TY - JOUR T1 - Portfolio Industry Strategy in Venture Capital Investments JF - The Journal of Private Equity SP - 59 LP - 71 DO - 10.3905/jpe.2011.14.2.059 VL - 14 IS - 2 AU - Lucia Silva Gao Y1 - 2011/02/28 UR - https://pm-research.com/content/14/2/59.abstract N2 - Venture capitalists make investments decisions at the level of the individual companies and at the level of the portfolio of companies. This article studies the impact of a VC industry portfolio strategy on portfolio performance. Three types of strategies are considered: industry specialization, industry diversification, and complementary networks investments. I find that venture capital firms that specialize in terms of industry exhibit better portfolio performance. When I look further at portfolios with investments in information technology, I find that these portfolios are diversified at a narrower industry classification level. I apply the concept of “software stack” to capture the existence of complementary network effects and find that venture capitalists may pursue a strategy of investing in ventures that are complementary components of a network system. The results also show that these complementary investments are comparably more successful.TOPICS: Private equity, portfolio construction, statistical methods, performance measurement ER -