Fishing Among Sharks – GP-LP Investment Syndication in Later-stage Venture Capital

41 Pages Posted: 2 Mar 2021

See all articles by Ann‐Kristin Achleitner

Ann‐Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies

Reiner Braun

Technische Universität München (TUM) - TUM School of Management; Center for Entrepreneurial and Financial Studies

Henry Keppler

Technische Universität München - Center for Entrepreneurial and Financial Studies

Date Written: March 1, 2021

Abstract

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

Achleitner, Ann-Kristin and Braun, Reiner and Keppler, Henry, Fishing Among Sharks – GP-LP Investment Syndication in Later-stage Venture Capital (March 1, 2021). Available at SSRN: https://ssrn.com/abstract=3795342 or http://dx.doi.org/10.2139/ssrn.3795342

Ann-Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25181 (Phone)

Reiner Braun

Technische Universität München (TUM) - TUM School of Management ( email )

Arcisstr. 21
Munich, Deutschland 80333
Germany
+498928925181 (Phone)
+498928925188 (Fax)

HOME PAGE: http://www.ef.wi.tum.de/

Center for Entrepreneurial and Financial Studies ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

Henry Keppler (Contact Author)

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

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