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| Author: | Brander, J. A. Amit, R. Antweiler, W. |
| Title: | Venture-Capital Syndication: Improved Venture Selection Vs. The Value-Added Hypothesis |
| Journal: | Journal of Economics & Management Strategy
2002 : FALL, VOL. 11:3, p. 423-452 |
| Index terms: | VENTURE CAPITAL VALUE ADDED ANALYTICAL REVIEW MODEL TESTING MODELS |
| Language: | eng |
| Abstract: | Syndication arises when venture capitalists jointly invest in projects. The authors model and test two possible reasons for syndication: project selection, as an additional venture capitalist provides an informative second opinion; and complementary management skills of additional venture capitalists. The central question is whether venture capitalists are engaged primarily in selection or in managerial value added. These alternatives imply contrasting predictions about comparative returns to syndicated and standalone Investments. The authors' empirical analysis, using Canadian data, finds that syndicated investments have higher returns, favoring the value-added interpretation. The authors also discuss risk sharing and project scale as possible reasons for syndication. |
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