Venture Capital (VC) capital operation refers to the allocation of capital to start-upcompanies by setting up funds, raising capital and equity investment, so as to realizecapital appreciation mainly through equity transfer when the venture enterprises aremature or relatively mature. The reputation of venture capital institutions refers to theperception of institutional profitability and resource capability by stakeholders, that is,venture capital companies create value for investors and bring resources to theirinvestment projects. The reputation depends largely on the past performance of theorganization. Many studies in financial literature have examined the importance ofreputation of financial intermediaries (people or institutions who act as intermediariesor bridges between the suppliers and suppliers of funds in the process of financing infinancial markets). As an important financial intermediary, venture capital institutionsare also the focus of theoretical and practical circles.
Venture capital research mainly involves three subjects: venture investors(including limited partners and general partners), venture capital institutions andventure enterprises. From the theoretical point of view, the research on venture capitalin China started relatively late. The research on the impact of reputation of venturecapital mainly focuses on the IPO and development performance of the investedenterprises. The research on the impact of reputation of venture capital on theoperation and allocation of venture capital institutions is less. For this reason, thispaper collects relevant data from 2000-2017 from private equity database, mainlychoosing two directions of capital raising and industry selection when allocatingfunds to study the impact of reputation of venture capital institutions on their capitaloperation.
The empirical results show that the reputation of venture capital has a significantpositive impact on the size of fund raising, the reputation of venture capital has asignificant positive impact on the number of industry categories of investment targets,and the institutions with good reputation of venture capital tend to invest in emergingindustries. Finally, this paper analyses the advantages of reputation to fund operationand the risks of venture capital institutions, and puts forward some suggestions on thecorresponding agency problems.
Keywords：venture capital, reputation, information asymmetry, fund raising,investment preference