An investor’s network is the hidden value of venture capital

This research sits at the intersection of finance, network science, and complex systems theory. It begins with a systematic review of 150 academic studies published in 61 journals, which reveals a broad consensus: networks in venture capital are relational, dynamic, and reputational, and they influence every phase of the investment cycle, from selection to exit.

However, the literature is fragmented: networks are often analyzed using static approaches, and no model accounts for their evolution over time. Moreover, while we know a lot about how influence works, we know little about how it is built. The questions guiding the dissertation are therefore:

• How does an investor’s influence form and consolidate over time?
• How does this influence affect a startup’s funding trajectory?
• Is it possible to develop dynamic tools to measure and predict these effects?

The dissertation comprises three main contributions: a comprehensive literature review and two original empirical studies which, together, offer a new and more dynamic view of venture capital. The review reveals that networks in venture capital are not just channels for accessing information or capital: they are complex, dynamic structures through which reputations are built, strategic collaborations are activated, and the trajectories of funded companies are shaped.

The empirical section focuses on two main studies, both based on monthly data on startup investments in the United States between 2010 and 2021.

• The first study explores how an investor can build influence over time within the venture capital network. The analysis shows that one of the most effective mechanisms for “climbing” the network hierarchy occurs when a well-established investor (with a strong reputation) decides to enter a funding round previously joined by a lesser-known investor. In other words, the “emerging” investor gains influence when a powerful network actor invests in a startup they had already backed in an earlier round. This “endorsement” acts as a reputational certification: it signals to the market that the emerging investor had good judgment and can spot promising opportunities.

• The second study introduces an original metric: the Funding Attraction Index (FAI), which measures an investor’s ability to attract new capital to a startup they have invested in. Unlike traditional indicators, this index is not based solely on historical data; it updates in real time and reflects the investor’s actual influence in generating market trust. The results show that the FAI is a much more accurate predictor of a startup’s future success than standard metrics such as the number of exits or investor experience.

By recalculating the index monthly over the 11-year observation period, Zava highlights the network’s dynamism. Relative positions shift more quickly than one might expect, partly in response to emerging technologies. Having been influential during the heyday of blockchain startups doesn’t guarantee the same position when artificial intelligence becomes the new focus. The past that shapes an investor’s influence, in short, is the recent past.

The dissertation shows that venture capital cannot be fully understood if seen only as a flow of money or a series of rational decisions. It is instead a social and relational system, where networks matter as much as, if not more than, past performance. Influence is built over time, through strategic connections, mutual recognition, and the ability to shape others’ decisions.

For those operating in the sector, these findings have practical implications:

• For those investing in venture capital funds, namely Limited Partners such as pension funds, foundations, or large family offices: it’s time to move beyond traditional metrics and consider investors’ relational position and dynamic influence. Evaluating a fund based only on past returns can be misleading.
• For startup founders: those in a position to choose should favor funding from investors who are somehow able to influence the network.
• For accelerators, incubators, and policy makers: building entrepreneurial ecosystems is not just about capital or operational support. It’s also about fostering high-quality networks, where influence can circulate and take root. Connections matter, and reputation can be engineered.

Finally, for venture capitalists themselves, the lesson is that investing in the network is a long-term investment. Teaming up with already recognized players, even at the cost of immediate returns, can unlock larger opportunities in the future. In a context defined by uncertainty and frequent startup failure, reputational capital may well be the most solid asset on which to build success.

Marta Zava, Venture Capital and Complex Systems, PhD dissertation, Wolfgang Goethe University Frankfurt am Main.