Author(s)

He Chunming, Zhen Jia

Corresponding Author

He Chunming

Abstract

Due to the lack of collateral, the strategic funding for access to venture capital institutions is one of the main financing strategies for SMEs in the start-up period. When selecting a venture capital institution, SMEs should proceed from their own strategies and characteristics and choose according to the matching with different venture capital institutions. In general, SMEs and venture capital institutions are optimally when they form a positive assortative matching, that is, high-quality SMEs form strategic investment relationships with the stronger and larger venture capital institutions. After adding information asymmetry factors, such as the signal from participants, we found SMEs prefer to match local venture capital institutions. The analysis in this paper is based on the dynamic analysis of the match.

Keywords

SME; financing strategy; positive assortative matching; reputation