The effects of prior co‐investments on the performance of venture capitalist syndicates: A relational agency perspective

This study provides a reconciliation ofprevious findings regarding the effects of prior co-investments among venture capitalists (VCs) and the perfor-mance of VC syndicates. We propose a relational agencyframework outlining cost–benefit trade-offs associated withprior co-investments between VCs. A longitudinal study of4,550 U.S. ventures receiving syndicated investments from1980 to 2017 shows that there exists an inverted U-shapedrelationship between the number of prior co-investmentsand a venture's likelihood of a successful exit through initialpublic offering or merger and acquisition. We further findthat the relationship between prior co-investments and syn-dicate performance is moderated by venture- and partner-specific risks.