Syndicating Venture Capital Investments: An Integrated Benefit/Cost Framework and Analysis

48 Pages Posted: 10 Mar 2010  

Wouter De Maeseneire

Vlerick Business School; Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Rutger Van Halder

Goldman Sachs International, London

Date Written: March 9, 2010

Abstract

This paper focuses on the syndication of venture capital investments. We present a comprehensive framework that simultaneously integrates the benefits and drawbacks of syndication. Our empirical analysis uses a sample of UK venture capitalists’ investments made between 1964 and 2006. We collected data about three different units of analysis: venture capital firm level, portfolio company level and investment round level. Overall, we find evidence for the main motivations to syndicate, namely the finance, resource based and deal flow rationales. Furthermore, indirect support for the window dressing and agency problem motives is established. We also confirm the importance of transaction costs. Hence, VCs’ syndication decisions are driven by the benefits and costs of syndication.

Keywords: syndication, venture capital, private equity, transaction costs, resource based view

JEL Classification: G32

Suggested Citation

De Maeseneire, Wouter and Van Halder, Rutger, Syndicating Venture Capital Investments: An Integrated Benefit/Cost Framework and Analysis (March 9, 2010). Available at SSRN: https://ssrn.com/abstract=1567430 or http://dx.doi.org/10.2139/ssrn.1567430

Wouter De Maeseneire (Contact Author)

Vlerick Business School ( email )

Reep 1
Ghent
BE-9000 Ghent
Belgium

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Rutger Van Halder

Goldman Sachs International, London ( email )

Peterborough Court
133 Fleet Street
London, EC4A 2BB
United Kingdom

Paper statistics

Downloads
176
Rank
139,385
Abstract Views
972