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Formation of Chinese venture capital syndication network

Author

Listed:
  • Makoto Nirei

    (University of Tokyo)

  • Toshiaki Shoji

    (Seikei University)

  • Fei Yu

    (China International Capital Corporation)

Abstract

Using a dataset that recorded a large number of investment transactions in China from 1991 to 2018, we examine the statistical properties of the Chinese venture capital (VC) syndication network. Our main findings are as follows. First, the number of investment transactions sharply increased after 2014. Second, more than half of the VC firms are located in Beijing, Shanghai, and Shenzhen. Third, the degree distribution becomes roughly straight on a log–log plot. Fourth, the hypothesis that the degree distribution follows a power-law distribution is not rejected for 2015 and 2016. Fifth, better connected VC firms increase their connectivity faster, which suggests the existence of preferential attachment.

Suggested Citation

  • Makoto Nirei & Toshiaki Shoji & Fei Yu, 2021. "Formation of Chinese venture capital syndication network," The Japanese Economic Review, Springer, vol. 72(1), pages 49-64, January.
    • Handle: RePEc:spr:jecrev:v:72:y:2021:i:1:d:10.1007_s42973-020-00055-7
    DOI: 10.1007/s42973-020-00055-7
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    References listed on IDEAS

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    1. Yael V. Hochberg & Alexander Ljungqvist & Yang Lu, 2007. "Whom You Know Matters: Venture Capital Networks and Investment Performance," Journal of Finance, American Finance Association, vol. 62(1), pages 251-301, February.
    2. Hochberg, Yael V. & Lindsey, Laura A. & Westerfield, Mark M., 2015. "Resource accumulation through economic ties: Evidence from venture capital," Journal of Financial Economics, Elsevier, vol. 118(2), pages 245-267.
    3. Daron Acemoglu & Vasco M. Carvalho & Asuman Ozdaglar & Alireza Tahbaz‐Salehi, 2012. "The Network Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 80(5), pages 1977-2016, September.
    4. Bruce Kogut & Pietro Urso & Gordon Walker, 2007. "Emergent Properties of a New Financial Market: American Venture Capital Syndication, 1960-2005," Management Science, INFORMS, vol. 53(7), pages 1181-1198, July.
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    Cited by:

    1. Kroll, Henning & Frietsch, Rainer, 2022. "China's changing role in global science and innovation," Discussion Papers "Innovation Systems and Policy Analysis" 73, Fraunhofer Institute for Systems and Innovation Research (ISI).

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