Polishing diamonds in the rough: the sources of syndicated venture performance

Authors

Sanjiv R. Das
Hoje Jo
Yongtae Kim, Santa Clara UniversityFollow

Document Type

Article

Publication Date

4-2011

Publisher

Elsevier B.V.

Abstract

Using an effort-sharing framework for VC syndicates, we assess how syndication impacts investment returns, chances of successful exit, and the time taken to exit. With data from 1980-2003, and applying apposite econometrics for endogeneity to these different performance measures, we are able to ascribe much of the better return to selection, with the value-addition by monitoring role significantly impacting the likelihood and time of exit. While the extant literature on Venture Capital (VC) syndication is divided about the relative importance of the "selection" and "value-add" hypotheses, we find that their roles are complementary.

Comments

NOTICE: this is the author's version of a work that was accepted for publication in Journal of Financial Intermediation. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Intermediation, Vol. 20, No. 2, (2011) doi:10.1016/j.jfi.2010.08.001

Recommended Citation

Das, Sanjiv R., Hoje Jo, and Yongtae Kim. "Polishing Diamonds in the Rough: The Sources of Syndicated Venture Performance." Journal of Financial Intermediation 20.2 (2011): 199-230.