The Lower Level of Risk Tolerance of Chinese Domestic Venture Capitalists

Lin Zhang
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Lin Zhang: Shandong University of Technology

Chapter Chapter 6 in Venture Capital and the Corporate Governance of Chinese Listed Companies, 2024, pp 91-106 from Springer

Abstract: Abstract From the third chapter to the fifth chapter, they collectively analyzed the defects in the entire cycle of Chinese domestic VCs with the practice template of American ones. More significantly, on the basis of this analysis, the assumption that those disadvantages of Chinese domestic VCs are at least loosely ascribed to the institutional impediments imposed by the control-based model of Chinese state-controlled listed companies has been proved. This chapter will attempt to explain their different performance through the perspective of risk tolerance. As it has been repeatedly indicated in this book, the investment targets of VCs ought to be high-technology startups with high risks as well as high returns. Therefore, high-risk tolerance should be an essential quality of real venture capitalists. Correspondingly, it should also be a valid factor that affects the performance of the VC sector. In this aspect, the existing research has already established the linkage between the prosperity of the American VC industry and the more remarkable risk tolerance of American venture capitalists. Thus, in order to more thoroughly assess the reasons for the distance between American VCs and Chinese domestic ones, it is meaningful to make a comparison of the risk tolerance of their respective venture capitalists based on empirical evidence. More importantly, this comparison provides clues to explore whether or not the control-based model has passive influences on the quality of Chinese domestic venture capitalists.

Date: 2024
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DOI: 10.1007/978-3-030-67572-1_6

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