Impacts Of Venture Capital On The IPO Of Companies

Venture capital (VC), in the form of equity investment, acts as a bond between small and medium-sized enterprises(SMEs) and capital market, and its impact on the IPO of companies is reckoned to be considerable.This thesis uses both quantitative and qualitative methods. For vertical comparison within VC holding enterprises and those investment cases that lack statistics, we choose qualitative methods; for the horizontal comparison among enterprises with different types of shareholders, we use quantitative methods. This thesis chooses 138 companies from the total 381 companies listed on Growth Enterprises Market (GEM) as samples through excerpts matching method, independent sample T-test, Mann-Whitney U test, one-way ANOVA and Kruskal-Wallis H test and multiple linear regressions, examines VC and the impact of VC’s nature and characteristics on IPO companies.The research shows that VC no doubt plays a positive part in the IPO of GEM companies. VC not only plays an important part in screening, monitoring and certification for shareholders, but also provides some value-added services. However, due to the late start of VC industry and uneven development of VC organizations, its positive effect is yet to be strengthened. Through further research, this thesis discloses there is no sufficient proof that the amount of VC’s shares is proportional to its positive effect to the company, but rather the VC’s reputation. Good reputation tends to have stronger "screening/monitoring" and "certification" effects. In addition, compared to the VC of private nature, VC with foreign or government background can make these effects more significant.