Abstract:

In order to enhance investment information superiority of the venture capital firm. we collect joint venture investment data in China during year the 2000~2013, and empirically analyze the relationship between the network embeddedness of a venture capital firm and the formation of venture capital alliance at the initial stage of venture capital development. The results show that the leader faces adverse selection problem when choosing partners. In addition, the leader hardly relies on its industry influence to raise followers threshold of joining the alliance when opening up investment areas. Finally, the opportunity of the follower joining the alliance is independent of the scale of joint investment.

Key words: information economics, venture capital alliance, network embeddedness, investment value chain