Optimal Syndication Decision of Corporate Venture Capital and Venture Capital Firms
Autor: Andreas Frick and Hannes Maxin
Nummer: 577, Jul 2016, pp. 28
JEL-Class: G24, M13
Venture capital and corporate venture capital firms are driven by high financial returns through the sale of ownership stakes. Additionally, corporate venture capital firms maximize the profits of their parent companies by generating innovation advantage. Despite this, both intermediaries can join syndicates to obtain more information about their potential investments. We examine a model to show the differences between the syndication decisions of these two investor types. We find that corporate venture capital firms finance more projects without a syndicate in comparison with venture capital firms. To reinforce our theoretical results, we conduct a survey about the German private equity market. The empirical evidence support our main theoretical findings.
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