Founders Matter! Serial Entrepreneurs and Venture Capital Syndicate Formation

Although founders are responsible for soliciting venture capital (VC) funding, their influence over VC syndicate formation has largely been neglected in the extant literature. This article fills this gap by comparing serial and novice entrepreneurs. Using the information asymmetry argument as our guiding framework, we argue that when potential investors face diminished information asymmetry, entrepreneurs are more likely to form VC syndicates that are more beneficial to ventures—providing entrepreneurs with greater and more diverse resources and to some extent reducing entrepreneurs’ loss of control. Enriched by qualitative evidence from fieldwork, a quantitative analysis of 351 ventures shows general support for our argument and reveals unexpected nuances.