Market Reputation, Innovation or Synergistic Partnerships, and Syndication Activities within Venture Capital Markets

47 Pages Posted: 9 Nov 2016 Last revised: 19 May 2021

Date Written: May 19, 2021

Abstract

Absent superior performance with respect to `Portfolio Innovation Focus' (PIF), formal theoretical predictions show `less experienced' (`competing') venture capitalists (VCs) - VCs who only coinvest with other less experienced VCs - become less reputable than alternate (same cohort) less experienced (`non-competing') VCs who coinvest with experienced VCs. Empirical results validate the theory, and existence of a single crossing property between PIF realizations for the two groups confirms dichotomy of preferences. The finding that highest ability non-competing VCs unequivocally outperform highest ability competing VCs indicates predication of syndication on `demand for expertise' Pareto dominates predication on quid-pro-quo benefits of syndicate size.

Keywords: Risk, Single Crossing, Experience, Diversification, Syndicate Size, Portfolio Innovation Focus

JEL Classification: G24; L14

Suggested Citation

Obrimah, Oghenovo A., Market Reputation, Innovation or Synergistic Partnerships, and Syndication Activities within Venture Capital Markets (May 19, 2021). Available at SSRN: https://ssrn.com/abstract=2866898 or http://dx.doi.org/10.2139/ssrn.2866898

Oghenovo A. Obrimah (Contact Author)

FISK University ( email )

1000 17th Ave N
Nashville, TN TN 37208-3051
United States
4049404990 (Phone)

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