1994/01/01 by Joshua Lerner · 5 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Capital Investment and Risk Analysis #Corporate Finance and Governance #Private Equity and Venture Capital
paper · doi:10.2307/3665618
crossref issued 1994/01/01 · crossref published 1994/01/01 · crossref published-print 1994/01/01 · openalex publication_date 1994/01/01 · crossref created 2007/03/06 · crossref deposited 2021/02/05 · openalex created_date 2025/10/10 · crossref indexed 2026/07/27 · openalex updated_date 2026/07/28
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 capita) 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.