Specialization and Performance: Evidence from Chinese Venture Capital Funds

Venture capital (VC) is honored as the "engine for economic growth". However, Chinese VC funds' investment performance varies from each other greatly. This paper uses the sample of 73 VC funds' investment data from 2001 to 2011 in China, and attempts to examine the impact of specialization strategy on investment performance, especially the industry specialization and stage specialization. By performing correlation analysis, hierarchical regression analyses and robustness test, we finally get the conclusion that: (i) specialization in industry has a remarkable positive impact on VC performance; (ii) the interaction of stage specialization and VC funds' age has a significant negative correlation with VC performance; (iii) performance of the VC funds located in Beijing, Shanghai, Guangzhou and Shenzhen are higher than those in other regions. Finally, some suggestions are provided based on these results.