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Why Do Venture Capital Companies Syndicate?

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Author Info
S. MANIGART ()
A. LOCKETT
M. MEULEMAN ()
M. WRIGHT
H. LANDSTRÖM
H. BRUINING
P. DESBRIÈRES
U. HOMMEL

Additional information is available for the following registered author(s):

Abstract

Financial theory, access to deal flow, selection and monitoring skills are used to explain syndication in venture capital (VC) firms in six European countries. In contrast with US findings, portfolio management motives are more important for syndication than individual deal management motives. Risk sharing, portfolio diversification and access to larger deals are more important than selection and monitoring of deals. This holds for later stage and for early stage investors. Value adding is a stronger motive for syndication for early stage investors than for later stage investors, however. Non-lead investors join syndicates for the selection and value adding skills of the syndicate partners.

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Publisher Info
Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 04/226.

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Length: 43 pages
Date of creation: Feb 2004
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Handle: RePEc:rug:rugwps:04/226

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  6. N. Berger, Allen & F. Udell, Gregory, 1998. "The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 613-673, August. [Downloadable!] (restricted)
    Other versions:
  7. Kaplan, Steven & Martel, Frederic & Strömberg, Per Johan, 2003. "How Do Legal Differences and Learning Affect Financial Contracts?," CEPR Discussion Papers 4161, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Jeng, Leslie A. & Wells, Philippe C., 2000. "The determinants of venture capital funding: evidence across countries," Journal of Corporate Finance, Elsevier, vol. 6(3), pages 241-289, September. [Downloadable!] (restricted)
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  12. Bygrave, William D., 1987. "Syndicated investments by venture capital firms: A networking perspective," Journal of Business Venturing, Elsevier, vol. 2(2), pages 139-154. [Downloadable!] (restricted)
  13. Sapienza, Harry J. & Manigart, Sophie & Vermeir, Wim, 1996. "Venture capitalist governance and value added in four countries," Journal of Business Venturing, Elsevier, vol. 11(6), pages 439-469, November. [Downloadable!] (restricted)
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