Download or read book Three Essays on the Performance Determinants of Venture Capital Industry written by Miona Milosevic and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Venture capital is crucial for funding and development of young innovative ventures. The French venture capital industry figures among the most important in Europe, however, its performance remains negative, underperforming both the US and the average European market. Since the 2008 financial crisis, banks and insurance companies, which used to be principal investors, have abandoned venture capital industry, mainly due to unfavorable regulatory changes (Basel III and Solvency II). To fill this gap, the government has increased its intervention, and direct funds and tax incentives have now become the principal sources of funding in the venture capital industry. Besides, French business environment also represents an exception compared to other developed economies due to tight relations between the State and the business sector, concentration of the public and corporate power in the hands of actors mainly educated in highly elitist education institutions, which are also well known for their powerful networks. Our aim was, first, to study the underperformance of the venture capital industry though a holistic lens, and then test quantitatively how different elements of human and social capital relate to performance measures, such as portfolio exits, fundraising and syndication. We find specificities of the French venture capital market, the dominance of banking and finance professionals and prevailing government funding and incentives, to hamper the process of expertise acquisition. We further show how task-specific innovation and investment human capital contribute positively to value adding, by raising funds from syndicate partners in follow-on rounds, and exiting, even in an environment characterized by dominant networks. However, we also provide evidence that in a market with strong government intervention and networks, human capital characteristics determining the exit performance are not associated with higher capital commitments. Instead, our research points out to the importance of social networks for fundraising activity, where connections and favoritism lead to inefficiencies in capital allocation.