Venture capitalists' social connections boost funding for start-up firms
The social connections of venture capitalists can impact how much money start-up companies receive. By studying over 5,000 funding rounds in the Internet and IT sector, researchers found that VCs with strong social networks tend to invest more in start-ups. This is because these connections give VCs better access to information about potential investments, making them more willing to fund these companies. The study shows that the social capital of VCs plays a crucial role in the funding of new ventures, challenging previous beliefs in the field.