Mitigating information asymmetry to acquire venture capital financing for digital startups in China: The role of weak and strong signals

Yang, Yuxue; Fang, Yulin; Wang, Nianxin; Xiang, Song

doi:10.1111/isj.12452

Cited by 7 publications

(2 citation statements)

References 113 publications

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“…These insights carry valuable practical implications regarding how the VC ecosystem can scale funding and engagement with frontier technologies like AI that will shape future markets. Second, while prior entrepreneurial finance research has analyzed various mechanisms that aid VCs in surmounting information asymmetries [5,6,43], limited scholarly attention has delved into network-related remedies in the context of uncertain, rapidly evolving technologies like AI. Syndication networks represent a conduit through which VCs can tap into distributed knowledge and expertise, illuminating the merit of unfamiliar startups [24,44,45].…”

Section: Introductionmentioning

confidence: 99%

Overcoming Uncertainty in Novel Technologies: The Role of Venture Capital Syndication Networks in Artificial Intelligence (AI) Startup Investments in Korea and Japan

Hyun,

Kim

2024

Systems

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This paper investigates how historical inter-firm syndication networks influence venture capitalists’ (VCs) propensity to invest in startups pursuing novel, uncertain technologies, with a focus on artificial intelligence (AI). We theorize that VCs’ positional attributes within cumulative syndication networks determine their access to external expertise and intelligence that aid AI investment decisions amidst informational opacity. Specifically, reachability to prior AI investors provides referrals and insights transmitted across short network paths to reduce ambiguity. Additionally, VC brokerage between disconnected industry clusters furnishes expansive, non-redundant information that is pivotal for discovering and assessing AI opportunities. Through hypotheses grounded in social network theory, we posit network-based mechanisms that equip VCs to navigate uncertainty when engaging with ambiguous innovations like AI. We test our framework, utilizing comprehensive historical records of global venture capital investments. Analyzing the location information of VC firms in this database, we uncovered a history of 14,751 investments made by Korean and Japanese firms. Using these data, we assembled an imbalanced panel dataset from 1984 to 2022 spanning 230 Korean and 413 Japanese VCs, with 4508 firm-year observations. Negative binomial regression analysis of this dataset reveals how historical relational patterns among venture capital firms foster readiness to evaluate unfamiliar innovations.

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Section: Introductionmentioning

confidence: 99%

Overcoming Uncertainty in Novel Technologies: The Role of Venture Capital Syndication Networks in Artificial Intelligence (AI) Startup Investments in Korea and Japan

Hyun,

Kim

2024

Systems

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“…In the second article, Yang et al (2023) explore how weak and strong signals affect venture capital funding acquired by digital startups in various industries in China. Drawing on signalling theory and institutional legitimacy theory, the authors suggest that application downloads function as a novel strong signal that can reduce market legitimacy concerns, and previous-round venture capitalist reputation as a traditional strong signal that mitigates regulatory legitimacy concerns.…”

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confidence: 99%

Quirks, neologisms, provocations and the mundane: Titles and interpretations

Davison

2023

Information Systems Journal

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As editor, I get to read a lot of titles, the vast majority of which, alas, we do not end up publishing. In this editorial, I would like to reflect briefly on the nature of titles and their effectiveness in conveying a quick message to a potential reader.Throughout the course of my career, I cannot ever recall seeing any advice about how to create a title for a research paper. Titles in general are meaningful and give some clues as to the content of the article that follows.Sometimes we see a title that really catches the eye, that inspires, or even that disgusts, depending on our individual taste. Here is an example of a title of a paper that, regrettably, we did not publish: 'Rat Swarm Pelican Based Deep Learning And Sequence Mining For Web Page Recommendation'. How do you feel about that? The first three words alone may suffice to turn you on or off. Why the authors thought that the article might be suitable for the ISJ is another matter, but the title alone has a certain unique quality that might seduce or repel you. Thus, just as the creation of a title is a subjective process, so too is the interpretation of a title. But there are some aspects of a title that are worth examining a little more carefully. For instance, we can look at length, depth, comprehensibility, suitability and so forth. In the paragraphs below, I offer some recent ISJ titles and my own analysis. My purpose is to alert readers to the potential for value in a title, and to gently suggest that the creation of a title is itself an art that is worth examining and practicing carefully.At one extreme, I have seen titles that are almost as long as the abstract. These often tend to mundane description rather than creative quirkiness. The longer titles often have two parts, separated by a dash or colon. It seems that the authors want to cram into the title as many parts of the study as possible, including in some cases a list of all the moderating and mediating variables. This is probably effective both in conveying the substance of a paper to potential readers, and in lengthening one's cv by a line or two. But is it really necessary? Could one devise a more frugal title that is nevertheless attractive to potential readers? The longest I can see at the ISJ in recent years is Kranz et al. ( 2016) 'Understanding the influence of absorptive capacity and ambidexterity on the process of business model change: The case of on-premise and cloud computing software'. It is quite comprehensive and certainly provides very clear information to the reader on what to expect in the article. In contrast, the shortest title at the ISJ (excluding editorials) is Clarke's (2016) 'Big Data, Big Risks'. Not only is this short and pithy, but it is also quite provocative and controversial. It may be disliked by those who are enamoured of big data for instance. It seems to embed the personal stance of the researcher. As a title, I think it is quite attractive and it certainly conveys the essence of the article itself. Sometimes, a title has a quirky flavour to it that bor...

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Economic asymmetries and the new “markets of tomorrow”

2023

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This article investigates the differences between the ongoing digital advancements in the market‐based society and the future market‐technology society in the Fourth Industrial Revolution. This article explores the “markets of tomorrow” that embody the production capacity limits of technological progress to respond to socio and economic transformations amid viral threats, digitalization, and sustainable growth development. Examining the digital economy and technological advancement in developed and developing countries is being conducted. Generally, three key factors play a significant role in determining business strategy and development. These are the threat of viral infections, the process of digitalization, and the need for sustainable development. Our findings show that socio‐institutional innovations are present in the current landscape and play a role in guiding suggestions for managing these markets, considering their unique characteristics. The novelty of this article is analyzing the digital divide as a new form of global asymmetry. This is particularly important when there is a growing emphasis on polarization and power relations, especially under the conditions of digital competition in new markets of tomorrow, which the Fourth Industrial Revolution has predetermined.

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Mitigating information asymmetry to acquire venture capital financing for digital startups in China: The role of weak and strong signals

Cited by 7 publications

References 113 publications

Overcoming Uncertainty in Novel Technologies: The Role of Venture Capital Syndication Networks in Artificial Intelligence (AI) Startup Investments in Korea and Japan

Overcoming Uncertainty in Novel Technologies: The Role of Venture Capital Syndication Networks in Artificial Intelligence (AI) Startup Investments in Korea and Japan

Quirks, neologisms, provocations and the mundane: Titles and interpretations

Economic asymmetries and the new “markets of tomorrow”

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