What drives venture capital fund performance?

This study analyses the determinants of the return on Korean venture capital (VC) funds in terms of fund management strategies. In particular, I adopt the quantile regression analysis to identify the heterogeneous effect of a strategy based on the performance level of a fund. As a result of the analysis, it has been shown that to achieve high performance, it is necessary to use instruments to deal with the uncertainty of investment targets and information asymmetry such as stepwise investment, use of conversion securities, syndication. In addition, for very high performance, it is necessary to focus on a certain industry and to include a few companies in the portfolio with large investment. As well, in order to achieve high returns, investing large amount in a small number of portfolios is confirmed to be valid strategy.