Do I Have a Say in It? The Founders’ Role in Venture Capital Syndicate Formation

Abstract

Despite being the ones who solicit venture capital (VC) funding, the founders’ influence on VC syndicate formation has been neglected in the current literature. This paper fills this gap by comparing serial and novice entrepreneurs. We argue that a syndicate with lower prior tie density is more likely to be formed by serial entrepreneurs. However, this effect only holds when collaboration challenges are less of an issue. In the case of multi-VC syndicates, serial entrepreneurs are more likely to form a syndicate with lower tie strength dispersion to ensure a supportive syndicate. Empirical analyses of 183 startup companies support our arguments.