Independent Venture Capital, Size and Structure of Firms' Portfolio: Comparative Study from Some Cases in Mainland China

Abstract

Through all coverage survey and comparative analysis on VC funds in mainland China, some evidence findings are as follows in this paper. Firstly, these facts about the average size (number) and entrepreneurs (enterprise management teams) ownership percentage of firms' portfolios of VC funds invested in mainland China, are consistent with theorem in the VC literature. The portfolio firms' number or entrepreneurs' profit share of government-sponsored VC funds is higher than other funds in China, which is wholly consistent with theory proposition in the VC literature and the evidence in Canada. Secondly, entrepreneurs' ownership percentage is less obviously with no more than 40% equity compared with Western Countries. This might be related with the majority of VC engaged in similar PE business or the later stage of firms-invested in mainland China. Finally, holding periods of firms by the funds invested in mainland China, are even shorter than in Western Countries; Meanwhile, the ratios of seeds to total projects by all funds are simple arithmetic average of less than 5%. All these signal: VC in the traditional classic sense being the majority of similar PE business in mainland China.