Venture Capital Networks

Abstract

This review is the first one addressing the elephant in the room: the role of networks in venture capital. Entrepreneurs spend days and days in finding the way to get introduced to VCs, while VCs jump from event to event in the aim of spotting the next unicorn. The whole startup and venture capital industry is connected over tiny details: participating at the same events, binge at the same accelerator, investing together in a promising - or in a failing - company. Other ties are more personal. Founding a company together, or attending the same university, creates strong social ties among individuals. Startups themselves are connected by providing products to each other. Investors and entrepreneurs are the fundamental players in developing companies and they coexist in a complex networked system. Innovation, funding, information, and know-how are spread through it, by means of a multitude of connections formed in a variety of ways. The chapter provides an overview of the state of the literature, shedding a light on the challenges faced by this research area and offering suggestions on its potential developments.

Keywords: Venture Capital, Entrepreneurship, Networks

JEL Classification: G24, M14, D85, L14