Fishing Among Sharks – GP-LP Investment Syndication in Later-stage Venture Capital
41 Pages Posted: 2 Mar 2021
Date Written: March 1, 2021
Venture capital (VC) syndication mainly occurs to compensate for a lack of resources, whether financial or otherwise. The current literature does not sufficiently explore the extent to which the motives differ for syndication between general partners (GPs) or between GPs and limited partners (LPs). This paper investigates this matter, using a qualitative research design and focusing explicitly on heterogenous GP-LP syndicates. We document substantial differences between GPs and LPs in terms of syndication motives and criteria. For example, GPs aim to maximize influence by pooling control rights, while LPs wish to play a more passive role. More broadly, we find that the investment context, particularly the target company’s business model, presents another factor for determining the most effective syndicate setup.
Keywords: Venture capital, Syndication, Agency theory
JEL Classification: G24, G32, G34
Suggested Citation: Suggested Citation