Like Performance, Perfect Match: Role of Past Performance in Venture Capital Syndication

Syndication among venture capital firms (VCFs) is increasingly prevailing in recent years, especially in emerging markets like China. Some of the VCFs have to syndicate with “worse performers” despite the “better performer preference.” The primary aim of this article is to contribute to our understanding of the impact performance gap among syndicated VCFs on formulation and duration of syndicate. The data consist of over 295,000 pair of VCFs syndicated in China mainland from 2000 to 2020. We find the negative effect of performance gap on the propensity of syndication with self-categorization of VCFs as the moderator. The key contribution of this paper is to test the significance of homogenous performance in syndication. This study advances the knowledge of agency in collaboration and sheds new light on organizational performance feedback in venture capital markets.