Venture Capitalists' Decision to Syndicate

Compares the relative importance of syndicationmotives across different types of venture capitalists. First, a discussion ofmotives for syndicating venture capital (VC) investments leads to theformulation of several hypotheses, two of which propose that the finance motiveis more important for small, early-stage VC firms than for large, later-stagefirms. Other hypotheses suggest that the deal flow motive is more important forlarge, specialized firms than for small, non-specialized firms. The remaininghypotheses involve the deal selection motive and the value-adding motive. Allof the hypotheses are evaluated in light of data on the VC syndicationpractices of 317 VC firms in Sweden, France, Germany, the Netherlands, Belgium,and the United Kingdom. The data suggest that the finance motive is the most important syndicationmotive for both early- and later-stage VC firms. Value adding, on the otherhand, is not an important motive for any firm. Finally, the deal flow and dealselection motives are more important for larger, early-stage VC firms than forsmaller firms. The study concludes with a discussion of implications forresearchers and practitioners. (SAA)