Research Paper 35: How closely are Europe's venture capital investors networked with one another?

Venture capital plays a central role in financing innovative companies. In addition to capital, networks are particularly important in this context. Investors exchange information, identify business opportunities, provide strategic guidance to companies, and organize follow-on financing. A new research paper by Monika Köppl-Turyna and Nils Pomberger examines, for the first time, the extent to which European venture capital investors are connected at the partner level and the structures that shape these networks.   

The study is based on data from approximately 41,000 venture capital transactions in Europe, as well as information on approximately 4,000 venture capital partners active in Europe. Based on fund affiliations, shared mandates, and connections to portfolio companies, a comprehensive network has been reconstructed that encompasses more than 154,000 participants and approximately 255,000 relationships.   

The results make it clear that European venture capital networks do not emerge by chance. Rather, close-knit groups of investors form, connected through repeated interactions, shared investments, and similar professional backgrounds. Investors who are more deeply embedded in such networks tend to have greater deal flow access, stronger co-investment opportunities, and more influence over financing decisions within the European venture capital ecosystem.  

Furthermore, the analysis shows that new connections are particularly likely to form between actors who already share similar networks and contact structures. Trust, reputation, and the exchange of information thus play an important role in the formation and stability of relationships in the venture capital market.   

The research paper thus provides new insights into how the European venture capital market functions and shows that networks not only shape collaboration among investors but also potentially influence the financing, development, and success of innovative companies. At the same time, the analysis lays the groundwork for future research on the effects of investor networks on company growth, follow-on financing, and exits.