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<p>In this paper, we construct a model in which a lead Venture Capital investor forms a syndicate to invest in an entrepreneurial project. Syndicate members have different investment horizon preferences and bear the cost of delay whenever the lead investor’s investment horizon is greater than theirs. Optimal syndicate size is formed by a trade-off between the success probability of the project, which increases with syndicate size and the extra equity share that the lead investor has to offer because of the delay cost that the marginal syndicate member bears. We also show that syndicate size is decreasing in the lead investor’s investment horizon preference and induces incentive effects on the lead investor’s managerial effort that in turn affect the success probability of the project.</p>

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Syndication, investment horizon, and managerial effort in venture capital

  • 期刊论文

  • 发表日期：

    2026年2月19日

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  • George Geronikolaou

摘要

In this paper, we construct a model in which a lead Venture Capital investor forms a syndicate to invest in an entrepreneurial project. Syndicate members have different investment horizon preferences and bear the cost of delay whenever the lead investor’s investment horizon is greater than theirs. Optimal syndicate size is formed by a trade-off between the success probability of the project, which increases with syndicate size and the extra equity share that the lead investor has to offer because of the delay cost that the marginal syndicate member bears. We also show that syndicate size is decreasing in the lead investor’s investment horizon preference and induces incentive effects on the lead investor’s managerial effort that in turn affect the success probability of the project.