Whom you know matters: Venture capital networks and investment performance

  • Hochberg Y
  • Ljungqvist A
  • Lu Y
  • 479

    Readers

    Mendeley users who have this article in their library.
  • 451

    Citations

    Citations of this article.

Abstract

Many financial markets are characterized by strong relationships and networks, rather than arm's-length, spot market transactions. We examine the performance consequences of this organizational structure in the context of relationships established when VCs syndicate portfolio company investments. We find that better-networked VC firms experience significantly better fund performance, as measured by the proportion of investments that are successfully exited through an IPO or a sale to another company. Similarly, the portfolio companies of better-networked VCs are significantly more likely to survive to subsequent financing and eventual exit. We also provide initial evidence on the evolution of VC networks.

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Authors

  • Yael V. Hochberg

  • Alexander Ljungqvist

  • Yang Lu

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free