Who are responsible venture capitalists? The effect of business experience

Abstract

Using 891 venture capitalist- and 1777 deal-level samples of China, we find that venture capitalists with business experience significantly promote their portfolio-firm's corporate social responsibility (CSR) performance better than those without business experience. To explore the mechanisms, we perform DID test and heterogeneity analysis. First, we find venture capitalists with business experience increase the CSR performance of firms in hazardous industries following a shock that raised awareness of CSR, which indicates that the venture capitalists have more social consciousness. Second, the effects of business experience on CSR are stronger if venture capitalists invest in earlier stages of firms or have greater equity ownerships, in which cases the venture capitalists have more and better opportunities to display their abilities in CSR activities. Overall, our findings highlight the effects of venture capitalists' human capital on sustainable investments.