Venture Capital Communities
Author(s) Amit Bubna, Sanjiv R Das, Nagpurnanand Prabhala

ABSTRACT

We show that VCs tend to draw syndicate partners from very small pools of potential partners. This preferential attachment to some VCs over others leads VCs to cluster into new organizational forms, communities, or pools of VCs who tend to co-syndicate with each other. Using a large sample of syndications, we characterize the number, size, and composition, of communities and examine their economic activities. Communities comprise VCs with similar age, influence, and functional style. Community VC-funded fi rms, especially earlier-stage firms with limited innovation histories, display more innovation scale and novelty and mature faster, particularly when communities pool diverse VC experiences.


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