Navigating investment decisions with social connectedness : Implications for venture capital

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Auteurs
Date

1 octobre 2023

Type de document
Périmètre
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Identifiants
Source

HAL SHS (Sciences de l’Homme et de la Société)

Collection

Archives ouvertes

Organisation

Centre pour la communication scientifique directe

Licence

info:eu-repo/semantics/OpenAccess

Mots-clés En

Social connectedness Venture capital Capital allocation Investment performance

Sujets proches En

Businesses Firms Companies Enterprises Business organizations Organizations, Business

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Giang Nguyen et al., « Navigating investment decisions with social connectedness : Implications for venture capital », HAL SHS (Sciences de l’Homme et de la Société), ID : 10670/1.d0df98...

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Résumé En

"This study examines how the geographical structure of social networks shapes venture capital (VC) investment decisions. We find that VC firms invest more in portfolio companies in socially connected regions. The effect is more pronounced among independent, smaller, less reputable, early–stage–focused VC firms and those not from a VC hub. We further document that social connectedness lowers the likelihood of a successful exit since it induces VC firms to undertake suboptimal investment decisions. Overall, our findings highlight the role of social connectedness in constituting the geographical differences in VC firms’ capital allocation and investment outcomes."

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