Using all financing rounds for new ventures from 1980-2003, we develop a detailed empirical
model to explain which portfolio companies obtain Venture Capital (VC) syndication. We
then assess how syndication impacts portfolio companies’ returns, their chances of successful
exit, and the time taken to exit. Applying apposite econometrics for endogeneity across these
different performance measures, we are able to ascribe much of the better return to selection,
with the value-add role significantly impacting the likelihood and time of exit. Though the
extant literature on VC syndication treats the “selection” and “value-add” hypotheses as
mutually exclusive, we find that their roles are in fact complementary. To this end we propose
a new “effort-sharing” model of venture syndication.