RM
R.C. Menten
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Acquiring Chinese Venture Capital as a European High-tech Start-up
An exploratory research into the critical requirements and governmental and economic influences affecting the decision-making of Chinese Venture Capital firms investing in early-stage European High-tech Start-ups
In this research, a literature review is done to create a framework on all current known criteria other countries' VC firms set when selecting a Tech start-up. The framework also includes possible governmental and economic influences that could affect the decision-making of Chinese VC firms. Subsequently, nine in-depth interviews have been held with three different perspectives: Chinese VC firms, European start-ups, and Specialists with an external view on Chinese VC investments in Europe. By conducting interviews, it was possible to get in-depth information on Chinese investments in the past. With this, valuable information on essential criteria for Chinese VC firms when investing in Europe is obtained. After data gathering, transcripts were made, and data were grouped into themes using open coding. Finally, a within-case- and cross-case analysis have been executed to trace possible causal relationships regarding selection criteria of Chinese VC firms on one side and governmental and economic aspects on the other side. Based on the findings of this research, European start-ups can better assess the risks and understand the decision-making of Chinese VC firms investing in Europe. It appears that mainly governmental decisions from China and Europe influence the decision making of Chinese VC firms investing in Europe. Especially Chinese governmental capital requirements need to be considered before investments in European start-ups; however, VC firms try to circumvent the Chinese regulations as far as possible. The influence of the Chinese government comes forward in the fact that: 1. The investment needs to contribute to the Chinese economy 2. The European start-up should not compete with investments in start-ups funded by the Chinese government. In addition, European rules restrict Chinese investors from investing in sensitive technologies, making it increasingly challenging for Chinese investors to invest in specific European sectors. This happens mainly due to the negative coverage of US politics on China. Furthermore, this study has identified criteria Chinese VC firms particularly use when investing in European Tech start-ups. It was found that Chinese VC firms mainly focus on the following categories: 1. experience, personality, and capabilities of entrepreneur and team 2. characteristics of the market 3. characteristics of product 4. financial considerations. More specifically, based on the interviews, a list of 21 selection criteria is found that European start-ups could consider when attracting Chinese VC investments. To conclude, since every investment is unique, and the strategy of VC firms differs, it is good to consider all criteria found in this study, including the criteria found in previous literature of other countries' VC firms to get a better overview on the requirements Chinese VC firms set when investing in European High-Tech start-ups.
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In this research, a literature review is done to create a framework on all current known criteria other countries' VC firms set when selecting a Tech start-up. The framework also includes possible governmental and economic influences that could affect the decision-making of Chinese VC firms. Subsequently, nine in-depth interviews have been held with three different perspectives: Chinese VC firms, European start-ups, and Specialists with an external view on Chinese VC investments in Europe. By conducting interviews, it was possible to get in-depth information on Chinese investments in the past. With this, valuable information on essential criteria for Chinese VC firms when investing in Europe is obtained. After data gathering, transcripts were made, and data were grouped into themes using open coding. Finally, a within-case- and cross-case analysis have been executed to trace possible causal relationships regarding selection criteria of Chinese VC firms on one side and governmental and economic aspects on the other side. Based on the findings of this research, European start-ups can better assess the risks and understand the decision-making of Chinese VC firms investing in Europe. It appears that mainly governmental decisions from China and Europe influence the decision making of Chinese VC firms investing in Europe. Especially Chinese governmental capital requirements need to be considered before investments in European start-ups; however, VC firms try to circumvent the Chinese regulations as far as possible. The influence of the Chinese government comes forward in the fact that: 1. The investment needs to contribute to the Chinese economy 2. The European start-up should not compete with investments in start-ups funded by the Chinese government. In addition, European rules restrict Chinese investors from investing in sensitive technologies, making it increasingly challenging for Chinese investors to invest in specific European sectors. This happens mainly due to the negative coverage of US politics on China. Furthermore, this study has identified criteria Chinese VC firms particularly use when investing in European Tech start-ups. It was found that Chinese VC firms mainly focus on the following categories: 1. experience, personality, and capabilities of entrepreneur and team 2. characteristics of the market 3. characteristics of product 4. financial considerations. More specifically, based on the interviews, a list of 21 selection criteria is found that European start-ups could consider when attracting Chinese VC investments. To conclude, since every investment is unique, and the strategy of VC firms differs, it is good to consider all criteria found in this study, including the criteria found in previous literature of other countries' VC firms to get a better overview on the requirements Chinese VC firms set when investing in European High-Tech start-ups.