Follow or not? private venture capitalists’ investment decision after governmental venture capitalists’ investments in ventures

Governmental venture capitalist (GVC) is designed to address the market failure by stimulating investments from private venture capitalists (PVCs). Complementing to prior studies that largely focus on the amount of funding GVC-backed ventures could achieve, this paper examines GVCs’ effect on the investee’s ability to attract follow-on private investment. We adopt institutional logic perspective and theorize that PVCs, embedded in a professional logic, would concern about the imprinting of the prior-round GVC’s state logic on the venture and thus are less likely to make a follow-on investment. We further examine two moderators that revise either GVCs’ or PVCs’ conformity to their logics: GVC’s limited partnership (LP) and PVC status.