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Peer networks in venture capital

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  • Lee, Hoan Soo

Abstract

I identify advantages from strategic networks in venture capital investments, estimating large impacts. I use the experiment underlying the formation of HBS MBA VCs and entrepreneurs. Random assignment of HBS MBA graduates provides a key exogenous variation. Being connected to peer VC firms and startups leads to more deals and larger AUM. An endowment of one-additional entrepreneur leads to raising $23.47M more, and one-additional VC leads to raising $10.48M more than the average size of HBS funds. Results suggest that the well-connected venture capitalist may be successful by attaining access to great deals.

Suggested Citation

  • Lee, Hoan Soo, 2017. "Peer networks in venture capital," Journal of Empirical Finance, Elsevier, vol. 41(C), pages 19-30.
    • Handle: RePEc:eee:empfin:v:41:y:2017:i:c:p:19-30
    DOI: 10.1016/j.jempfin.2016.12.006
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    Cited by:

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    4. Christopher Boudreaux & George Clarke & Anand Jha, 2021. "Social capital and small business productivity: The mediating roles of financing and customer relationships," Papers 2104.12004, arXiv.org.
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    6. Li, Jiu-Jin & Xu, Chang & Fung, Hung-Gay & Chan, Kam C., 2021. "Do venture capital firms promote corporate social responsibility?," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 718-732.
    7. Cumming, Douglas & Dai, Na, 2024. "Shadow capital in venture financing: Selection, valuation, and exit dynamic," Journal of Empirical Finance, Elsevier, vol. 78(C).

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    More about this item

    Keywords

    Networks; Venture capital; Peer effects;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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