Whom you know matters: Venture capital networks and investment performance

Yael V. Hochberg*, Alexander Ljungqvist, Yang Lu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

994 Scopus citations


Many financial markets are characterized by strong relationships and networks, rather than arm's-length, spot market transactions. We examine the performance consequences of this organizational structure in the context of relationships established when VCs syndicate portfolio company investments. We find that better-networked VC firms experience significantly better fund performance, as measured by the proportion of investments that are successfully exited through an IPO or a sale to another company. Similarly, the portfolio companies of better-networked VCs are significantly more likely to survive to subsequent financing and eventual exit. We also provide initial evidence on the evolution of VC networks.

Original languageEnglish (US)
Pages (from-to)251-301
Number of pages51
JournalJournal of Finance
Issue number1
StatePublished - Feb 2007

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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