2022/03/23 by Joshua Lerner · 1 citation
Business, Management and Accounting · Economics, Econometrics and Finance · #Capital Investment and Risk Analysis #Corporate Finance and Governance #Private Equity and Venture Capital
paper · doi:10.4324/9781315235110-12
openalex publication_date 2022/03/23 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/02
This paper examines three rationales for the syndication of venture capital investments, using a sample of 271 private biotechnology firms. Syndication is commonplace, even in the first-round investments. Experienced venture capitalists primarily syndicate first-round investments to venture investors with similar levels of experience. In later rounds, established venture capitalists syndicate investments to both their peers and to less experienced capital providers. When experienced venture capitalists invest for the first time in later rounds, the firm is usually doing well. Syndication also often insures that the ownership stake of the venture capitalist stays constant in later venture rounds. I argue that the results are consistent with the proposed explanations.