RT Journal Article SR Electronic T1 Portfolio Industry Strategy in Venture Capital Investments JF The Journal of Private Equity FD Institutional Investor Journals SP 59 OP 71 DO 10.3905/jpe.2011.14.2.059 VO 14 IS 2 A1 Lucia Silva Gao YR 2011 UL https://pm-research.com/content/14/2/59.abstract 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