Getting tired of your friends: the dynamics of venture capital relationships
We empirically examine how venture capitalists adjust coinvestor relationships over time. We identify a fundamental trade-off where the benefits of familiarity are weighed against the opportunity costs of coinvesting with other syndication partners. Using US data, we find that venture capitalists dy...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
| Published: |
Elsevier
2024
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| _version_ | 1811139628098387968 |
|---|---|
| author | Du, Q Hellmann, T |
| author_facet | Du, Q Hellmann, T |
| author_sort | Du, Q |
| collection | OXFORD |
| description | We empirically examine how venture capitalists adjust coinvestor relationships over
time. We identify a fundamental trade-off where the benefits of familiarity are weighed against
the opportunity costs of coinvesting with other syndication partners. Using US data, we find that
venture capitalists dynamically adjust their relationship intensities by gradually disengaging from
overly deep relationships. More centrally networked investors are more cautious with
disengaging. In hot investment markets investors disengage more readily from existing
relationships, but new relationships forged in hot market are less enduring. Perhaps surprisingly,
we find a negative relationship between deeper prior relationships and investment performance. |
| first_indexed | 2024-04-09T03:56:08Z |
| format | Journal article |
| id | oxford-uuid:88ec7d67-46ff-41bf-8d05-2a045406b962 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-09-25T04:09:06Z |
| publishDate | 2024 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | oxford-uuid:88ec7d67-46ff-41bf-8d05-2a045406b9622024-06-14T10:25:18ZGetting tired of your friends: the dynamics of venture capital relationshipsJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:88ec7d67-46ff-41bf-8d05-2a045406b962EnglishSymplectic ElementsElsevier2024Du, QHellmann, TWe empirically examine how venture capitalists adjust coinvestor relationships over time. We identify a fundamental trade-off where the benefits of familiarity are weighed against the opportunity costs of coinvesting with other syndication partners. Using US data, we find that venture capitalists dynamically adjust their relationship intensities by gradually disengaging from overly deep relationships. More centrally networked investors are more cautious with disengaging. In hot investment markets investors disengage more readily from existing relationships, but new relationships forged in hot market are less enduring. Perhaps surprisingly, we find a negative relationship between deeper prior relationships and investment performance. |
| spellingShingle | Du, Q Hellmann, T Getting tired of your friends: the dynamics of venture capital relationships |
| title | Getting tired of your friends: the dynamics of venture capital relationships |
| title_full | Getting tired of your friends: the dynamics of venture capital relationships |
| title_fullStr | Getting tired of your friends: the dynamics of venture capital relationships |
| title_full_unstemmed | Getting tired of your friends: the dynamics of venture capital relationships |
| title_short | Getting tired of your friends: the dynamics of venture capital relationships |
| title_sort | getting tired of your friends the dynamics of venture capital relationships |
| work_keys_str_mv | AT duq gettingtiredofyourfriendsthedynamicsofventurecapitalrelationships AT hellmannt gettingtiredofyourfriendsthedynamicsofventurecapitalrelationships |