Late-Stage Venture Capital and Firm Performance: Evidence from Small and Medium-Sized Enterprises in China




Journal Title

Journal ISSN


Volume Title


Taylor and Francis



Peer reviewed



Where venture capitalists have traditionally focused on early-stage innovative firms, increasingly venture capitalists are investing in late-stage firms, especially in Asia. The performance consequences of this novel phenomenon of late-stage venture capital remain unexplored. This paper provides novel insight into this phenomenon by examining the impact of late-stage venture capital on two key dimensions of firm performance in the venture capital literature: innovation and financial performance. We link VC investment events to financial indicators of Chinese listed firms to account for the timing of VC entry and identify the firm performance impacts. Utilizing a matching and difference-in-differences procedure to account for selection biases, our results show that late-stage venture capital improves investee firms’ financial performance but reduces their innovation performance. Our findings advance understanding about the emergence of late-stage venture capital and its performance consequences, especially in emerging economies. Our work has implications for entrepreneurs and policymakers.


Co-authors received external funding linked to the project, but these are non-UK based and not at DMU. The financial support from the National Natural Science Foundation of China (No.72174163, No. 71974026, No. 71804140 and No. 71672138) is gratefully acknowledged. The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.


Venture capital, late stage, innovation performance, firm performance, emerging economy, SME


Dai, X., Chapman, G., Shen, H. (2021) Late-Stage Venture Capital and Firm Performance: Evidence from Small and Medium-Sized Enterprises in China. Applied Economics.


Research Institute

Centre for Enterprise and Innovation (CEI)