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Venture capital syndication in times of economic crisis

Listed author(s):
  • Geertjan De Vries
  • Joern H. Block

This study analyses the effects of the 2000--2001 dot-com crisis and the 2008--2009 financial crisis on venture capital syndication. Using propensity score matching analysis, we show that during the two crises, venture capital firms (VCFs) had a lower tendency to syndicate their investments, and the size of the syndicates was smaller. This effect is found to be stronger for later-stage financing than for early stage financing. We explain the lower propensity to syndicate and the reduction in syndicate size by the existence of fewer exit opportunities for VCFs and a lower supply of funds for the venture capital industry. Implications for VCFs and start-up firms are discussed.

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Article provided by Taylor & Francis Journals in its journal Venture Capital.

Volume (Year): 13 (2011)
Issue (Month): 3 (June)
Pages: 195-213

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Handle: RePEc:taf:veecee:v:13:y:2011:i:3:p:195-213
DOI: 10.1080/13691066.2011.600278
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