The Social Capital of Venture Capitalists and Its Impact on the Funding of Start-Up Firms

How does the social capital of venture capitalists (VCs) affect the funding of start-ups? Extant entrepreneurship literature conceptualizes a substitute effect between the social and financial capital that new firms attain from their investors. On the contrary, by building on the rich social capital literature, we hypothesize a positive effect of VCs’ social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural aspects of VCs’ social network, such as the number of connections and the spanning of structural holes, and relational aspects, such as the diversity of network partners’ attributes, provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 5,000 funding rounds in the Internet and IT sector, strongly confirm our hypotheses. Both structural and relational attributes of VCs’ syndication networks have a significant influence on the funds received by start-up firms, highlighting the importance of a social capital perspective on new venture funding. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs’ social capital on start-up firms is much more complex than previously argued in the literature.social networks;social capital;start-ups;venture capital;structural holes

The impact of acquisitions on Chinese acquirers’ innovation performance

Acquisitions by Chinese firms have increased markedly in recent years. So far, we know little about the effects of these acquisitions on the acquirer’s innovation performance. Our paper focuses on two interrelated research questions. First, to what extent can Chinese firm

The Social Capital of Venture Capitalists and Its Impact on the Funding of Start-Up Firms

How does the social capital of venture capitalists (VCs) affect the funding of start-ups? Extant entrepreneurship literature conceptualizes a substitute effect between the social and financial capital that new firms attain from their investors. On the contrary, by building on the rich social capital literature, we hypothesize a positive effect of VCs’ social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural aspects of VCs’ social network, such as the number of connections and the spanning of structural holes, and relational aspects, such as the diversity of network partners’ attributes, provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 5,000 funding rounds in the Internet and IT sector, strongly confirm our hypotheses. Both structural and relational attributes of VCs’ syndication networks have a significant influence on the funds received by start-up firms, highlighting the importance of a social capital perspective on new venture funding. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs’ social capital on start-up firms is much more complex than previously argued in the literature

Wissenschaftliche Beiträge - Methoden der Längsschnittanalyse in den Wirtschafts- und Sozialwissenschaften

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The Impact of Acquisitions on Chinese Acquirers’ Innovation Performance: An Empirical Investigation of 1,545 Chinese Acquisitions

Acquisitions by Chinese firms have increased markedly in recent years. So far, we know little about the effects of these acquisitions on the acquirer’s innovation performance. In this regard, we study two related research questions. First, to what extent can Chinese firms increase their patent output following an acquisition? Second, which factors influence the post-acquisition patent output? Using a comprehensive data set of Chinese manufacturing firms, we find no significant overall effect of acquisitions on patent output. However, we find that several acquisition-specific factors have a positive effect on post-acquisition patent output (e.g., characteristics of the acquired knowledge base, cross-border acquisitions), while other factors (e.g., state-ownership) have a negative effect. Our study extends prior research on post-acquisition innovation performance to the context of China