Research On The Neighborhood Effect In The Formation Of Venture Capital Syndication Network

Venture capital syndication network is the result of cooperation between the venture capitalists. As one kind in the continuing dynamic evolution of the typical social network, the generation process is the starting point of venture capital syndication network’s evolution. The links between venture capitalists are deeply influenced by other venture capitalists in the neighborhood.This paper researched the influences of venture capitalists’ neighborhood to the venture capital syndication network formation progress by using the theory knowledge of network game theory, optimization theory and graph theory. In our study, venture capitalists’ neighborhood was divided into direct neighborhood and indirect neighborhood. Then, We defined the venture capitalists’ characteristics as homogeneity and heterogeneity basis on the homogeneous or heterogeneous revenue and cost of the direct links between venture capitalists. On this basis, we achieved the equilibrium strategy of the two types venture capitalists adopted and the venture capital syndication equilibrium network structure under the individual and collective rationality by building and solving the corresponding network game model.The study found that, within the scope of the direct neighborhood, the Nash equilibrium network structure, which were formed by the homogenous venture capitalists, consist of complete network and empty network. Otherwise, the Nash equilibrium network structure, which were formed by the heterogeneous venture capitalists, consist of complete network, peripheral-sponsored star network and empty network; Within the scope of the indirect neighborhood, the Nash equilibrium network structure, which were formed by the homogenous venture capitalists, consist of complete network, connected network and empty network. Otherwise, the Nash equilibrium network structure, which were formed by the heterogeneous venture capitalists, consist of complete network, connected network, center-sponsored star network and empty network.This paper conducted a deeper thinking on how to form a venture capital syndication network with more overall performance from a new perspective, thus providing the guiding significance and reference value for venture capitalists to better realize their own growth and the government to formulate relevant policies.