With Whom Sharks Share their Meal. How Corporates Syndicate New Venture Investment With Other CVCs

Abstract

This paper aims at filling a relevant gap in the entrepreneurial literature, by studying how corporates share their new venture investments with other corporates in a syndication team. In particular, we analyze how the corporate exploration propensity, i.e. the experience the corporate has acquired in investing in new ventures far from the corporate’s industrial domain, influences the number of other the corporates (the multiplicity) involved in the syndication team and their prominence. Furthermore, we also analyze how the corporate’s propensity at syndicating their investment with IVCs moderate the relationship between exploration propensity and corporate multiplicity and prominence. By drawing from the literatures of organizational learning and of competition concern in CVC syndication, we argue that there is a U-shaped relation between the corporate propensity to exploration and the multiplicity in syndication teams. We also argue that there is a negative relation between the corporate propensity to exploration and the corporate prominence in syndication teams. Furthermore, by drawing from social network literature, we argue that the propensity of the corporate to syndicate with IVCs and with prominent IVCs moderates the aforementioned relations. To test our theoretical framework, we have collected data about CVC investments from the VenturExpert database for 21 years, i.e. in the time window from 1995 to 2015. Our empirical analysis substantially confirms the theoretical framework by providing a significant contribution to the CVC literature.