What drives Venture Capital Syndication

Christian Hopp and Finn Rieder
Additional contact information
Finn Rieder: German Banking Association

Finance from EconWPA

Abstract: This paper analyses the syndication behavior of VC organisations and the factors influencing their overall propensity to co-invest. We develop hypothesis concerning the investment behavior of Venture Capitalists in the German market and compare these hypothesis to the actual empirical evidence from a data set including 2,500 VC investments. We find that the underlying theories of financial and resource driven motives can indeed be used to explain the observed behavior for syndicated venture capital investments. We show that mainly Resource driven motives foster the propensity to syndicate an investment. Additionally, we find that Venture Capital Firms tend to diversify their portfolio, such that both motives of venture capital syndication (Finance and Resource driven) seem to be present at the same time and play a significant role simultaneously for the decision to jointly co-invest. We find evidence that a lower level of experience and expertise fosters the need to syndicate an investment.

Keywords: Venture Capital; Syndication (search for similar items in EconPapers)
JEL-codes: G24 G31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fin
Date: 2004-12-22, Revised 2006-01-12
Note: Type of Document - pdf
View list of references View citations in EconPapers

Downloads: (external link)
http://129.3.20.41/eps/fin/papers/0412/0412023.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:0412023

Access Statistics for this paper

More papers in Finance from EconWPA
Series data maintained by EconWPA ().