a measurement model to test the effectiveness of co-investment.Finally,based on the theoretical analysis and the research design,the regional culture is tested for the impact of cross-border VC investment in the selection of state-owned VC joint investment,and based on the cultural characteristics model,the cross-border VC joint investment partner selection deviates from the equilibrium level to the invested enterprise.The impact of subsequent financing,the impact on the innovation performance of the invested companies and the impact on cross-border VC exit performance.In summary,the innovative research results of this paper include the following points:Firstly,the invested enterprises are located in areas with high collectivism culture of small groups,high culture of rights gap,or high culture of interpersonal care.Cross-border VC will increase the proportion of VC in joint investment in China,and allocate higher political level state-owned VC in joint investment.In addition,when the level of regional marketization is relatively high,the positive impact of three cultural dimensions of small group collectivism,right gap and interpersonal care on cross-border VC’s choice of state-owned VC joint investment will be weakened,that is,the strategy of cross-border VC joint investment partner selection will tend to be more diversified.Secondly,choosing state-owned VC joint investment from a cultural perspective is an endogenous consideration of cross-border VC.If the proportion of VC in cross-border VC joint investment in China is lower than the equilibrium level,or the political level of VC in China is lower than the equilibrium level,it will not significantly reduce the number of follow-up rounds and follow-up financing institutions of the invested enterprises.When the invested enterprises are located in areas with high traditional culture,deviating from the equilibrium level of the proportion of the number will reduce the number of follow-up financing institutions of the invested enterprises,and deviating from the equilibrium level of the political level will reduce the number of follow-up financing rounds and follow-up financing institutions of the invested enterprises.When the invested enterprises are located in the areas with better external financing environment,the deviation from the equilibrium level of the quantity proportion will not reduce the number of follow-up rounds of financing and the number of follow-up financing institutions of the invested enterprises,or even increase when they deviate from the equilibrium level of the political level.Thirdly,choosing state-owned VC joint investment from a cultural perspective is an endogenous consideration of cross-border VC.If the proportion of cross-border VC joint investment in China is lower than the equilibrium level,or the political level of VC joint investment in China is lower than the equilibrium level,the sum of patent applications and the sum of patent applications for invention in three years after accepting investment will be reduced.The above effect is more obvious when the invested enterprises are located in areas with high traditional culture.When the invested enterprises are located in the areas with high degree of intellectual property protection,deviating from the equilibrium level of the quantity proportion will not reduce the application for patents and invention patents of the invested enterprises,or even deviate from the equilibrium level of the political level will increase the number of application for invention patents.Fourthly,the choice of state-owned VC joint investment from a cultural perspective is an endogenous consideration of cross-border VC.If the proportion of VC in cross-border VC joint investment in China is lower than the equilibrium level,or the political level of VC in China is lower than the equilibrium level,although it will not reduce the possibility of exit of crossborder VC with the IPO of the invested enterprise,it will decline.The possibility of exit of low cross-border VC by M&A of invested enterprises.The above effect is more obvious when the invested enterprises are located in areas with high traditional culture.When the investment is in a period of low uncertainty of exit environment,deviating from the equilibrium level of the proportion of quantity will not reduce the possibility of M&A,but even improve the possibility of IPO,while deviating from the equilibrium level of political level will increase the possibility of M&A and IPO.