Abstract

http://ssrn.com/abstract=631941
 
 

References (34)



 
 

Citations (191)



 


 



Whom You Know Matters: Venture Capital Networks and Investment Performance


Alexander Ljungqvist


New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Research Institute of Industrial Economics (IFN)

Yael V. Hochberg


National Bureau of Economic Research (NBER); Rice University - Jesse H. Jones Graduate School of Business

Yang Lu


AQR Capital Management, LLC

September 2005


Abstract:     
Many financial markets are characterized by strong relationships and networks, rather than arm's-length, spot-market transactions. We examine the performance consequences of this organizational choice in the context of relationships established when VCs syndicate portfolio company investments. VC firms that enjoy more influential network positions have significantly better fund performance, as measured by the proportion of investments that are successfully exited through an IPO or sale to another company. Similarly, the portfolio companies of better-networked VC firms are significantly more likely to survive to subsequent financing and to eventual exit. Finally, we provide initial evidence on the evolution of VC networks.

Number of Pages in PDF File: 56

Keywords: Venture Capital, Networks, Syndication, Investment Performance

JEL Classification: G24, L14

working papers series





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Date posted: December 15, 2004  

Suggested Citation

Ljungqvist, Alexander and Hochberg, Yael V. and Lu, Yang, Whom You Know Matters: Venture Capital Networks and Investment Performance (September 2005). Available at SSRN: http://ssrn.com/abstract=631941 or http://dx.doi.org/10.2139/ssrn.631941

Contact Information

Alexander Ljungqvist (Contact Author)
New York University (NYU) - Department of Finance ( email )
Stern School of Business
44 West 4th Street, Suite 9-160
New York, NY 10012-1126
United States
212-998-0304 (Phone)
212-995-4220 (Fax)
HOME PAGE: http://pages.stern.nyu.edu/~aljungqv
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Research Institute of Industrial Economics (IFN) ( email )
Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden
Yael V. Hochberg
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Rice University - Jesse H. Jones Graduate School of Business ( email )
6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
Yang Lu
AQR Capital Management, LLC ( email )
Greenwich, CT
United States
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References:  34
Citations:  191

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