Unique Resources of Corporate Venture Capitalists as a Key to Entry into Rigid Venture Capital Syndication Networks

Abstract

We investigate how corporate venture capitalists (CVCs) can rapidly attain central positions in venture capital syndication networks. Using data of CVC investments by US corporations between 1996-2005, we complement prior research which suggests that centrally positioned VCs predominantly invest together with other centrally positioned VCs. While we find clear support for the social network theory arguments that prior central positions in syndication networks significantly explain future network positions of CVCs, we also find a negative interaction effect between past centrality and corporate resources. This finding implies that resources of CVCs can substitute for their lack of prior centrality and allow them to gain rapidly central positions in rigid VC syndication networks.

Keywords: Network evolution, venture capital syndication, corporate venture capital

JEL Classification: D21, G24, M13, O32