Industry Hedging by Family-Affiliated Corporate Venture Capitalists for Wealth Preservation

This study investigates whether family-affiliated Corporate Venture Capitalists (CVCs) display unique investment strategies in comparison to non-family CVCs, driven by the ultimate goal of the parent firms behind family CVCs to preserve wealth. Specifically, we focus on industry hedging—referred to as CVCs’ industry choices that reduce their parent firms’ exposure to external shocks or uncertainty in existing industries—as an indicator of investment strategies. Based on a unique panel dataset of 6,233 CVCs that conducted investments in China from 2010 to 2021, we find that family CVCs, driven by their parent firms’ primary goal of wealth preservation, adopt more industry hedging than those non-family CVCs that focus on corporate growth. Our study contributes to the CVC literature by identifying a distinct difference between family and non-family CVCs in their risk propensities associated with industry choices.