IDEAS home Printed from https://ideas.repec.org/p/fbb/wpaper/201037.html
   My bibliography  Save this paper

The Design of Syndicates in Venture Capital

Author

Listed:
  • Cestone Giacinta

    (UNIVERSITY OF SALERNO)

  • Lerner Josh

    (UNIVERSITY OF SALERNO HARVARD BUSINESS SCHOOL)

  • White Lucy

    (UNIVERSITY OF SALERNO HARVARD BUSINESS SCHOOL)

Abstract

We argue that the process whereby a venture capital syndicate is formed is characterized by two-sided asymmetric information, as the profitability signals held by different VCs are non-verifiable and manipulable. We analyze how an appropriate design of the syndicating VCs cash-flow rights can induce them to truthfully reveal their signals to each other. We then study how the incentive costs of syndication and the shape of financial claims vary with the VCs levels of expertise in evaluating entrepreneurial projects.

Suggested Citation

  • Cestone Giacinta & Lerner Josh & White Lucy, 2006. "The Design of Syndicates in Venture Capital," Working Papers 201037, Fundacion BBVA / BBVA Foundation.
    • Handle: RePEc:fbb:wpaper:201037
    as

    Download full text from publisher

    File URL: http://www.fbbva.es/TLFU/tlfu/ing/areas/econosoc/publicaciones/documentos/fichadoc/index.jsp?codigo=190
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hannes Maxin, 2020. "Corporate venture capital and the nature of innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 29(1), pages 1-30, January.
    2. Casamatta, Catherine & Haritchabalet, Carole, 2007. "Experience, screening and syndication in venture capital investments," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 368-398, July.
    3. Maxin, Hannes, 2018. "The Corporate Venture Capital Exit Decision," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181647, Verein für Socialpolitik / German Economic Association.
    4. Rin, Marco Da & Hellmann, Thomas & Puri, Manju, 2013. "A Survey of Venture Capital Research," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 573-648, Elsevier.
    5. Suting Hong, 2013. "Competition, syndication, and entry in the venture capital market," Working Papers 13-49, Federal Reserve Bank of Philadelphia.
    6. Kang, Jun-Koo & Li, Yingxiang & Oh, Seungjoon, 2022. "Venture Capital Coordination in Syndicates, Corporate Monitoring, and Firm Performance," Journal of Financial Intermediation, Elsevier, vol. 50(C).
    7. Douglas Cumming & Na Dai, 2013. "Why Do Entrepreneurs Switch Lead Venture Capitalists?," Entrepreneurship Theory and Practice, , vol. 37(5), pages 999-1017, September.
    8. Wang, Lanfang & Wang, Susheng, 2012. "Endogenous networks in investment syndication," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 640-663.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fbb:wpaper:201037. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Fundacion BBVA / BBVA Foundation (email available below). General contact details of provider: https://edirc.repec.org/data/fbbvaes.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.