Who's the new kid? The process of developing centrality in venture capitalist deal networks

Bret R. Fund, Timothy G. Pollock, Edward Baker, Adam J. Wowak

Research output: Chapter in Book/Report/Conference proceedingChapter

17 Citations (Scopus)

Abstract

In this chapter we examine the process by which new firms become central actors within their industry networks. We focus, in particular, on how relatively new venture capital (VC) firms become more central within investment syndication networks. We present a model that captures the relationships among (1) the social capital and status of the new VC firm's founders, (2) the VC firm's resource endowments, (3) the VC firm's ability to forge relationships with other prestigious and central venture capital firms, (4) the visibility-enhancing performance of portfolio firms, and (5) the urgency and effort exhibited by the new VC as it pursues these opportunities. These factors combine to shape a new VC's journey from the periphery to the center of its industry network. To illustrate these processes, we develop in-depth case studies of Benchmark Capital and August Capital, two VC firms founded in 1995. We then elaborate upon the enacted nature of resource and opportunity constraints and conclude with a discussion of how new firms create their own self-fulfilling prophecies.

Original languageEnglish (US)
Title of host publicationNetwork Strategy
EditorsJoel Baum, Timothy Rowley
Pages563-593
Number of pages31
DOIs
StatePublished - Aug 25 2008

Publication series

NameAdvances in Strategic Management
Volume25
ISSN (Print)0742-3322

Fingerprint

Venture capital firms
Venture capitalists
Centrality
New ventures
New firms
Network industries
Venture capital
Syndication
Benchmark
Social capital
Visibility
Factors
Self-fulfilling prophecy
Resources
Endowments
Firm resources
Social status

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management

Cite this

Fund, B. R., Pollock, T. G., Baker, E., & Wowak, A. J. (2008). Who's the new kid? The process of developing centrality in venture capitalist deal networks. In J. Baum, & T. Rowley (Eds.), Network Strategy (pp. 563-593). (Advances in Strategic Management; Vol. 25). https://doi.org/10.1016/S0742-3322(08)25016-3
Fund, Bret R. ; Pollock, Timothy G. ; Baker, Edward ; Wowak, Adam J. / Who's the new kid? The process of developing centrality in venture capitalist deal networks. Network Strategy. editor / Joel Baum ; Timothy Rowley. 2008. pp. 563-593 (Advances in Strategic Management).
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Fund, BR, Pollock, TG, Baker, E & Wowak, AJ 2008, Who's the new kid? The process of developing centrality in venture capitalist deal networks. in J Baum & T Rowley (eds), Network Strategy. Advances in Strategic Management, vol. 25, pp. 563-593. https://doi.org/10.1016/S0742-3322(08)25016-3

Who's the new kid? The process of developing centrality in venture capitalist deal networks. / Fund, Bret R.; Pollock, Timothy G.; Baker, Edward; Wowak, Adam J.

Network Strategy. ed. / Joel Baum; Timothy Rowley. 2008. p. 563-593 (Advances in Strategic Management; Vol. 25).

Research output: Chapter in Book/Report/Conference proceedingChapter

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Fund BR, Pollock TG, Baker E, Wowak AJ. Who's the new kid? The process of developing centrality in venture capitalist deal networks. In Baum J, Rowley T, editors, Network Strategy. 2008. p. 563-593. (Advances in Strategic Management). https://doi.org/10.1016/S0742-3322(08)25016-3