Essays on Venture Capital Investment
The thesis focuses on Venture Capital (VC) investments. This thesis contributes to the VC literature and advances the understanding of venture capital by shedding light on the interplay between VC local experience and geographic distance on investment decisions and partnership performance, impact of...
| Main Author: | |
|---|---|
| Format: | Thesis (University of Nottingham only) |
| Language: | English |
| Published: |
2023
|
| Subjects: | |
| Online Access: | https://eprints.nottingham.ac.uk/76503/ |
| _version_ | 1848800910050852864 |
|---|---|
| author | WU, Changjian |
| author_facet | WU, Changjian |
| author_sort | WU, Changjian |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | The thesis focuses on Venture Capital (VC) investments. This thesis contributes to the VC literature and advances the understanding of venture capital by shedding light on the interplay between VC local experience and geographic distance on investment decisions and partnership performance, impact of VC diversification strategies, and the role of VC monitoring in enhancing director accountability.
In the first chapter, we investigate the interplay between VC local experience, geographic distance, and their influence on investment decisions and subsequent partnership performance. Leveraging hand-collected data on first-time VC investments in biotechnology firms worldwide, observed over the period from 2010 to 2019, we examine how VC local investment experience moderates the negative relationship between geographic distance and the likelihood of engaging in later-stage investments. Surprisingly, while VC local experience does moderate investment decisions, it does not seem to foster follow-on funding and successful exits in partnerships involving geographically distant VCs and portfolio firms. The results are robust to a series of sensitivity and endogeneity tests, shedding light on the nuanced dynamics of VC experience and geographic distance in the VC investment landscape.
After examining how VC investment decisions are influenced by geographic distance, the second chapter delves into the impact of VC diversification strategies on the operational and financial performance of portfolio firms. Using a hand-collected panel data set comprising 401 VC-funded UK companies observed over the period from 2009 to 2019, we examine the influence of VC expertise gained from prior active investments compared to the coordination costs associated with concurrent active investments in firms with diverse business activities. The results highlight that expertise obtained from VCs' diverse prior experiences positively correlates with portfolio firms' performance. Conversely, coordination costs from VCs' concurrent diversification show a negative association with portfolio firms' performance.
In the third chapter, we focus on the impact of VC monitoring on director accountability within portfolio firms. Through an empirical analysis of a sample of UK companies observed over the 2009-2019 period, we explore whether director turnover is more sensitive to firm performance in firms backed by VC compared to those without VC support. The findings consistently demonstrate higher director turnover in VC portfolio firms experiencing lower performance and growth. Our results remain robust when considering alternative performance measures and estimation methods, suggesting that VCs contribute to enhancing director accountability for portfolio firm performance.
Key words: venture capital, VC diversification, portfolio firms, VC monitoring, director turnover, geographic distance, investment stage decision, VC local experience. |
| first_indexed | 2025-11-14T20:59:04Z |
| format | Thesis (University of Nottingham only) |
| id | nottingham-76503 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T20:59:04Z |
| publishDate | 2023 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-765032025-06-02T08:52:05Z https://eprints.nottingham.ac.uk/76503/ Essays on Venture Capital Investment WU, Changjian The thesis focuses on Venture Capital (VC) investments. This thesis contributes to the VC literature and advances the understanding of venture capital by shedding light on the interplay between VC local experience and geographic distance on investment decisions and partnership performance, impact of VC diversification strategies, and the role of VC monitoring in enhancing director accountability. In the first chapter, we investigate the interplay between VC local experience, geographic distance, and their influence on investment decisions and subsequent partnership performance. Leveraging hand-collected data on first-time VC investments in biotechnology firms worldwide, observed over the period from 2010 to 2019, we examine how VC local investment experience moderates the negative relationship between geographic distance and the likelihood of engaging in later-stage investments. Surprisingly, while VC local experience does moderate investment decisions, it does not seem to foster follow-on funding and successful exits in partnerships involving geographically distant VCs and portfolio firms. The results are robust to a series of sensitivity and endogeneity tests, shedding light on the nuanced dynamics of VC experience and geographic distance in the VC investment landscape. After examining how VC investment decisions are influenced by geographic distance, the second chapter delves into the impact of VC diversification strategies on the operational and financial performance of portfolio firms. Using a hand-collected panel data set comprising 401 VC-funded UK companies observed over the period from 2009 to 2019, we examine the influence of VC expertise gained from prior active investments compared to the coordination costs associated with concurrent active investments in firms with diverse business activities. The results highlight that expertise obtained from VCs' diverse prior experiences positively correlates with portfolio firms' performance. Conversely, coordination costs from VCs' concurrent diversification show a negative association with portfolio firms' performance. In the third chapter, we focus on the impact of VC monitoring on director accountability within portfolio firms. Through an empirical analysis of a sample of UK companies observed over the 2009-2019 period, we explore whether director turnover is more sensitive to firm performance in firms backed by VC compared to those without VC support. The findings consistently demonstrate higher director turnover in VC portfolio firms experiencing lower performance and growth. Our results remain robust when considering alternative performance measures and estimation methods, suggesting that VCs contribute to enhancing director accountability for portfolio firm performance. Key words: venture capital, VC diversification, portfolio firms, VC monitoring, director turnover, geographic distance, investment stage decision, VC local experience. 2023-12-14 Thesis (University of Nottingham only) NonPeerReviewed application/pdf en cc_by https://eprints.nottingham.ac.uk/76503/1/CHANGJIAN%20WU-20181974-thesis.pdf WU, Changjian (2023) Essays on Venture Capital Investment. PhD thesis, University of Nottingham. venture capital investment decisions business accountability VC diversification portfolio firms VC monitoring director turnover geographic distance investment stage decision VC local experience. |
| spellingShingle | venture capital investment decisions business accountability VC diversification portfolio firms VC monitoring director turnover geographic distance investment stage decision VC local experience. WU, Changjian Essays on Venture Capital Investment |
| title | Essays on Venture Capital Investment |
| title_full | Essays on Venture Capital Investment |
| title_fullStr | Essays on Venture Capital Investment |
| title_full_unstemmed | Essays on Venture Capital Investment |
| title_short | Essays on Venture Capital Investment |
| title_sort | essays on venture capital investment |
| topic | venture capital investment decisions business accountability VC diversification portfolio firms VC monitoring director turnover geographic distance investment stage decision VC local experience. |
| url | https://eprints.nottingham.ac.uk/76503/ |