Venture Capital Syndication: Synthesis and Future Directions

Jääskeläinen, Mikko

doi:10.2139/ssrn.1406989

Cited by 22 publications

(22 citation statements)

References 118 publications

(23 reference statements)

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“…Scholars in entrepreneurial finance have called for more research on the performance implications of syndication, as well as for a better understanding of the drivers of performance heterogeneity among the population of syndicates (Bellavitis, Filatotchev, Kamuriwo, & Vanacker, ; Jääskeläinen, ; Manigart & Wright, ). Prior research hinted at positive effects of syndication by emphasizing resource pooling benefits, which lower venture‐specific risks (Brander et al, ; Bygrave, ; Hochberg et al, ).…”

Section: Discussionmentioning

confidence: 99%

“…Similar trade‐offs have been identified in contexts other than syndicated VC investments, by scholars studying strategic alliances and networks (e.g., Burt, ; Coleman, ; Goerzen, ; Granovetter, ; Holloway & Parmigiani, ; Uzzi, ). Despite these well‐documented costs and benefits of syndication (and inter‐firm collaborations more broadly), we still know relatively little about the factors driving heterogeneity in performance among VC syndicates (Jääskeläinen, ; Manigart & Wright, ). Addressing this gap, below we develop and test a theoretical framework that is grounded in a relational agency perspective, and predicts how prior co‐investments affect the performance of VC syndicates.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

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The effects of prior co‐investments on the performance of venture capitalist syndicates: A relational agency perspective

Bellavitis

Rietveld

Filatotchev

2019

Strategic Entrepreneurship

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Research Summary: This study provides a reconciliation of previous findings regarding the effects of prior coinvestments among venture capitalists (VCs) and the performance of VC syndicates. We propose a relational agency framework outlining cost-benefit trade-offs associated with prior co-investments between VCs. A longitudinal study of 4,550 U.S. ventures receiving syndicated investments from 1980 to 2017 shows that there exists an inverted U-shaped relationship between the number of prior co-investments and a venture's likelihood of a successful exit through initial public offering or merger and acquisition. We further find that the relationship between prior co-investments and syndicate performance is moderated by venture-and partnerspecific risks.Managerial Summary: We study the effects of prior coinvestments among venture capital (VC) firms on the performance of VC syndicates. We propose a framework outlining cost-benefit trade-offs associated with prior co-investments between VCs. A study of 4,550 U.S. ventures receiving syndicated investments shows that there exists an inverted U-shaped relationship between the number of prior coinvestments and a venture's likelihood of a successful exit through initial public offering or merger and acquisition. Our findings hold implications for managers considering whom to partner with for future co-investments and the conditions under which prior co-investments are more or less likely to be beneficial.

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Section: Discussionmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

The effects of prior co‐investments on the performance of venture capitalist syndicates: A relational agency perspective

Bellavitis

Rietveld

Filatotchev

2019

Strategic Entrepreneurship

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“…Because much prior research has suggested syndication is a critical factor that influences investment activities and performance (cf., Jääskeläinen, ), we ran additional regressions to check the effect of syndication in the subsample of mainstream ventures (Groups C and D). We included two new variables as predictors.…”

Section: Resultsmentioning

confidence: 99%

Ethnic Enclave and Entrepreneurial Financing: Asian Venture Capitalists in Silicon Valley

Zhang

Wong

2016

Strategic Entrepreneurship

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Research summary: We examine the dilemma of ethnic investors in using ethnic network ties to invest by extending the 'ethnic enclave' concept to incorporate two dimensions: social network and social status. Our analysis of the first round of venture capital funding in Silicon Valley from 1976 to 2004 shows a higher likelihood of Asian venture capitalists (VCs) investing in Asian-led ventures than mainstream VCs. In addition, the valuation of their investments in mainstream ventures is higher than those by mainstream VCs in such ventures. In contrast, this premium effect is not observed when mainstream VCs invest in Asian ventures. These asymmetrical findings suggest the premium Asian VCs pay to compete in the mainstream venture market is due to their lower social status rather than their social network disadvantages. Managerial summary: Do ethnic minority investors behave differently from more mainstream investors? We examine this question by studying the venture capital industry in Silicon Valley over the period 1976 to 2004. We found that Asian venture capitalists (VCs) were more likely to invest in immigrant Asian entrepreneurs than mainstream VCs, and when they did invest in mainstream ventures, they paid higher valuations than mainstream VCs. In contrast, mainstream VCs did not pay higher average valuations compared to Asian VCs when they invested in Asian ventures. We show that two social factors-the ethnic minority VCs' social network ties and their lower social status-could have contributed to such behavioral differences.

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“…The immense scientific work on VC contracts has triggered surveys of literature on the same topic, one conducted by Tykvová (2007) and the other from Zambelli (2014). Jääskeläinen (2012) clusters literature on syndication, one of the most integral components of VC activity. An interesting review that looks at the research output focused on the period of the VCs postinvestments comes from Manigart and Wright (2013a).…”

Section: Discussionmentioning

confidence: 99%

Institutional Determinants of Venture Capital Activity: An Empirically Driven Literature Review and a Research Agenda

Grilli

Latifi

Mrkajic

2019

Journal of Economic Surveys

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Venture Capital (VC) was born and has flourished in the United States, yet it has only modestly developed in other geographical areas. A vast body of research has been carried out to investigate the factors which are conducive to VC activity, and that may better explain the differences in the degree of development and performance of VC industry across different geographical contexts. However, there has only been a limited effort in the literature to systematize what we know (and what we do not know) about the institutional factors that spur VC activity. This paper tries to close that gap, through a systematic survey of the existing literature on the institutional and related determinants of VC activity. Grounding on the seminal work of North (1990), we consider formal (e.g. laws and formal rules) and informal (e.g. cultural norms and tacit codes of behaviour) institutions which are found in the extant empirical economics and management literature to affect the development of the VC industry. Building on this careful review, our paper aims to propose interesting avenues for future research in this domain.

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Venture Capital Syndication: Synthesis and Future Directions

Cited by 22 publications

References 118 publications

The effects of prior co‐investments on the performance of venture capitalist syndicates: A relational agency perspective

The effects of prior co‐investments on the performance of venture capitalist syndicates: A relational agency perspective

Ethnic Enclave and Entrepreneurial Financing: Asian Venture Capitalists in Silicon Valley

Institutional Determinants of Venture Capital Activity: An Empirically Driven Literature Review and a Research Agenda

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