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http://dx.doi.org/10.7737/KMSR.2012.29.3.091

A Study on Selection Capability and Investment Efficiency of Korean Venture Capitals  

Sohn, Dong-Won (인하대학교 경영학부)
Hur, Wonchang (인하대학교 경영학부)
Publication Information
Korean Management Science Review / v.29, no.3, 2012 , pp. 91-105 More about this Journal
Abstract
This paper examines the investment efficiency of Korean venture capitals during 1987~2006 (20 years), focusing on their selection capability. Despite the Korean government's efforts, venture capital industry has evolved in a slow speed. Since the genesis of venture paradigm in Korea at 1997, venture capital industry as a macro unit has been fully discussed in Korean contexts. But venture capital's activities at micro level regarding each investment's outcome have not been examined. This study attempts to fill the voids of micro knowledge about each investment success rates by venture capitals. We analyzed venture investment records in 4,791 venture startups and their success rates. Their investment criteria were relevant to high potential industries and amount of tangible assets. But their criteria were not relevant to R&D intensity and financial growth of venture firms, which may indicate low level of maturity about Korean venture capital industry. We found that Korean venture capital's investment pattern may be originated from the low return of investment, so that efficiency of IPO markets is a prerequisite for the upgrade of venture capitals' efficiency. Some policy implications are discussed.
Keywords
Venture Capital; Selection Capability; Investment Return; IPO Market;
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