Dynamics of Venture Capital Syndication: Perspective of Information

25 Pages Posted: 7 Nov 2019

See all articles by Rong Chen

Rong Chen

Shanghai University of Finance and Economics, School of Public Economics & Administration, Department of Investment, Students

Zhiyi Qiu

Shanghai University of Finance and Economics, School of Public Economics & Administration, Students

Date Written: October 26, 2019

Abstract

Syndication develops an increasing social network of venture capitals (VC). On one hand, information channel to the center of network. On the other hand, firms in the center are faced with redundant information. Using the evidence from China, we investigate the dynamics of syndication network with the perspective of information. The position of a firm in the network exerts a curvilinear effect on its strategy of syndication in the future. Specifically, less-centered firms focus more on the quantity of information and are prone to gather information by syndication (especially with familiar partners). Contrarily, the top centered firms focus more on information diversity and are prone to operate solo or to syndicate with new partners. Furthermore, cross-clique syndication improves VC firm’s performance. In addition, the ownership and experience of VC firms affects the curvilinear relationship.

Keywords: Syndication, Venture capital (VC), Network, Clique, Performance

JEL Classification: G24

Suggested Citation

Chen, Rong and Qiu, Zhiyi, Dynamics of Venture Capital Syndication: Perspective of Information (October 26, 2019). Available at SSRN: https://ssrn.com/abstract=3475874

Rong Chen

Shanghai University of Finance and Economics, School of Public Economics & Administration, Department of Investment, Students ( email )

Shanghai, 200433
China

Zhiyi Qiu (Contact Author)

Shanghai University of Finance and Economics, School of Public Economics & Administration, Students ( email )

Shanghai
China

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