Abstract
As a key driver of innovation and entrepreneurship, venture capital firms play an important role in building innovation cities. Based on the listed companies in ChiNext market of Shenzhen Stock Exchange in China between 2009 and 2011, this paper examines the impact of venture capital firms’ co-investment behavior on investees’ fundraising capacity in IPO Markets. Empirical results show that co-investment behavior of venture capital firms indeed enhance the investee’s fundraising capacity, however, the number of venture capital firms introduced by it is not the more, the better, if the entrepreneur wants to raise more capital in IPO markets. The optimal choice for the company is to introduce four venture capital firms in order to raise larger amounts of capital in the IPO process. This paper also reveals the reason for the phenomenon of excess fundraising of IPO companies in the ChiNext market from the perspective of co-investment behavior of venture capital firms.
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