Frontiers of Entrepreneurship Research
1997 Edition
SUMMARIES
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PREDICTING THE NATURE OF THE VENTURE CAPITAL COINVESTMENT SYNDICATE AND UNDERSTANDING THE EFFECTS OF SYNDICATE TYPE ON THE FUNDED VENTURE 

1Douglas D. Moesel
2Lowell W. Busenitz
3James O. Fiet
4Jay B. Barney

1Lehigh University
Bethlehem, PA 18015

Telephone: 1610-758-4953
Fax: 1610-758-6429

Principal Topics

Differences in syndication of VC investment are examined from the perspective of important antecendents of the syndicate type and structure.  Antecedents include attributes of the VC firms, the attributes and environment of the new venture firm, and attributes and experiences of the new venture management team being funded.  In addition, effects of syndicate type and structure on the individual new venture are explored across a few key measures of new venture post-funding governance and performance.  Competing views of the role of syndication are contrasted.

Method

A combination of discriminant and regression analyses of a random sample of 204 mail survey respondents is used to examine new venture firms receiving first round funding by venture capitalists.  Network analytic matrices are used to develop measures of binary co-investment choices of venture capitalists involved in funding the new venture.

Major Findings

Initial analytical results will be reported.  Research is at an early stage so suggestions for development of the database to fully capture existing co-investment theories are welcome.

Implications

Enhanced understanding of the relative validity of alternative theories of VC syndication has merit for individual VC firms, new venture management teams, professional intermediaries for entrepreneurs, investors in VC fund pools, and regional, state, and local economic development organizations.  Each group can benefit from more fully comprehending what attracts different VCs to a new venture and the likely behaviors of the resulting syndicate.

 

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