Venture Capital Coordination in Syndicates, Corporate Monitoring, and Firm Performance
94 Pages Posted: 9 Aug 2018 Last revised: 18 Oct 2021
Date Written: October 16, 2021
Abstract
This paper examines how the coordination of venture capital (VC) investors in their syndicates, as measured by their geographic concentration, affects firm performance and ex ante contractual terms. Using the introduction of new airline routes between the locations of VC investors as a shock to their coordination costs, we find that firms with geographically concentrated VC investors are more likely to exit successfully than other firms. Geographically proximate VC investors are also more likely to form syndicates in follow-up rounds and to use less intensive staged financing and fewer convertible securities.
Keywords: Venture capital, Geographic concentration, Coordination, Monitoring, Exit, Staged financing
JEL Classification: G23, G24, G34
Suggested Citation: Suggested Citation