Role of Syndication in Venture Capital Investments in Geographic Distant Projects: Evidence from Chinese Growth Enterprise Market Board

The current article exams the role of syndication in venture capital investments in distant potential companies. Using data from Chi next, we find supportive evidence that syndication pronouncedly improves the performance and exit probability of distant investments compared with standalone VC investments. Furthermore, our results show the power of syndication is still significant but seems to decrease when the distance becomes larger, and finally, it seems to disappear when investing in very remote companies. The current article sheds light on the changeable role of syndication with the increase of geographic distance, which present as a reversed U-shape. The results give insights into the necessity to improve the quality and reliability of networks, especially for ties with remote partners, and open the further research on how to reduce agency costs of maintaining a syndication in transitional economy, like in China.