The importance of venture capital (VC) for startup development has been largely recognized. However, a critical question remains underexplored: is the contribution of VC investments geographically limited to their financially supported startups? We attempt to address this question by examining the effects of VC investments on urban entrepreneurship from a novel perspective of urban spatial structures. We investigate urban spatial structures based on land development and population distribution patterns for 271 Chinese cities from 2014 to 2020 and examine their impact on entrepreneurship by employing a two-way fixed effects model. It is found that VC investments can facilitate urban entrepreneurship development via knowledge spillovers. This positive impact is reinforced in a polycentric planned city where subcenters are compactly developed. The findings shed light on how urban spatial structures serve as a “spatial institution” of VC resources for fostering entrepreneurship development. This raises a new dialogue surrounding the coordination of VC investments, entrepreneurship development, and urban planning. • We examine how urban spatial structure moderates the relationship between entrepreneurship and VC investments. • We employ a two-way fixed effects model on 271 Chinese cities from 2014 to 2020. • VC investments positively affect entrepreneurship, and urban polycentricity and compactness reinforce such impact. • The positive moderating role of polycentricity and compactness can be amplified in mega cities and for Tech & IT firms.
Shi et al. (2026) studied this question.