Abstract
Due to the importance of venture capital (VC) firms in spurring regional economic growth, the geography of VC firms and VC investments have attracted a lot of attention. However, the spatial patterns of cross-regional VC flows have rarely been explored, particularly in the context of emerging economies. Drawing on a unique dataset on VC firms and investments related to domestic initial public offerings (IPOs), this study combines location analysis with network analysis to investigate the spatial patterns of VC activities in China. The results confirm that Beijing, Shenzhen and Shanghai are the leading VC centres in the country. Although Yangtze Delta Area hosts the largest number of investments, Beijing and Shenzhen have a considerable advantage over Shanghai in terms of the number of VC firms, investments, and the number of domestic VC-backed IPOs. Beijing and Shenzhen also appear more central than Shanghai in China’s VC networks, with Beijing-Shenzhen representing the most important city-dyad in terms of VC investment flows. The article explains how the dynamics of the VC centres is embedded in China’s institutional and cultural context, critical to understanding the evolution and geography of China’s VC industry.
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