VENTURE CAPITAL CROSS-INVESTMENT NETWORK COMMUNITY MOVEMENT AND INVESTMENT PERFORMANCE

In this paper, we investigate the impact of cross-network-community movement on venture capital investment performance in China.We mainly focus on two research questions: (1) what is the relationship between the agglomeration of investment network communities and the venture capital companies' investment performance?Specifically, we tested our hypothesize that whether information redundancy caused by excessive agglomeration inhibits the venture capital companies' performance; 2) In order to obtain new resources, venture capital companies commonly do cross-community movements, and we are trying to find out what is the impact of agglomeration movements on investment performance.Using the sample of the early joint investment events of venture capital institutions in China from 2003 to 2018, our research shows that: (1) there is an inverted U-shaped relationship between the agglomeration of investment networks and investment performance; (2) there is a significant positive correlation between crossinvestment network community mobility and investment performance of venture capital institutions.However, when the number of movements reaches a certain level, then there is a significant negative correlation between the number of movements and investment performance.We argue that frequent movements across networks will increase the cost of forming relationships, thus will weaken the investment performance of the venture capital companies.