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Title: Three essays in venture capital
Author: Wang, Fan
Awarding Body: University of Manchester
Current Institution: University of Manchester
Date of Award: 2015
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This thesis examines various issues related to venture capital (VC) firms. The thesis consists of three essays that try to answer the following questions: Do local VC firms benefit from their syndication experience with foreign partners? Do VC firms benefit from their directorships in mature public companies? What do we know about the failure of VC firms? The first essay examines the benefits of cross-border syndication to ‘local’ (in the context of the first essay, Asian) VC firms. The main finding is that, post-syndication, local VC firms invest more in the high-tech industry than they did pre-syndication. I interpret this as a result of enhanced knowledge and confidence in assessing and taking on rather risky investments. Further, local VC firms have a higher likelihood of successful exits from their portfolio companies post-syndication. I interpret these results as being benefits to local VC firms that they derive from syndicating with their foreign partners. Overall, my results indicate that there are tangible benefits for local VC firms from syndicating with international VC partners. These benefits are more pronounced when the foreign partners are from North America or Europe. The second essay examines the benefits to venture capital firms through their directorships in mature public companies. I investigate the benefits to venture capital firms in terms of fundraising and investment performance. First, my empirical results show that venture capital firms raise more funds and set higher fund-raising targets during the post-directorship period. Second, I show that venture capital firms are more likely to exit successfully from their investments post-appointment as a board of director in an S&P 1500 company. Overall, my results indicate that being on the board of mature public companies brings tangible benefits to venture capital firms. The third essay examines the failure of VC firms. Based on a sample of 2,752 VC firms in the United States established between 1980 and 2004, the study finds that almost one-third of VC firms in the sample had gone out of business by the end of 2014. I then investigate the causal factors of VC firm failure. Specifically, I examine VC characteristics (location and year of incorporation) and factors related to VC activities (fundraising, investments, and exits). The empirical results show that VC firms with a higher level of failure tolerance and risk appetite are more likely to fail, whereas VC firms with better fundraising abilities and stronger control rights are less likely to do so.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available