Venture Capitalists' Decision to Syndicate

Posted: 10 Nov 2009

See all articles by Sophie Manigart

Sophie Manigart

Vlerick Business School; Ghent University

Andy Lockett

Nottingham University Business School (NUBS)

Miguel Meuleman

Vlerick Business School; University of Nottingham

Mike Wright

Nottingham University Business School

Hans Landström

Lund University - Lund Institute of Economic Research

Hans Bruining

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship; Erasmus Research Institute of Management (ERIM)

Philippe Desbrieres

Université de Bourgogne

Ulrich Hommel

EBS Business School

Date Written: March 1, 2006

Abstract

Compares the relative importance of syndicationmotives across different types of venture capitalists. First, a discussion ofmotives for syndicating venture capital (VC) investments leads to theformulation of several hypotheses, two of which propose that the finance motiveis more important for small, early-stage VC firms than for large, later-stagefirms. Other hypotheses suggest that the deal flow motive is more important forlarge, specialized firms than for small, non-specialized firms. The remaininghypotheses involve the deal selection motive and the value-adding motive. Allof the hypotheses are evaluated in light of data on the VC syndicationpractices of 317 VC firms in Sweden, France, Germany, the Netherlands, Belgium,and the United Kingdom. The data suggest that the finance motive is the most important syndicationmotive for both early- and later-stage VC firms. Value adding, on the otherhand, is not an important motive for any firm. Finally, the deal flow and dealselection motives are more important for larger, early-stage VC firms than forsmaller firms. The study concludes with a discussion of implications forresearchers and practitioners. (SAA)

Keywords: Syndication, Portfolio management, Venture capital, Motivation, Venture capital firms, Value maximization, Management decisions, Late stage financing, Early stage financing

Suggested Citation

Manigart, Sophie and Lockett, Andy and Meuleman, Miguel and Wright, Mike and Landström, Hans and Bruining, Hans and Desbrieres, Philippe and Hommel, Ulrich, Venture Capitalists' Decision to Syndicate (March 1, 2006). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1503249

Sophie Manigart (Contact Author)

Vlerick Business School ( email )

Reep 1
Ghent, BE-9000
Belgium

Ghent University ( email )

Sint-Pietersplein 7
Gent, 9000
Belgium

Andy Lockett

Nottingham University Business School (NUBS) ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Miguel Meuleman

Vlerick Business School ( email )

Reep 1
Gent, 9000
Belgium
0032(0)92109770 (Phone)
0032(0)92109790 (Fax)

University of Nottingham

University Park
Nottingham, NG8 1BB
United Kingdom

Mike Wright

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom
+44 115 951 5257 (Phone)
+44 115 951 5204 (Fax)

Hans Landström

Lund University - Lund Institute of Economic Research

P O Box 7080
SE-220 07 LUND
Sweden

Hans Bruining

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship ( email )

RSM Erasmus University
Rotterdam, 3000 DR
Netherlands

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Philippe Desbrieres

Université de Bourgogne ( email )

Institut d'Administration des Entreprises
21066 Dijon Cedex
France

Ulrich Hommel

EBS Business School ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, 65189
Germany
+49 611 7102 1241 (Phone)
+49 611 7102 10 1241 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
467
PlumX Metrics