Unveiling the Double‐Edged Sword: Assessing the Impact of Venture Capital Market Competition on Startup Success in China
研究利用中国风险投资市场数据，发现市场竞争阻碍了优质创业企业与风投的匹配，降低了其成功概率，但对低质量企业无显著影响，且在高科技行业中负面效应减弱。
ABSTRACT This paper investigates the influence of venture capital (VC) market competition on startup success using data from the Chinese VC market. By employing Bartik instrumental variables and the Heckman–Sørensen two‐step method to tackle endogeneity, we demonstrate that VC competition hampers the matching process between high‐quality startups and VCs, while promoting larger VC syndication. The adverse effects of VC competition on high‐quality startups result in a negative correlation with their probability of success. Moreover, our supplementary analysis reveals that the negative effects of VC competition on the success of high‐quality startups are attenuated within high‐tech industries. Conversely, VC market competition does not exhibit a significant impact on low‐quality startups. Consequently, policymakers face the challenge of striking a balance between fostering a competitive VC market and ensuring startup success.