Exploring the Impact of Government Venture Capital (GVC) on Private Venture Capital (PVC) Investment Choices in China's Semiconductor Industry

Abstract

Can government venture capital (GVC) change the investment choice of private venture capital (PVC) to fulfill its political mission? Most of the previous literatures on GVC and PVC focus on the post venture capital (VC), while there are few studies on the impact of GVC on PVC before venture capital investment. This phenomenon is more obvious in previous studies with China as the research background. Based on the background of China's semiconductor industry, which is strongly supported by the Chinese government, this paper studies whether GVC can affect the investment niche and venture capital investment mode of PVC. Through empirical analysis of the VC data of semiconductor industry in Anhui, Beijing, Jiangsu and Guangdong provinces from 2012 to 2022, I found that in the semiconductor venture capital market of the above four provinces and cities, GVC effectively played a role of leverage and effectively attracted PVC to invest in the semiconductor industry. And as the number of semiconductor GVC data as a percentage of all semiconductor VC data continues to decline year after year, PVC is more inclined to invest in semiconductor R&D firms, and more inclined to invest the firms whose location has served as a target region for government semiconductor related guided funds, and the investment form of PVC is more inclined to syndicate investment with government venture capitalists. It can be said that GVC has effectively influenced the investment decisions of PVC and fulfilled its political mission of promoting the independence of technology and production in China's semiconductor industry.