To be or Not to be Friends: Exploiting Social Ties for Venture Investments

摘要: Recent years have witnessed the boom of venture capital industry. Venture capitalists can attain great financial rewards if their invested companies exit successfully, via being acquired or going IPO (Initial Public Offering). The literature has revealed that, from both and managerial perspectives, decision-making process successful rates (VC) investments be greatly improved investors well know team members target startups. However, much less efforts been made on understanding impact prominent social ties between VC firms start-up investment decisions. To this end, we propose to study such relationship see how information contribute foreseeing deals. We aim at providing analytical guidance for in choosing right targets. Specifically, develop a Social-Adjusted Probabilistic Matrix Factorization (PMF) model exploit connections startups recommendations. Unlike previous studies, make use directed any pair connected two institutions respectively quantify variety network groups. As result, it brings more flexibility, modeling results inherently provide meaningful implications operators Finally, evaluate our synthetic real-world data. demonstrate that approach outperforms baseline algorithms with significant margin.