Finance and Economics; Choosing co-investors; Friends without benefits;
Venture capitalists need to be ruthless about their relationships;
Even in a world of algorithmic trading and automated credit scoring, good financial decisions still depend on judgment. Choosing whom to invest alongside is particularly important in the uncertain world of venture capital, where many deals are syndicated, in order to share risk and information. Paul Gompers and Yuhai Xuan of Harvard Business School and Vladimir Mukharlyamov of Harvard University have put together a dataset of 3,500 early-stage investors in almost 12,000 deals to examine why specific pairs of investors are drawn to each other, and how that affects their financial performance.
就算在一個充斥著算法式交易和自動信譽評級的世界里，好的投資決策依然依靠判斷力。選擇與誰并肩作戰，在一個充滿著未知數的風投世界里顯得尤其重要。許多風投項目都是聯合投資以分散風險與共享信息。哈佛商學院Paul Gompers和Yuhai Xuan跟哈佛大學Vladimir Mukharlyamov整合了一個擁有3500名早期投資者，將近12,000個案例的資料庫。該數據庫式用以檢驗為什么特定組合的投資者能互相吸引，而這種關系如何影響他們的投資表現。
Investors clearly prefer partners with whom they have something in common. People who have worked at the same company are over 60% more likely to co-invest than those who have not. Investors who belong to the same ethnic minority, or studied at the same university, are around 20% more likely to pair up. The bias towards co-investors on measures of ability is weaker: investors with degrees from the best universities are just 9% more likely to get together.
Rapport is a poor basis for selecting partners. The authors examine investors' record at exiting investments through an initial public offering (IPO). An IPO is the holy grail for many start-ups, but the odds of success are 22% lower if a co-investing pair are alumni of the same university, and 18% lower if they share a past employer. By itself, ethnicity has no effect on investment success. In a pair, it is a different story. Co-investors from the same ethnic minority are 25% less likely to bring a portfolio company to an IPO (and the odds are still lower if the partners are East Asian). The data suggest that the poorer results of similar investors stem less from selecting bad companies, more from bad decisions taken together after the initial investment. It may be that a diversity of views helps investors to make better calls.
Partnerships based on ability, not similarity, tend to do better. If one investor of a pair has a degree from a leading university, this adds 9% to the possibility of their selected firms reaching an IPO; if the second does too, that adds a further 11%. Of course, such investors still have to find each other. Research led by Alexander Ljungqvist of New York University's Stern School of Business has shown that VC firms in influential network positions perform better, as they have more opportunity to take part in syndications. The moral seems to be that investors should make friends easily, but not invest for friendship's sake alone.