Syndicated investments by venture capital firms: A networking perspective

Bygrave, William D.

doi:10.1016/0883-9026(87)90004-8

Cited by 309 publications

(231 citation statements)

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“…These new investors, who have not developed the same social ties with the Founder-CEO, may have less confidence in his or her ability to continue to run the company and may therefore cause the board to reexamine whether to replace the founder. In addition, new investors can add credibility to the company and bring new skills and networks of contacts that the company can leverage (Bygrave 1987). FounderCEOs are often willing to accede to the demands of such high-quality investors to gain their involvement with the company.…”

Section: Bringing In New Investorsmentioning

confidence: 99%

Founder-CEO Succession and the Paradox of Entrepreneurial Success

Wasserman

2003

Organization Science

404

140

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In the last few decades, we have developed a substantial body of knowledge about CEO succession. However, except for some studies of family businesses that lack direct applicability to nonfamily CEO succession, the past studies of succession have not examined the very first succession event in a firm, when the Founder-CEO is replaced, on a largescale basis. The critical differences between later-stage succession and Founder-CEO succession include the higher level of attachment between Founder-CEOs and the firms they create, the much larger equity holdings of Founder-CEOs (which give them much more control of the firm), the fact that many Founder-CEOs remain in the firm (even though it is being run by their successors), and the fact that nearly all earlystage succession events involve outside successors (in contrast to later-stage succession research, which has focused on the insider-outsider distinction). These differences make it hard to extrapolate from later-stage succession findings to Founder-CEO succession. Therefore, in order to examine Founder-CEO succession, I used field research and grounded theory building to study the factors that should affect Founder-CEO succession in Internet start-ups. I find that there are two central intertemporal events that may affect Founder-CEO succession: The completion of product development and the raising of each round of financing from outside investors. I develop testable hypotheses about how each of these events affect the rate of succession, and then test these hypotheses using an eventhistory analysis of a unique dataset containing the succession histories of 202 Internet firms. My findings point to multiple "paradoxes of success" in which the Founder-CEO's success at achieving critical milestones actually causes the chance of Founder-CEO succession to rise dramatically.

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Section: Bringing In New Investorsmentioning

confidence: 99%

Founder-CEO Succession and the Paradox of Entrepreneurial Success

Wasserman

2003

Organization Science

404

140

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“…Much of VC investing occurs within "syndicates" (Bygrave 1987) in which VCs invite other VC firms with whom they have developed a relationship to invest in their best companies, in exchange for future reciprocated investing opportunities. To build good syndication relationships, VCs usually try to avoid dragging other VCs into their "lemons" (Gompers and Lerner 1999).…”

Section: Hypothesis 4a When a Company Adds New Investors There Willmentioning

confidence: 99%

Founder-CEO Succession and the Paradox of Entrepreneurial Success

2001

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“…Different hypotheses have been explored. Syndications have been understood as a means to diversify risk (Bygrave, 1987;Bygrave & Timmons, 1992;Lerner, 1994;Manigart et al, 2006), to improve projects selection (Brander et al, 2002;De Clercq & Dimov, 2004;Manigart et al), to mobilize competencies (Brander et al;De Clercq & Dimov;Hochberg, Ljungqvist, & Lu, 2007;Manigart et al), and to gain access to deal flow (Manigart et al).…”

Section: Introductionmentioning

confidence: 99%

Syndication of Venture Capital Investment: The Art of Resource Pooling

Ferrary¹

2010

Entrepreneurship Theory and Practice

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This article explores the rationale of syndications of institutional venture capital investors when they fund start-ups. There is an implicit labor division between institutional venture capital investors in which pure venture capital firms are in charge of converting investment uncertainty into risk by funding the seed stage of start-ups. The other investors invest in the following stages to sustain the start-ups' development. Relationships between investors are also handled following informal rules. Exchanges between institutional venture capital investors are based on a reciprocity that follows the informal principles of the gift exchange theory.

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Syndicated investments by venture capital firms: A networking perspective

Cited by 309 publications

References 1 publication

Founder-CEO Succession and the Paradox of Entrepreneurial Success

Founder-CEO Succession and the Paradox of Entrepreneurial Success

Founder-CEO Succession and the Paradox of Entrepreneurial Success

Syndication of Venture Capital Investment: The Art of Resource Pooling

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