The Effects of Prior Co-Investments on the Performance of VC Syndicates: A Relational Agency Perspective

Strategic Entrepreneurship Journal (Forthcoming)

62 Pages Posted: 7 May 2019

See all articles by Cristiano Bellavitis

Cristiano Bellavitis

Auckland Business School, Management and International Business

Joost Rietveld

UCL School of Management

Igor Filatotchev

City University London - Sir John Cass Business School

Date Written: April 24, 2019

Abstract

This study provides a reconciliation of previous findings regarding the effects of prior co-investments among venture capitalists (VCs) and the performance of VC syndicates. We propose a relational agency framework outlining cost-benefit trade-offs associated with prior co-investments between VCs. A longitudinal study of 4,550 U.S. ventures receiving syndicated investments from 1980 to 2017 shows that there exists an inverted U-shaped relationship between the number of prior co-investments and a venture’s likelihood of a successful exit through initial public offering or merger and acquisition. We further find that the relationship between prior co-investments and syndicate performance is moderated by venture-specific and partner-specific risks.

Keywords: entrepreneurial finance, venture capital, syndication, prior co-investments, performance

JEL Classification: M13

Suggested Citation

Bellavitis, Cristiano and Rietveld, Joost and Filatotchev, Igor, The Effects of Prior Co-Investments on the Performance of VC Syndicates: A Relational Agency Perspective (April 24, 2019). Strategic Entrepreneurship Journal (Forthcoming). Available at SSRN: https://ssrn.com/abstract=3377098 or http://dx.doi.org/10.2139/ssrn.3377098

Cristiano Bellavitis (Contact Author)

Auckland Business School, Management and International Business ( email )

12 grafton rd
Auckland
Auckland, Auckland 0000
New Zealand

Joost Rietveld

UCL School of Management ( email )

Level 38, One Canada Square, Canary Wharf
London, E14 5AA
United Kingdom

HOME PAGE: http://www.strategyguide.nl

Igor Filatotchev

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

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