Venture capital in China has played a significant economic role in the country’s development and is expected to play an even more significant role in the future. This paper examines how institutions, particularly those related to the regulatory environment and culture of China, shape the venture capital industry and create differences from the venture capital industry in the West. These differences are true despite the fact that many venture capitalists have been trained in Western venture capital firms and share similar beliefs about how venture investments are to be made. The paper concludes with a fuller understanding of how venture capital works in China and what outside investors and firms need to familiarize themselves with.
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