The dynamics of switching between governmental and independent venture capitalists: theory and evidence

In this paper, we study the switching dynamics between independent VCs (IVCs) and governmental VCs (GVCs) by means of a theoretical model and an empirical analysis. By assuming that (i) VCs of higher reputation are more selective in terms of venture quality and (ii) IVCs are mainly motivated by the desire to maximize the economic return of a venture, while GVCs also care about the social repercussions, we have obtained two results. First, low...