Latest Seminars

Venture Capital Portfolio Investment Under Uncertainty

This study analyzes venture capital (VC) firms’ portfolio investment strategy under uncertainty in an interconnected world. Both real options theory and social network theory have shed light on investment under uncertainty, but they have largely developed in parallel. We show that a joint consideration offers additional insights. Our central thesis is that the atomistic view of uncertainty in real options can be complemented by the network view of using ties with other parties to access information and resources. We first examine how uncertainty in a strategic domain has differential effects on a VC firm’s portfolio depth in that domain and portfolio diversity across strategic domains. We then propose that the effects of uncertainty are contingent on a VC firm’s network position through its prior syndicate investments. In particular, we posit that network centrality and brokerage will affect a VC firm’s portfolio strategy under uncertainty differently. Analyses of VC investments in the U.S. during 1976-2015 largely support our thesis. This study adds to research on real options, social networks and VC portfolio investment.


Speaker :
Prof. Yong Li, University at Buffalo
Venue :
LSK Rm5047 (Lift 1-2)
Date :
Time :
10:30am - 12:00nn