The impact of venture capital firms’ network positionon the mechanism for their successful exit

Dang Xinghua; Dong Jianwei; Yang Minli

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Science Research Management ›› 2012 ›› Issue (10) : 129-137.

The impact of venture capital firms’ network positionon the mechanism for their successful exit

Dang Xinghua, Dong Jianwei, Yang Minli

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Abstract

Researches have shown that venture capital firms’ network position has a significant influence on their successful exit, however the mechanism of this influence has not yet been revealed. On the basis of Heckman model, a two-step model is constructed to study this influence. In the first place, the inverse Mills ratio is calculated by the first-step selection model, and then the inverse Mills ratio is introduced into the second-step regression model in order to separate the effect of venture selection and value-added services, respectively from the overall influences of venture capital firms’ network position on their successful exit. With the data of Zero2IPO Database from January 1, 2000 to December 31, 2009, it is found that venture capital firms standing on a vantage point in co-investment network not only could select high-quality ventures, but also could provide high-quality value-added services to them, therefore they are able to achieve a higher ratio of successful exit.

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venture capital firm / network position / successful exit / Heckman model

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Dang Xinghua, Dong Jianwei, Yang Minli. The impact of venture capital firms’ network positionon the mechanism for their successful exit[J]. Science Research Management. 2012(10): 129-137

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