How Venture Capital Influences High-tech Enterprises’ IPO: External Factors versus Internal Growth

Abstract

There is huge potential for China to transform and upgrade its traditional manufacturing sector, and high-tech enterprises in manufacturing industries stand out. This study contributes to the literature on how venture capital affects technology-based Enterprises’ IPO by evaluating the characters between the two parties.  According to the symmetric information theory, certification theory and enterprise property rights theory, the first round of risk financing enterprises from 2010 to 2019 is taken as a research sample to empirically analyze the impact of venture capital and corporate growth on firm listing events. The results show that the investment experience of venture capital institutions, when matched appropriately to firms’ specific growth, will facilitate and accelerate the IPO process. Thus the matching degree between the two are significantly positively related to the company's IPO. Under the premise of low growth of the company, venture capital has a significant impact on the listing of the company. As the growth of the company increases, the impact of venture capital on the listing of the company is gradually reduced. Venture capital institutions with overseas backgrounds are more inclined to promote the IPO of invested international companies. Finally, we discuss the implications based on the results of the empirical analysis, and make suggestions for venture capital institutions and companies.