We thought it could that they only syndicate the deals to their friends . Ithat they can t get anyone else to do Xuan says. Such indicators includ whether a company s founder . Ihad a history of founding successful companies the stage of. Ithe portfolio company risky early stage versus less risky later stage.
How much mia attention
The company had receiv at the time of investment. Controlling for these factors they found. I that the quality of the deals was not apparently affect. I by co investor affinity. In other words birds of a feather did not necessarily pick worse investments than Ghana Phone Number List birds of different feathers on day one. It s not like we invest into a deal that s bad . Ito start with and therefore we get a bad outcome in the end Xuan says. Rather the lack of success among similar investors seem to lie in the decisions that follow the investment. In addition to granting cash venture capitalists are heavily involv in hiring or firing the CEO of the portfolio company choosing a board of directors devising an overall strategy identifying potential partners and so on.
Index the researchers found that
The negative affinity effect was strongest in early stage deals which generally require more input from investors than do later stage deals. of co investments tween venture capitalists that share similar characteristics is trigger by them Bahamas WhatsApp Number List making inefficient decisions or even mistakes that they would otherwise avoid the researchers write in The Cost of Friendship. They attribute this inefficiency to groupthink the psychological phenomenon in which memrs of a group make poor decisions cause they fail to consider viewpoints other than their own.
