Using a sample of 5,383 investment events of venture capital firms (VCs) investing in Chinese companies between 1997 and 2017, this article investigates the impact of backing type and managerial knowledge on successful exits for venture capital firms (VCFs). It also examines how CEO human capital influences CEO replacement decisions by domestic and foreign VCs. Backing Influence : VCFs funded by corporations tend to achieve better exit outcomes than those backed by financial institutions or semi-captive VCFs, due to better alignment of strategic goals and portfolio returns. Managerial Impact: Corporate-backed VCFs benefit from industry-specific knowledge, while financial institution-backed VCFs face challenges with managerial expertise and compensation. CEO Human Capital : Domestic and foreign VCs are less likely to replace CEOs with high human capital. Foreign VCs rely more on CEO human capital as a quality signal due to difficulties in monitoring, while domestic VCs use additional information, such as social skills and charisma, due to their geographical proximity.

This study provides critical insights into how VCF backing and CEO human capital influence investment outcomes and replacement decisions. Understanding these factors helps venture capitalists and family offices refine their investment and management strategies for improved success rates.