Venture Capital Communities 1 Amit Bubna Indian School of Business Gachibowli, Hyderabad, India 500 032 Sanjiv R. Das Leavey School of Business Santa Clara University, CA 95053 Nagpurnanand Prabhala Robert H. Smith School of Business University of Maryland, College Park, MD 20742 February 27, 2014 1Comments welcome. We thank Alexandre Baptista, David Feldman, Jiekun Huang, Ozgur Ince, Vladimir Ivanov, Pete Kyle, Josh Lerner, Laura Lindsey, Robert Marquez, Vojislav Maksi- movic, Manju Puri, Krishna Ramaswamy, Rajdeep Singh, Richard Smith, Anjan Thakor, Susan Woodward, Bernard Yeung, and participants at the CAF, FIRS, Midwest Finance Association, World Private Equity and TAPMI conferences, and seminar participants at Blackrock, Florida, George Washington University, Georgia State, Georgia Tech, ISB, Kellogg, Maryland, NUS, the R User Group, Rutgers, UNSW, and Villanova for helpful comments. The authors may be reached at their respective email addresses: amit
[email protected],
[email protected], and
[email protected]. Abstract Venture Capital Communities While it is well-known that syndication is extensively used in venture capital (VC) financing, less is known about the composition of VC syndicates. We present new evidence on this issue. While VC firms have a large pool of syndicate partners to choose from, they tend to draw from smaller groups of partners that we call VC \communities." We implement new techniques to uncover these groups and use them to understand preferences driving syndicate partner selection. We find a complex pattern in which preferences for dissimilar partners to extend influence coexist with preferences for similarity in terms of functional style on dimensions of industry, stage, and geographic specialization.