Syndication networks and the spatial distribution of venture capital investments

Sociological investigations of economic exchange reveal how institutions an d social structures shape transaction patterns among economic actors. This article explores how interfirm networks in the U.S. venture capital (VC) ma rket affect spatial patterns of exchange. Evidence suggests that informatio n about potential investment opportunities generally circulates within geog raphic and industry spaces. In turn, the circumscribed flow of information within these spaces contributes to the geographic- and industry-localizatio n of VC investments. Empirical analyses demonstrate that the social network s in the VC community-built up through the industry's extensive use of synd icated investing-diffuse information across boundaries and therefore expand the spatial radius of exchange. Venture capitalists that build axial posit ions in the industry's coinvestment network invest more frequently in spati ally distant companies. Thus, variation in actors' positioning within the s tructure of the market appears to differentiate market participants' abilit y to overcome boundaries that otherwise would curtail exchange.