Cooperation among financial institutions is a persistent feature of the equity issuance process. Also, the syndication of venture capital investments is common practice among venture capitalists. Despite the importance of syndication, surprisingly little is known on the motives and structure of syndication (Manigart et al. (2002)). Furthermore, there is hardly any empirical evidence for Europe or particularly Germany on the syndication behavior of VC organisations and the factors influencing their overall propensity to co-invest.
On the one hand, the purpose of this paper is to compile and summarise all aspects of the existing theory on VC syndication. Therefore, the evidence from the few empirical studies that were so far carried out on this topic is discussed. Thus, the general theory on syndication, which is thought to be independent from peculiar VC industries, serves as the framework throughout this paper which is complemented by the results of the empirical analyses done so far by different authors. On the other hand, this text has also an explorative component where it is analysed if and to what degree findings of the existing studies also hold for the German VC market. This analysis is done by the use of a data base listing a total of 3,230 VC investments in German portfolio companies. The nature of the data base at hand is not designed to allow for conclusions on all relevant aspects of syndication. But the claim of this paper is to use and analyse it whenever it is possible and the data base can be linked to aspects on syndication discussed throughout the different chapters.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Problem set and course of investigation
- Definition of venture capital
- Definition of venture capital syndication
- Syndication practice of venture capitalists in Europe
- Exploration of the data set
- Methodology
- Description of the sample
- Number of investors
- Syndication Ratio of the investors
- Number of portfolio companies
- Geographical characteristics of the sample
- Distribution of the venture capital investors in Germany
- Distribution of the portfolio companies in Germany
- Rationales for venture capital syndication
- The finance-based motive
- The resource-based motive
- The Superior Investment Selection Hypothesis
- The Value Added Hypothesis
- Evaluation of the Value Added Hypothesis and the Selection Hypothesis
- The deal flow motive
- Other motives
- Window dressing
- Collusion
- Empirical relevance of the major motives
- Factors influencing the propensity to syndicate
- Degree of uncertainty
- Industry of the investee company
- Type of the venture capital investor
- Characteristics of the venture capital organisation
- Size
- Maturity
- Specialisation
- Investment amount
- Workload of the investment manager
- Location of the venture capital firm and the portfolio company
- Investment stage
- Competition in the venture capital market
- Syndicate formation and networking of venture capital organisations
- Partner selection in syndicates
- The structure of venture capital syndicates
- The role of the lead investor
- Syndication under a networking perspective
- Networking activities of venture capitalists
- Implications on venture capitalists
- Implications on entrepreneurs
- Syndication and firm value of the portfolio company
- Syndicates of independent venture capitalists
- Syndicates of corporate venture capitalists
- Potential problems with syndication
- Informational asymmetry
- Coordination problems
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis aims to analyze the syndication of venture capital investments in Germany, exploring its theoretical foundations and practical applications. The study examines the motivations for syndication, factors influencing the propensity to syndicate, and the impact of syndication on the value of portfolio companies.
- Motivations for Venture Capital Syndication
- Factors Influencing Syndication Propensity
- Syndicate Formation and Networking
- Syndication and Firm Value
- Potential Problems with Syndication
Zusammenfassung der Kapitel (Chapter Summaries)
The first chapter introduces the topic of venture capital syndication, outlining the research question and defining key terms. It also explores the practice of syndication within the European venture capital landscape. Chapter two delves into the data set used for the analysis, presenting the methodology and describing the sample of venture capital investors and portfolio companies. Chapter three examines the rationales behind venture capital syndication, exploring motives such as finance-based, resource-based, and deal flow considerations. Chapter four investigates factors that influence the propensity to syndicate, including uncertainty levels, industry characteristics, and organizational features. Finally, Chapter five explores the formation and networking aspects of venture capital syndicates, analyzing partner selection, syndicate structure, and the role of networking activities.
Schlüsselwörter (Keywords)
Venture capital syndication, venture capital, syndication, portfolio companies, investment, financing, motives, factors, networking, firm value, Germany, European venture capital.
- Quote paper
- Dipl.Kfm. Finn Rieder (Author), 2003, Syndication of Venture Capital Investments - Theory and Practice in Germany, Munich, GRIN Verlag, https://www.grin.com/document/185856
