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Cross-border venture capital investments in Asia: Selection and exit performance

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  • Dai, Na
  • Jo, Hoje
  • Kassicieh, Sul
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Abstract

We investigate the investment behavior and exit performance of VCs that have pursued expansion outside their home locations, specifically, in Asia. Our findings indicate that, in the Asian VC markets, foreign VCs have relative advantages over local VCs in terms of size and experience while they are at a disadvantage in information collection and monitoring due to both geographic and cultural distances. When investing alone, foreign VCs are more likely to invest in more information-transparent ventures. Partnership with local VCs helps alleviate information asymmetry and monitoring problem and has positive implication for the exit performance of local entrepreneurial firms. Specifically, we find that after controlling for the endogeneity of selection, firms with both foreign and local VC partnership are about 5% more likely to successfully exit.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Business Venturing.

Volume (Year): 27 (2012)
Issue (Month): 6 ()
Pages: 666-684

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Handle: RePEc:eee:jbvent:v:27:y:2012:i:6:p:666-684

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Web page: http://www.elsevier.com/locate/jbusvent

Related research

Keywords: Venture capital; Internationalization; Proximity; Cultural distance; Exit performance;

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References

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Cited by:
  1. Li, Yong & Vertinsky, Ilan B. & Li, Jing, 2014. "National distances, international experience, and venture capital investment performance," Journal of Business Venturing, Elsevier, Elsevier, vol. 29(4), pages 471-489.

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