Do unicorns exist in China? A study of the Chinese technological start-up ecosystem

Venture capital syndication plays a pivotal role in fuelling the growth of new ventures that subsequently become unicorns, privately owned companies valued above $1bn. China has been very successful in generating new unicorns, surpassed only by the United States. In this paper we examine the impact of the experience of venture capital companies and the strategic choice(s) of the unicorn to grow inorganically through acquisition in two areas: the amount of funding available to unicorns and the size of the syndication network. It is argued in the literature that both of these play a key role in shaping the growth of new enterprises.

We find that the experience in lead investments of the first investor of the unicorn has a positive impact in terms of both amount of funding and size of the syndication. We also find that the presence of an experienced investor has a positive effect on the syndication size but a negative effect on the total amount of funding that is raised. Finally, acquisitions have a strong effect on both the amount of funding and the size of the syndication.