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Syndication in Venture Capital Financing
Author(s) -
Deli Daniel N.,
Santhanakrishnan Mukunthan
Publication year - 2010
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.2010.00261.x
Subject(s) - web syndication , venture capital , syndicate , business , social venture capital , finance , value (mathematics) , financial capital , capital (architecture) , financial system , human capital , economics , market economy , machine learning , computer science , archaeology , history
We examine syndication in venture capital (VC) investments between 1980 and 2005. We argue that VC firms syndicate investments to mitigate human capital and financial constraints within individual VC firms and to reduce uncertainty about firm value. Our results are consistent with those arguments. We find that syndication is more likely for firms in the earliest stage of development and firms in the last stage of development as private firms (when human capital investments are greatest), for firms requiring the largest amounts of financial capital, and for firms with greater growth opportunities (those that are most difficult to value).