A Knowledge-Based View of Venture Capital Firms’ Portfolio Investment Specialization and Syndication

15 Pages Posted: 25 Mar 2011

See all articles by Dirk De Clerq

Dirk De Clerq

Brock University - Faculty of Business

Date Written: 2003

Abstract

Using a knowledge-based perspective, we examine determinants of outcomes of venture capital investments. We focus on the effects on investment performance of venture capital firms’ (VCFs’) (1) specialization in terms of industry and development stage and (2) involvement in investment syndicates. We test our hypotheses based on a longitudinal data set of realized strategies of 200 U.S.-based VCFs over a twelve-year period. We find that investment specialization in terms of industry and development stage has a positive effect on performance. We also find that whereas the degree of syndication at the initial investment round negatively affects investment performance, the total involvement by the investment syndicate over time has a positive impact on performance. Finally, we find support for both knowledge-based and financial arguments for why VCFs engage in syndication.

Keywords: Entrepreneurship

JEL Classification: M13

Suggested Citation

De Clercq, Dirk, A Knowledge-Based View of Venture Capital Firms’ Portfolio Investment Specialization and Syndication (2003). Babson College, Babson Kauffman Entrepreneurship Research Conference (BKERC), 2002-2006. Available at SSRN: https://ssrn.com/abstract=1782178

Dirk De Clercq (Contact Author)

Brock University - Faculty of Business ( email )

St. Catharines, Ontario L2S 3A1
Canada

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