The Impact of Investment Networks on Venture Capital Firm Performance

A Contingency Framework

Venture capital (VC) syndicates involve repeated transactions among partners and, therefore, they possess network-like characteristics. Although networks provide access to important externalities, extant literature has not studied the effects of the focal firm’s resource needs on performance benefits arising from different network structures. We investigate the impact of the VC firm’s maturity and status as proxies for firm-level resources on the relationship between network cohesion and VC performance. Analyzing a dataset of the UK VC investments (1998–2012), we find that mature/high-status VCs benefit less from network cohesion, and they ...

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