This paper examines how the coordination of venture capital (VC) investors in their syndication, as measured by their geographic concentration, affects their choice of ex ante contractual terms and firm performance. We find that geographically concentrated VC investors use less intensive staged financing and convertible securities in their investment, experience more successive syndication in a follow-on round, and are less likely to send their representatives to firm boards. Moreover, their firms experience a higher likelihood of successful exits, lower IPO underpricing, and higher IPO valuation. These results are robust to using the introduction of new direct airline routes as an exogenous shock to geographic concentration.

Keywords: Venture capital, Geographic concentration, Coordination, Monitoring, Staged financing, Board, IPO

JEL Classification: G23, G24, G34