Dynamics of Venture Capital Syndication: Perspective of Information
25 Pages Posted: 7 Nov 2019
Date Written: October 26, 2019
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
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