PT - JOURNAL ARTICLE AU - Lucia Silva Gao TI - Portfolio Industry Strategy in Venture Capital Investments AID - 10.3905/jpe.2011.14.2.059 DP - 2011 Feb 28 TA - The Journal of Private Equity PG - 59--71 VI - 14 IP - 2 4099 - https://pm-research.com/content/14/2/59.short 4100 - https://pm-research.com/content/14/2/59.full AB - 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