Degree
Doctor of Philosophy (PhD)
Department
Finance
Document Type
Dissertation
Abstract
This dissertation studies how distance-driven frictions shape venture capital (VC) intermediation and entrepreneurial outcomes. It includes two chapters. The title of the first chapter is “Cross-Border Corporate Venture Capital and FinTech Startup Exits”. The title of the second chapter is “Political Sorting and Information Frictions in Venture Capital”.
The first chapter examines how cross-border corporate venture capital (CVC) influences startup exits in a regulated, innovation-intensive setting. Using FinTech financings from LSEG Venture, I find that startups receiving cross-border CVC are less likely to achieve successful exits (IPO/M&A) and more likely to fail. In firm-level specifications, cross-border CVC is associated with a 4.3 percentage point lower probability of successful exit and a 3.6 percentage point higher probability of failure. These patterns are not explained by weaker entry financing: cross-border CVC rounds are not smaller and attract broader syndicates. Instead, cross-border CVC predicts post-investment syndicate reconfiguration—incumbent domestic CVCs and independent VCs are less likely to reinvest in subsequent rounds, while foreign corporate participation persists and expands—highlighting syndicate continuity and coordination as key channels linking cross-border strategic capital to startup outcomes.
The second chapter studies whether partisan separation between investor and startup locations creates frictions in VC matching. Using a deal-anchored opportunity-set design and county-level presidential vote shares to measure political distance, I find that a one-standard-deviation increase in political distance lowers the probability of forming an investment match by 0.75 percentage points, roughly 8% of the baseline rate. Systematic mechanism tests reveal that political distance operates through soft-information frictions: the penalty amplifies where qualitative assessments matter most—first-round investments, young startups, and unfamiliar geographies—and attenuates where information infrastructure is stronger, such as VC hubs and during the 2020–2023 pandemic period. There is little support for alternative explanations tied to political risk and narrative misalignment. Conditional on funding, higher-political-distance deals exhibit better outcomes, consistent with tighter screening.
Overall, the dissertation documents how cross-border and political distance affect VC market functioning through information and coordination frictions, with implications for the allocation of entrepreneurial capital and spatial inequality in access to financing.
Date
3-20-2026
Recommended Citation
Zhang, Aihuan, "Essays on Information and Coordination Frictions in Venture Capital: Cross-Border CVC and Political Distance" (2026). LSU Doctoral Dissertations. 7024.
https://repository.lsu.edu/gradschool_dissertations/7024
Committee Chair
Wei-Ling Song
LSU Acknowledgement
1
LSU Accessibility Acknowledgment
1
Included in
Business and Corporate Communications Commons, Corporate Finance Commons, Entrepreneurial and Small Business Operations Commons