Syndication, Networks and the Growth of Venture Capital in Philadelphia, 1980–99

This paper explores the use of venture capital syndication among venture capital firms in the Philadelphia region from 1980 to 1999. The central question in the analysis is the extent to which regional actors have embraced a new type of investing. To explore this question, the paper looks at the distribution of syndication ties, that is, patterns of co-investment among venture capital firms. In particular, the analysis explores patterns of syndication and network structure among venture capital firms to identify not only the extent of syndication but also cliques and clusters among syndication partners. The analysis utilizes an extensive database consisting of venture capital disbursements and investments in the Philadelphia region from 1980 to 1999. The paper finds that the use of syndication among Philadelphia venture capital firms was limited in nature. Although Philadelphia venture capital firms syndicated extensively with venture capital firms from outside the region, syndication among partners tended to be highly parochial. In addition, the emergence of a dominant clique of venture capital firms is documented, and their impact is discussed.