Evolution and Influencing Factors of Venture Capital Network Structure among Chinese Cities

Abstract

Inter-city Venture Capital (VC) exchange is a micro-embodiment of the cross-regional flow of innovative elements such as capital and technology, and also an important driving force for shaping the network of VC cities. Compared with other types of investment activities, VC has more advantages in promoting the development of innovative industries, especially high-tech industries, and then driving urban economy and regional development; hence, it is widely regarded as a "catalyst" for economic growth and technological innovation. The study of VC networks is helpful in understanding the financial activity links between cities across the country and provides key support for further rational allocation of financial resources between cities. The existing research rarely uses the actual investment amount of VC transaction events between cities to construct the city network. The analysis of the continuous dynamic evolution research and the influencing factors of the overall spatial network structure over a long period of time needs to be strengthened. To compensate for the shortcomings in the above research, this study uses the data of China's inter-city VC flow between 2000 and 2018 to construct the Chinese urban VC network. The long-term spatial evolution characteristics and overall network structure influencing factors of the national inter-city VC network are discussed based on complex network analysis, GIS spatial technology analysis, multiple linear regression model, and so on. This study derives the following results: (1) The connection between cities tends to be closer, and the agglomeration degree of the national VC network increases, displaying obvious characteristics of high aggregation and small-world network. However, the cyber spatial structure of investors/start-ups tends to be flattened, there is a trend of decentralization. (2) The VC connection between cities has expanded from the eastern coastal axis to the central and western regions as a whole, exhibiting obvious characteristics of path dependence and distance attenuation. Additionally, the VC connection continues to sink from the three major urban agglomerations to other marginal cities, and the core node cities of the network also display a tendency of quantitative expansion and power transfer. (3) The city's entrepreneurial foundation, VC industry development level, financial environment, and urban accessibility all have differentiated impacts on the spatial structure of the national VC network. Moreover, the aforementioned are affected by various mechanisms such as multi-dimensional proximity, urban economy, and path dependence, which promote the construction of national and regional VC networks and the formation and evolution of regional capital centers.

Keywords

• venture capital network
• capital flows
• network structure evolution
• multiple linear regression model