From “Super App” to “Super VC”: The value-added effect of China's digital platforms

Jiancheng Wang and Xiaoye Li

Finance Research Letters, 2023, vol. 54, issue C

Abstract: This paper studies China's big digital platforms’ value-added effect as venture capitalists, using a dataset of companies registered in China that eventually reach the initial public offering stage. We find that China's digital platforms’ investments positively affect their portfolio firms’ IPO performance, in terms of higher IPO valuation, lower underpricing, and shorter time to reach the IPO stage, which is inconsistent with the grandstanding hypothesis. The plausible underlying channels are the certification and monitoring roles played by China's digital platform. The results remain robust after addressing several concerns. Our study sheds new light on VCs’ characteristics and digital platforms’ activities.

Keywords: Digital platforms; New ventures; Venture capital; Value adding; IPO performance (search for similar items in EconPapers)
JEL-codes: G23 G24 G32 L26 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:54:y:2023:i:c:s1544612323001460

DOI: 10.1016/j.frl.2023.103773

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