Social capital of venture capitalists and start-up funding
By Oliver Alexy, Joern H. Block, Philipp G. Sandner, Anne L. J. ter Wal. 2012
165 citations recorded by the source corpus.
How does the social capital of venture capitalists (VCs) affect the funding of start-ups? By building on the rich social capital literature, we hypothesize a positive effect of VCs’ social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural and relational aspects of VCs’ social networks provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 1,500 first funding rounds in the Internet and IT sector, strongly confirm our hypotheses. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs’ social capital on start-up firms may be more complex than previously argued in the literature.
Subfields: Accounting, Management of Technology and Innovation
View Paper: https://www.semanticscholar.org/paper/008a573568a769c19df95b1a3e5f054d1827ba1f
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In Accounting
In Management of Technology and Innovation
- F. Polzin
- E. Stam
- E. Malecki
- Andrew H. Van de Ven
- Ron A. Boschma
- David B. Audretsch
- N. Bosma
- Maksim Belitski
Citations in the corpus
- The wisdom of the crowd in funding: information heterogeneity and social networks of crowdfunders (2018, background): “Relationships are built between financier and venture as well as between syndicates of financiers to mitigate information asymmetries (Alexy et al. 2012; Gompers 1995; Gompers and Lerner 2001; Yao-Wen 2010).”
- Is the crowd sensitive to distance?—how investment decisions differ by investor type (2017, unknown): “Moreover, Hong et al. (2004) show that investment decisions are related to social interactions, which are linked naturally to investor communities (see also Vismara 2016a, 2016b and Alexy et al. 2012, for a discussion on the effect of information cascades).”
- Financing patterns of European SMEs – an empirical taxonomy (2016, unknown): “…comprehensive due diligence procedures, personal contacts with the entrepreneurs, investor networks and active involvement in the firm (Van Osnabrugge 2000; Carpenter and Petersen 2002a; Mason and Stark 2004; Block and Sandner 2009; Cosh, Cumming, and Hughes 2009; Hall 2010; Alexy et al. 2012).”