RSFAS Seminar Series – Professor Jason Zein

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Speaker: Professor Jason Zein

Institution: University of New South Wales

Date/Time: 11:00AM, Friday, 26 August 2022

Title: Do Incidental Encounters Strengthen Economic Ties? Evidence from Venture Capital Syndication

(Co-authored with Peter Pham and Rastin Seysan)

Abstract: We investigate whether personal interactions arising from day-to-day incidental encounters influence VC syndication partner choice. To distinguish the role of such interactions from other agglomeration benefits of co-locating in a VC hub, our analysis exploits urban topological features surrounding VC fund offices as well as changes in localized weather patterns to derive measures that capture the likelihood of chance meetings between VC fund managers. Our evidence indicates that incidental encounters significantly influence syndication probability between VC fund pairs located within a narrowly defined VC hub. This relationship cannot be explained away by the characteristics of each VC, their prior connections, their portfolio similarity, and portfolio firms' locations. However, syndication driven by in-person interactions does not appear to be associated with superior investment outcomes. Our results suggest that, even in high-risk, high-stakes investment environments, important collaborative decisions are influenced by serendipitous in-person encounters.

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