主题： The Spillover Effects of Foreign Venture Capital Firms’ Penetration: Evidence from Europe
Suting Hong is an assistant professor at School of Entrepreneurship and Management of ShanghaiTech University. Her research interests lie in entrepreneurial finance, innovation, and consumer finance. Her recent work examines how competition in the venture capital market affects success of start-ups, and how government-backed innovation competitions affect the development of start-ups. Professor Hong received her B.A. in Finance from Nanjing University in China and her Ph.D. in Economics from Drexel University.
We study the spillover effects of foreign venture capital (VC) firms’ penetration on the performance of start-ups backed by domestic VC firms. Using comprehensive data of VC investments in Europe, we find that, as a domestic VC firm acquires more syndication experience with foreign VC firms, the likelihoods of successful exits significantly improve for start-ups subsequently funded by the domestic VC firm. Such positive effects on success rates are stronger for domestic VC firms with lower connectedness status in the domestic VC market. The results are robust to controlling for the endogeneity of syndication experience with foreign VC firms. Our findings provide evidence for a learning mechanism by domestic VC firms through syndication with foreign VC firms, and suggest the importance of opening-up domestic markets to exploit the positive effects of foreign VC firms’ penetration.