Study on the guiding effects of the government venture capital guiding funds

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Science Research Management ›› 2014, Vol. 35 ›› Issue (11) : 8-16.

Yang Minli^1,2, Li Xinfang¹, Wu Yongheng³

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Abstract

Using the data of provincialventure capital fundraising between 2000 and 2011 and the simultaneous equations model, this paper investigates the guiding effects of China's government venture capital guiding funds (GVCs) on social funds into the venture capital industry. We find through the investigation that the guiding effects of GVCs are significantly different among provinces. In the well-developed provinces of venture capital, GVCs will crowd out social funds. By contrast, in the less-developed provinces ofventure capital, GVCs can guide social funds into the venture capital industry to some degree. These results support the hypothesis of "Virtuous Cycle" and suggest that the development circumstances of the local venture capital industry should be taken into account when deciding whether or not to set up GVCs.

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government venture capital guiding fund / guiding effect / crowd out / "Virtuous Cycle" / hypothesis

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Yang Minli, Li Xinfang, Wu Yongheng. Study on the guiding effects of the government venture capital guiding funds[J]. Science Research Management. 2014, 35(11): 8-16

References

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