Venture Capital Networks in Australia: Emerging Structure and Behavioural Implications

Abstract

<p>Inter-firm collaboration and networking have significantly increased in the context of technological innovation, changing the business environment and contributing to rapid and global integration. Being at the heart of technological innovation and commercialization, the venture capital (VC) industry has adopted inter-firm alliance as a common practice on a global scale. The most common form of collaboration in the industry is investment syndication between firms which eventually leads to a network of syndication. Understanding drivers of syndication and its financial implications is no longer enough. The nature of the inter-firm collaboration networks can be influenced by location and industry characteristics, and in turn they can also influence the industry practices and change. This study investigates the emerging structure of the VC networks in technology ventures in Australia in order to capture key features of the Australian VC market. Using graph theory the paper presents syndication network graphs and analyses their structural properties. The connectivity and density analysis shows further scope for facilitating the flow of information and resources across the VC industry. Behavioural implications of the networks on the industry practices and viability are also analysed and questions raised about the VC industry’s contribution to supporting and mainsteaming sustainable technologies.</p>

Misconduct risks, legal enforcement and venture capital networks

“…For example, if there is a tie between VC A and VC B , this means that there is a syndicated investment (co-investment event) and the value of the related cell in the matrix is set equal to 1, otherwise, it is zero (in case of no coinvestment). In line with the graph theory underlying network analysis (Friedkin, 1981) and VC networks (e.g., Siddiqui et al, 2016), VC syndication networks are conceived as 'networks of investors', in which VCs are represented by nodes and the coinvestment (or syndication) in the same target company is represented by ties or edges. From a graphical point of view, each line connecting two nodes represents a connection between two VCs, and such connection is established only if they have jointly invested in the same company.…”

Understanding the World Economy in Terms of Networks: A Survey of Data-Based Network Science Approaches on Economic Networks

“…In order to visualize our point, we provide in Figure 2 an example. [41,42] Director network Common members of the board of instituations; corporate structure between instituations [43,44] Ownership network Influence on corporate decisions [45,46] Financial network Dependency between stocks; stock market interconnectedness [47][48][49] Product network Individuals co-purchasing products or countries co-producing products [50] or [51] Trade network Exchange of goods and services; trading relations between countries [52][53][54] Starting from an abstract four-node network in Figure 2 top we show a cascade of different node meanings. First, the colors of the four nodes of the small network correspond to the four states California (CA, blue), Texas (TX, purple), Washington (WA, red) and New York (NY, yellow).…”