Syndicate partner composition of governmental venture capital firms: Evidence from China

This paper examines the syndicate partner composition of governmental venture capital firms (GVCs), focusing on whether GVCs are more likely to partner with other GVCs or private venture capital firms (PVCs), the mechanisms driving this composition, and the impact of partner composition on GVC investment performance. Based on data from China, we find that GVCs disproportionately partner with other GVCs when initiating an investment. Mechanism analysis shows that relational ties and aligned investment preferences are important reasons for GVCs' tendency to have other GVCs as partners. However, GVC-led syndicate investments with more GVC partners perform worse than those with more PVC partners. These results remain consistent across a series of robustness tests. Our research contributes to the burgeoning literature on GVCs and VC syndicate partner selection, and has important policy implications for venture capital industries around the world.