From In-Person To Online: The New Shape of the VC Industry
75 Pages Posted: 20 Sep 2022 Last revised: 26 Sep 2023
Date Written: August 23, 2022
This paper asks whether geographical clustering and in-person interactions are still essential features of the venture capital (VC) industry in the age of online communications. Exploring how VCs respond to an unexpected interruption in face-to-face meetings during the Covid-19 pandemic, we document that they break their traditional norm by investing in more distant startups. This evolution goes along with several changes in selection criteria and VCs' syndication process. Overall, our study reveals that online interactions cannot perfectly substitute for in-person meetings and helps us understand how VCs revisit their investment model.
Keywords: Venture Capital, Soft Information, Investment Selection, Syndication
JEL Classification: G23, G24, L26
Suggested Citation: Suggested Citation