Does syndication with local venture capitalists moderate the effects of geographical and institutional distances?

Drawing on a novel dataset of worldwide venture capital deals, we investigate how syndication with a local VC moderates the negative effects of geographical and institutional distances. For foreign VCs, syndication with a local partner is a way how they can mitigate the costs of investing in geographically distant regions. However, syndication with a local partner is not helpful in overcoming institutional distances. For local VCs, it is easier to choose partners from geographically than from institutionally distant locations. Most experienced local VCs tend to choose syndication partners irrespectively on these partner‘s geographical distance, but they put a large focus on their similar institutional background. Finally, older companies, companies is subsequent rounds and companies with large investment needs that already have a local investor tend to choose syndication partners irrespectively on these partner‘s geographical location, while institutional distance is detrimental for all company types. All in all, our results indicate that overcoming great institutional distances is much more difficult than overcoming great geographical distances.