Abstract

The social capital literature has featured a long-lasting debate on whether brokerage or closure represent higher-value information advantages. We maintain that this tension cannot be fully resolved without recurring to explanations of actor diversity, arguing that brokerage is of most value in networks with high actor similarity, whilst closure is most beneficial in networks with high diversity. In the context of newly funded ventures attempting to attract additional funding, we argue that they are most likely to succeed if their first-round investors have either specializedbrokered or diverse-closed networks. These balanced representations of social capital allow the venture to simultaneously reap in-depth and broad information from their investors’ syndication networks. By contrast, advice emerging from diverse-brokered or specialized-closed syndication networks is of limited value to the venture, representing situations of overloading and overembeddedness respectively.

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