A Social Network Analysis of Corporate Venture Capital Syndication

Abstract

The importance of social capital can be characterized by a well-known quote: "it's not just what you know, but whom you know". Firms with rich social capital are more informed, more capable, and more competitive, because networks of resources are within their reach. Social capital is embedded in social networks, and social network analysis is the chief topic of this research. The network being examined contains 1126 venture capital (VC) programs, 206 of them being corporate venture programs, and the rest consisting of independent venture capital firms. Venture programs co-invest in portfolio firms following an identifiable pattern. This research attempts to explain this co-investment pattern using social network analysis. Four attributes of social networks are explored during this analysis: prominence, range, brokerage, and cohesion. The findings of the corporate venture capital network provide a number of implications for the theory of social capital. The objective of the thesis is <em>using social capital to examine the syndication patterns in a corporate VC network</em>. The analysis of the corporate VC co-investment pattern supports four hypotheses. First, the corporate VC network is not cohesive. Second, most relationships in the network are indirect. Third, most prominent VCs are also the most powerful resource brokers in the network. Lastly, prominent VCs are likely to syndicate with other prominent VCs.