Do local and international venture capitalists play well together? The complementarity of local and international venture capitalists

Thomas Chemmanur, Tyler J. Hull and Karthik Krishnan

Journal of Business Venturing, 2016, vol. 31, issue 5, 573-594

Abstract: We find that entrepreneurial firms in emerging nations backed by syndicates composed of international and local venture capitalists have more successful exits and higher post-IPO operating performance than those backed by syndicates of purely international or purely local venture capitalists. We control for the potential endogenous participation and syndication by international VCs using instrumental variables analyses and a natural experiment and find a causal effect of international VC participation on successful outcomes. International VCs face disadvantages in their investments due to the lack of proximity to the entrepreneurial firm. Using air service agreements between countries as an exogenous change in effective proximity, we find that entrepreneurial firms backed by international VCs are more successful when travel becomes easier between the two countries. Overall, our results indicate that the greater venture capital expertise of international venture capitalists and the superior local knowledge and lower monitoring costs of local venture capitalists are both important in obtaining successful investment outcomes.

Keywords: Venture capital; Cross border investments; Complementarity; Local venture capital; International venture capital (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0883902616300313
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:31:y:2016:i:5:p:573-594

DOI: 10.1016/j.jbusvent.2016.07.002

Access Statistics for this article

Journal of Business Venturing is currently edited by S. Venkataraman

More articles in Journal of Business Venturing from Elsevier
Bibliographic data for series maintained by Catherine Liu ().