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Exit strategies of venture capital-backed companies in Singapore

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  • Clement K. Wang
  • Valerie Y.L. Sim

Abstract

As the exit of venture capital (VC) is essential for the growth of the VC industry, an empirical study is conducted on the VC exit mechanism in Singapore using survey and interview data. Relying on empirical evidence of VC firms in Singapore with exits from 1990-1998, the aim is to explore the rationale of VCs in choosing a particular mode of exit for their investments. This study presents empirical evidence of the various determinants which affect Singapore venture capitalists exit choices, and explores the local VC investment/exit process. Consistent with other studies, it was found that companies in the family-owned, high-technology industries tend to exit via initial public offering (IPO). In addition, the IPO exit route is positively related to the total amount of venture financing and company total sales. However, the level of equity valuation is shown to be independent of the likelihood that the VC-backed companies will exit via IPO. In contrast to the grandstanding hypothesis, younger VCs do not perform more IPO-exits than their older counterparts. Another noteworthy finding is that the frequency of financing rounds is independent of the IPO exit. All these results reveal the immaturity of Asia's capital markets compared with the West.

Suggested Citation

  • Clement K. Wang & Valerie Y.L. Sim, 2001. "Exit strategies of venture capital-backed companies in Singapore," Venture Capital, Taylor & Francis Journals, vol. 3(4), pages 337-358, October.
    • Handle: RePEc:taf:veecee:v:3:y:2001:i:4:p:337-358
    DOI: 10.1080/13691060110060664
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    Cited by:

    1. Bruton, Garry & Ahlstrom, David & Yeh, Kuang S., 2004. "Understanding venture capital in East Asia: the impact of institutions on the industry today and tomorrow," Journal of World Business, Elsevier, vol. 39(1), pages 72-88, February.
    2. Douglas Cumming & Grant Fleming & Armin Schwienbacher, 2009. "Corporate Relocation in Venture Capital Finance," Entrepreneurship Theory and Practice, , vol. 33(5), pages 1121-1155, September.
    3. Ann-Kristin Achleitner & Reiner Braun & Eva Lutz & Uwe Reiner, 2014. "Industry relatedness in trade sales and venture capital investment returns," Small Business Economics, Springer, vol. 43(3), pages 621-637, October.
    4. Rehnen, Lena Marie, 2016. "Exit strategies of loyalty programs," jbm - Journal of Business Market Management, Free University Berlin, Marketing Department, vol. 9(1), pages 564-596.
    5. Song, Sangcheol, 2014. "Unfavorable Market Conditions, Institutional and Financial Development, and Exits of Foreign Subsidiaries," Journal of International Management, Elsevier, vol. 20(3), pages 279-289.

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