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How Venture Capital Firms Choose Syndication Partners: The Moderating Effects of Institutional Uncertainty and Investment Preference

Published online by Cambridge University Press:  27 July 2021

Lu Zheng Open the ORCID record for Lu Zheng [Opens in a new window] ,
Likun Cao ,
Jie Ren ,
Xibao Li ,
Ximing Yin Open the ORCID record for Ximing Yin [Opens in a new window]  and
Jin Chen
Lu Zheng
Affiliation:
Tsinghua University, China
Likun Cao
Affiliation:
University of Chicago, USA
Jie Ren*
Affiliation:
Tsinghua University, China
Xibao Li
Affiliation:
Tsinghua University, China
Ximing Yin
Affiliation:
Beijing Institute of Technology, China
Jin Chen
Affiliation:
Tsinghua University, China
*
Corresponding author: Jie Ren ([email protected])
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Abstract

This study investigates how venture capital firms (VCs) choose syndication partners. Exponential random graph models of Chinese VC syndication networks from 2006 to 2013 show that the homophily mechanism does not always determine VCs’ partner selection. In selecting partners, VCs have to strike a balance between reducing uncertainty and mobilizing heterogeneous resources. Therefore, decisions about partners depend on institutional uncertainty and VCs’ investment preferences. While VCs that focus on traditional business in an immature market are more likely to form homogeneous syndications, their peers that prefer to invest in innovative companies and that can rely on a stable market tend to syndicate with heterogeneous partners.

摘要

本研究关注风险投资公司如何选择联合投资伙伴。通过对中国风险投资公司从2006年到2013年的联合投资网络建立指数随机图模型，我们发现风险投资并不总是选择同质性的联合投资伙伴。在选择合作伙伴时，风险投资公司需要在减少不确定性和调动异质性资源之间寻找平衡。联合投资伙伴的选择取决于制度的不确定性和风险投资的投资偏好。制度不确定性高时，投资传统业务的风险投资更可能选择同质的联合投资伙伴，制度不确定性低时，倾向于投资创新企业的风险投资更可能选择异质的联合投资伙伴。

Аннотация

Это исследование изучает, как венчурные компании (ВК) выбирают партнеров для объединения в синдикаты. Методы экспоненциальных случайных графов для моделирования сетей синдикации китайских венчурных компаний в период с 2006 по 2013 годов показывают, что механизм гомогенности не всегда определяет выбор партнеров для венчурных компаний. При выборе партнеров венчурные компании должны соблюдать баланс между снижением степени неопределенности и мобилизацией разнообразных ресурсов. Следовательно, решения о выборе партнеров зависят от институциональной неопределенности и инвестиционных преференций венчурных компаний. В то время как венчурные компании, которые сосредоточены на традиционном бизнесе на незрелом рынке, с большей вероятностью образуют однородные синдикаты, их коллеги, которые предпочитают инвестировать в инновационные компании и могут полагаться на стабильный рынок, как правило, объединяются в синдикаты с разнородными партнерами.

Resumen

Este estudio investiga cómo las empresas de capital de riesgo (VCs por sus iniciales en inglés) eligen sus socios de sindicación. Los modelos grafos aleatorios de las redes de sindicación de empresas de capital de riesgo chinas entre el 2006 y el 2013 muestran que los mecanismos de homofilia no siempre determinan la selección de socios por parte de las empresas de capital de riesgo. En la selección de socios las empresas de capital de riesgo tienen que encontrar un equilibrio entre reducir la incertidumbre y la movilización de recursos heterogéneos. Mientras que las empresas de capital de riesgo que se enfocan en negocios tradicionales en un mercado inmaduro son más propensas a formar sindicaciones homogéneas, sus pares que prefieren invertir en compañías innovadoras y que pueden confiar en un mercado estable tienden a sindicarse con socios heterogéneos.

Keywords

exponential random graph modelshomophilyinstitutional uncertaintyinvestment preferenceVC syndications风险投资联合投资同质性异质性指数随机图模型投资偏好制度不确定性модели экспоненциальных случайных графовгетерофилиягомофилияинституциональная неопределенностьинвестиционные преференциисиндикаты венчурных компанийmodelos grafos aleatorios exponencialesheterofiliahomofiliaincertidumbre institucionalsindicación de empresas de capital de riesgo
Type
Article
Information
Management and Organization Review , Volume 18 , Issue 3 , June 2022 , pp. 463 - 490
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of The International Association for Chinese Management Research

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Footnotes

ACCEPTED BY Senior Editor Lin Cui

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