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Why do European Venture Capital Companies syndicate?

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Author Info
Sophie Manigart (Vlerick Leuven Gent Management School)
Miguel Meuleman (Vlerick Leuven Gent Management School)

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Abstract

Financial theory, resource-based theory and access to deal flow are used to explain syndication practices among European venture capital (VC) firms. The desire to share risk and increase portfolio diversification is a more important motive for syndication than the desire to access additional intangible resources or deal flow. Access to resources is, however, more important for non-lead than for lead investors. When resource-based motives are more important, the propensity to syndicate increases. Syndication intensity is higher for young VC firms and for VC firms, specialised in a specific investment stage. Finally, syndication strategies are similar across European countries, but differ from North American strategies.

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Publisher Info
Paper provided by EconWPA in its series Finance with number 0210006.

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Length: 38 pages
Date of creation: 22 Oct 2002
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Handle: RePEc:wpa:wuwpfi:0210006

Note: Type of Document - ; pages: 38
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G - Financial Economics

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Vesa Kanniainen & Christian Keuschnigg, 2000. "The Optimal Portfolio of Start-Up Firms in Venture Capital Finance," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March. [Downloadable!] (restricted)
  3. Mike Wright, 1998. "Venture Capital and Private Equity: A Review and Synthesis," Journal of Business Finance & Accounting, Blackwell Publishing, vol. 25(5&6), pages 521-570. [Downloadable!] (restricted)
  4. Joshua Lerner, 1994. "The Syndication of Venture Capital Investments," Financial Management, Financial Management Association, vol. 23(3), Fall.
  5. Sah, Raaj Kumar & Stiglitz, Joseph E, 1986. "The Architecture of Economic Systems: Hierarchies and Polyarchies," American Economic Review, American Economic Association, vol. 76(4), pages 716-27, September. [Downloadable!] (restricted)
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  6. 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)
  7. Christopher B. Barry, 1994. "New Directions in Research on Venture Capital Finance," Financial Management, Financial Management Association, vol. 23(3), Fall.
  8. James A. Brander & Raphael Amit & Werner Antweiler, 2002. "Venture-Capital Syndication: Improved Venture Selection vs. The Value-Added Hypothesis," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 11(3), pages 423-452, 09. [Downloadable!] (restricted)
  9. Elango, B. & Fried, Vance H. & Hisrich, Robert D. & Polonchek, Amy, 1995. "How venture capital firms differ," Journal of Business Venturing, Elsevier, vol. 10(2), pages 157-179, March. [Downloadable!] (restricted)
  10. Philippe Desbrières & Sophie Manigart & Koen De Waele & Mike Wright & Ken Robbie & Harry Sapienza & Amy Beekman, 2002. "Determinants of required return in venture capital investments:A five country study," Working Papers FARGO 1020701, Université de Bourgogne - Latec/Fargo (Research center in Finance,organizational ARchitecture and GOvernance). [Downloadable!]
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  11. Lockett, Andy & Wright, Mike, 2001. "The syndication of venture capital investments," Omega, Elsevier, vol. 29(5), pages 375-390, October. [Downloadable!] (restricted)
  12. Douglas J. Cumming, 2006. "The Determinants of Venture Capital Portfolio Size: Empirical Evidence," Journal of Business, University of Chicago Press, vol. 79(3), pages 1083-1126, May. [Downloadable!]
  13. 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)
  14. 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)
  15. Sahlman, William A., 1990. "The structure and governance of venture-capital organizations," Journal of Financial Economics, Elsevier, vol. 27(2), pages 473-521, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mike Wright, 2007. "Venture capital in China: A view from Europe," Asia Pacific Journal of Management, Springer, vol. 24(3), pages 269-281, September. [Downloadable!] (restricted)
  2. Cumming, D. & Johan, S., 2005. "Provincial preferences in private equity," Discussion Paper 04, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
    Other versions:
  3. Cumming, Douglas & Johan, Sofia, 2006. "Corporate social responsibility: domestic and international private equity institutional investment," Discussion Paper 2, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
    Other versions:
  4. Christian Hopp & Finn Rieder, 2004. "What drives Venture Capital Syndication," Finance 0412023, EconWPA, revised 12 Jan 2006. [Downloadable!]
  5. Douglas Cumming & Sofia Johan, 2007. "Advice and monitoring in venture finance," Financial Markets and Portfolio Management, Springer, vol. 21(1), pages 3-43, March. [Downloadable!] (restricted)
    Other versions:
  6. Carola Jungwirth & Petra Moog, 2004. "Closing the gap or enlarging the pool: How venture capitalist differ in their syndication motives," Working Papers 0023, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
  7. Rainer Lauterbach & Isabell Welpe & Jan Fertig, 2007. "Performance differentiation: cutting losses and maximizing profits of private equity and venture capital investments," Financial Markets and Portfolio Management, Springer, vol. 21(1), pages 45-67, March. [Downloadable!] (restricted)
  8. Douglas Cumming & Grant Fleming & Armin Schwienbacher, 2008. "Financial intermediaries, ownership structure and the provision of venture capital to SMEs: evidence from Japan," Small Business Economics, Springer, vol. 31(1), pages 59-92, June. [Downloadable!] (restricted)
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