The impact of liability of foreignness on international venture capital firms in Singapore

<p>Extant research on the international venture capital (VC) firms largely focuses on cross-country comparison; only a limited number of studies have examined the internationalization of VC firms and their strategies in host countries. This study approaches the research topic mainly from an institutional perspective, and intends to understand the performance of foreign VC firms in emerging economies, a topic that has rarely been examined in previous research. Using a sample of U.S. VC firms investing in China, this study finds that U.S. VC firms with more investment experience at home have weaker investment performance in China. The empirical results also show that U.S. VC firms investing in ventures with larger top management team, staging their investments, and syndicating with other U.S. VC firms are likely to achieve better performance in China. Contrary to what was hypothesized, syndicating with Chinese VC firms decreases U.S. VC firms’ investment performance in China.</p>

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Entrepreneurship and Innovation in the Digital Economy

THE LAHORE JOURNAL OF ECONOMICS ◽

10.35536/lje.2016.v21.isp.a12 ◽

2016 ◽

Vol 21 (Special Edition) ◽

pp. 273-312 ◽

Cited By ~ 1

Author(s):

Naved Hamid ◽

Faizan Khalid

Keyword(s):

Venture Capital ◽

Digital Economy ◽

Country Risk ◽

Monitoring And Control ◽

Venture Capital Firms ◽

The Government ◽

And Control ◽

Immense Potential ◽

Similar Growth ◽

International Venture

It is believed that Pakistan’s digital economy will follow a similar growth trajectory to India, but with a lag of about five to six years. This implies that the digital economy in Pakistan carries immense potential and is likely to see very rapid growth in the next five years or so. This paper provides an overview of Pakistan’s digital economy in terms of international players, successful local businesses and rising stars in different segments of the industry. We also evaluate the role played by incubation centers. The industry’s emerging financial landscape appears to be attracting international venture capital firms, which is surprising, given the country risk and monitoring and control issues that are usually seen as binding constraints to investment. However, these investors use models tested in Silicon Valley and in countries such as India to estimate the potential for increase in the capital valuation of digital businesses in Pakistan. This development has also started to attract local investors. As a result, we are seeing the emergence of a venture capital industry in Pakistan. Finally, we examine the policy environment in the country and find that the existing tax policies, which were designed for traditional businesses, could be a major obstacle to the growth of the digital economy. We conclude by recommending that the government review its tax policy in view of the different nature of digital businesses and adapt it accordingly.

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Investigating the Motivations of VC Syndication in China --- Do Chinese Leading VC Firms Make a Difference in Terms of Syndication Decisions

International Journal of Economics and Finance ◽

10.5539/ijef.v8n6p78 ◽

2016 ◽

Vol 8 (6) ◽

pp. 78

Author(s):

Yi Tan ◽

Xiaoli Wang

Keyword(s):

Venture Capital ◽

Medium Size ◽

Policy Makers ◽

Developed Markets ◽

Business Environments ◽

Political Environments ◽

Lower Likelihood ◽

Chinese Policy ◽

Venture Capital Firms ◽

The Impact

The venture capital industry in China is quickly evolving and becoming more and more important in the development of small and medium-size companies in China. Venture capital firms usually invest in young private transactions which are usually involved with high risk. In addition, the legal and political environments in China are significantly different from those in the developed markets and at the same time, China is undergoing significant changes of business environments, which brings even more challenges to the VC firms in China’s market. Under these challenges, syndication has become a very popular investment method for the VC companies to diversify their investment risks. In this paper, we explore the various factors that might influence the motivation of VC firm’s syndication decisions in China’s market and especially focus on the impact of the firm’s Chinese ownership. We believe that VC firms’ Chinese ownership has a significant influence on the firm’s decision for syndication investment and our empirical analysis confirms this. We find that Chinese VC firms have a significantly lower likelihood to make syndicated investment than their foreign counterparties. We also explore the interactions between the firms’ Chinese ownership and other influencing factors to investigate their joint impacts on the syndication likelihood. We believe our study will provide a better and thorough understanding about the VC firms’ syndication behavior in China’s market and thus will offer significant values to Chinese policy makers in terms of their efforts to promoting VC development in China.

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Success in Global Venture Capital Investing: Do Institutional and Cultural Differences Matter?

Journal of Financial and Quantitative Analysis ◽

10.1017/s0022109014000568 ◽

2014 ◽

Vol 49 (4) ◽

pp. 1039-1070 ◽

Cited By ~ 91

Author(s):

Rajarishi Nahata ◽

Sonali Hazarika ◽

Kishore Tandon

Keyword(s):

Venture Capital ◽

Cultural Differences ◽

Emerging Economies ◽

Cultural Distance ◽

Legal Rights ◽

Liability Of Foreignness ◽

Developed Economies ◽

Portfolio Company ◽

Developed Stock Markets ◽

The Impact

AbstractWe analyze the impact of institutional and cultural differences on success in global venture capital (VC) investing. In both developed and emerging economies, superior legal rights (and enforcement) and better developed stock markets significantly enhance VC performance. Remarkably, cultural distance between countries of the portfolio company and its lead investorpositivelyaffects VC success. Further analysis reveals that cultural differences create incentives for rigorous ex ante screening, improving VC performance. Finally, local VC participation enhances success and mitigates foreign VCs’ “liability of foreignness,” albeit only in developed economies. Our findings follow from analyzing VC investments in nearly 10,000 companies across 30 countries.

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Optimization of the System of Monitoring the Effectiveness of Venture Investments

International Journal of Recent Technology and Engineering - 2 ◽

10.35940/ijrte.d7727.118419 ◽

2019 ◽

Vol 8 (4) ◽

pp. 2145-2150

Keyword(s):

Research And Development ◽

Venture Capital ◽

Private Equity ◽

Numerical Data ◽

Advanced Manufacturing Technologies ◽

Innovative Products ◽

Venture Capital Firms ◽

Manufacturing Technologies ◽

High Level ◽

The Impact

The paper discusses real examples of venture capital firms that have reached a high level, as well as start-ups that have not yet managed to become mature companies. The paper presents statistical data on venture investments in the form of tables and graphs for clarity and simplification of the perception of numerical data. The process of evaluating venture capital enterprises is described, which allows you to decide to invest money in a project or abandon such a decision. In the course of the research, scientific, comprehensive literature, periodical informational publications, and Internet resources of various types were used: websites of venture funds, Internet blogs of famous business angels, research articles on venture investment. The choice of diverse literature made it possible to approach the questions of research critically, which helped to ensure an independent assessment. Besides, scientific calculations were used from related fields - marketing, economic psychology, management, which allowed us to consider the topic from different angles, illuminating the subject and object of research from new perspectives. The economic and mathematical model for assessing the impact of venture network actors on the commercialization of innovative products at the regional level consists of the following indicators: advanced manufacturing technologies used; volume of innovative goods, works, services; the number of personnel engaged in research and development; grant of patents; amount of investment; domestic current expenditure on research and development; share of investments in 1 private equity and venture capital fund; share of expenses of the first organization for research and development.

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