Improving the performance of governmental venture capital firms: Reforms at Shenzhen Capital Group

Yuejia Zhang

Journal of Small Business Management, 2021, vol. 59, issue 2, 249-279

Abstract: This paper documents how Shenzhen Capital Group (SCG) tackled agency problems faced by governmental venture-capital firms (GVCs) by adopting an expansion strategy and undertaking a series of reforms in its compensation scheme and decision-making process. Empirical results show that after SCG’s reforms, portfolio companies funded by SCG or a SCG-led syndicate were more likely to achieve successful exits through IPO or M&A than those financed by other GVCs. This paper provides evidence and a live example of how GVCs can effectively mitigate agency problems to achieve better performance.

Date: 2021
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DOI: 10.1080/00472778.2020.1849713

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