中国市场 VC/PE 跟投制度研究

: 动因与影响

Abstract

The Venture Capital/Private Equity (VC/PE) industry serves as a key vehicle for innovative capital formation, playing a vital role in driving technological innovation and industrial upgrading. In recent years, the global VC/PE market has undergone structural changes in a complex economic environment, with fundraising increasingly concentrated among top institutions and scale effects becoming more pronounced. Meanwhile, after experiencing rapid growth from 2014 to 2018, China's VC/PE market has entered a phase of strict regulation and slowed growth, developing governance structures and incentive mechanisms with distinctive local characteristics. Against this backdrop, the co-investment system as an important incentive and constraint tool also exhibits unique Chinese features.
This research focuses on China's distinctive "deal-level co-investment" system in the VC/PE industry, systematically examining the selection drivers behind co-investment policies and their impact on investment performance. The study builds a comprehensive dataset covering 61 fund brands, 170 management companies, 913 funds, and 8,125 investment projects. Combining quantitative analysis with field research and adopting a dual agency theory perspective, the study reveals the following key findings:
First, agency relationships significantly shape co-investment policy choices. Funds are more likely to adopt mandatory co-investment policies when the proportion of state-owned LPs is higher or when GPs have stronger state-owned backgrounds; conversely, funds tend to favor voluntary co-investment when GP contribution ratios are higher. When both LPs and GPs have state-owned backgrounds, policies tend toward clear mandatory co-investment or prohibition of co-investment systems, reflecting increased accountability pressure and transparency requirements in multi-layered state-owned structures.
Second, the impact of co-investment policies on investment performance challenges the common belief that "voluntary co-investment effectively incentivizes GPs." At both project and fund levels, mandatory co-investment and prohibition of co-investment systems significantly outperform voluntary co-investment systems in terms of investment performance. This suggests that in multi-project investment environments, existing voluntary co-investment systems may lead to resource allocation distortions and team collaboration imbalances, thus failing to achieve effective incentivization.
Third, the effects of co-investment policies demonstrate significant heterogeneity. High-reputation GPs perform best under voluntary co-investment policies; experienced GPs are more suited to voluntary co-investment policies. These findings support the necessity of differentiated system design, indicating that optimal co-investment policies vary according to GP characteristics.
Fourth, risk preference adjustment is the primary mechanism through which mandatory co-investment affects project success, mainly by increasing mid-stage round investments to improve project success rates. When funds require investment teams to participate in project investments with their personal wealth, risk-bearing behavior becomes more balanced, avoiding excessive risk-taking or conservatism.
The contributions of this research are primarily reflected in three aspects: Theoretically, the study enriches the application of agency theory in the VC/PE field by introducing a dual agency framework, proposing a new perspective of "governance clarification," confirming the non-linear impact of co-investment policies, and revealing the differential logic between Chinese and Western private equity governance mechanisms. Methodologically, the research employs a mixed approach of quantitative analysis and field research, constructing a unique Chinese VC/PE project investment dataset that provides valuable resources for subsequent research. Practically, the study offers specific recommendations for internal governance in the VC/PE industry, supporting differentiated co-investment policy design based on fund characteristics and organizational environments, guiding funds to avoid potential negative effects of voluntary co-investment, rationally designing mandatory co-investment proportions, and emphasizing the importance of reputation and experience accumulation. These findings provide theoretical guidance and practical pathways for the healthy development and enhanced international competitiveness of China's private equity industry.

Date of Award	17 Sept 2025
Original language	Chinese (Simplified)
Awarding Institution	China Europe International Business School
Supervisor	Sheng Huang (Supervisor) & Yu Zhang (Supervisor)