Foreign venture capitalists and the internationalization of entrepreneurial companies: Evidence from China

Abstract

We use a comprehensive database of venture-capital-backed companies from China to test whether and how foreign venture capitalists (VCs) can facilitate international initial public offerings of entrepreneurial companies. Foreign VCs increase the likelihood that a portfolio company will list on a foreign exchange and use a top lawyer, banker, or accountant when doing so. The propensity to list overseas is moderated by the number of venture backers, the fund's size, and governance in the domestic market. Foreign VCs encourage foreign listings in domestic-backed companies. We take steps to address sample selection and endogeneity concerns. Overall, we show that foreign VCs encourage internationalization in entrepreneurial companies.