Antecedents and Consequences of Venture Capital Syndication

Abstract

Syndication has become a widely used investment strategy for venture capital funds. Meanwhile its drivers and its impact on the funds' performance remains poorly understood. The present study draws on a large and unique dataset of the characteristics of 57741 investment rounds and the performance of 1104 venture capital funds. It first analyses the antecedents of syndication at the initial and subsequent stages of a venture's life. We identify a funds' investment experience, syndication experience and financial resources as important predictors of syndication. We then explore the performance impact of syndication on venture capital fund performance and find that funds with a higher proportion of syndicated deals as well as funds with an early-stage focus syndicating at late-stage rounds perform better.

Keywords: syndication, venture capital, performance

JEL Classification: M13, G11, G24