As for the role of venture capital institutions in firms, is it due to ex-ante screening ability, or ex-post value-added ability or both? This paper uses a sample of SME board listed companies to test the effect of venture capital investment on firms. It comes to the following conclusions: firstly, before investment, VCs easily select firms with higher sales growth, financial leverage and poorer operational efficiency as well as firms that have more R&D input; secondly,after investment, value-added abilities of VCs significantly improve the operational efficiency of the portfolio companies, and enhance shareholders returns to a big margin; thirdly, among SME board firms, compared with firms without VC support, firms with VC support have significantly better earnings abilities, business efficiency and financial leverage; higher earnings abilities stem from the post-investment value-added role of VCs, and better business efficiency & financial leverage result from the co-role of ex-ante screening & post-investment value-added. Therefore, it concludes that VCs in China ordinarily select firms with poor business efficiency and higher debt ratios before investment and lead to the increase in business efficiency to a big margin, more rational capital structure & better rates of return on equity in invested firms through value added services after investment.