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| Author: | Hopp, C. |
| Title: | When do venture capitalists collaborate? Evidence on the driving forces of venture capital syndication |
| Journal: | Small business economics
2010 : NOV, VOL. 35:4, p. 417-431 |
| Index terms: | venture capital companies entrepreneurship capital new enterprise financial risk Germany |
| Language: | eng |
| Abstract: | Using a sample of 2,373 unique capital involvements from 437 venture capitalists (VCs) over multiple rounds into 961 start-ups during 1995-2005 in Germany, the circumstances are disentangled under which VCs engage in syndicate relationships with partner VCs. The results suggest that syndication is more pronounced when VCs face higher risks needing diversification and capital burdens are larger. Furthermore, industry investment experience lends legitimacy to lead VCs, letting them enter syndicate relationships to enhance their network positions. Generally, greater industry experience is connected with more syndication. Lastly, the results indicate lead VCs involving new/additional partners in subsequent financing rounds to leverage their idiosyncratic skills and knowledge to improve deal selection and/or improve the quality of managerial advice. |
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