Keeping things cordial: Competition, cooperation and coopetition in venture capital syndicates

Abstract

Firms increasingly find themselves in coopetitive situations − collaborating with rivals to co-create value while simultaneously competing with them to capture it. Research offers mixed insights, however, into when coopetition enhances or undermines performance. This study draws on network theory to examine how embedded interfirm relationships shape the outcomes of coopetition. We theorize that two forms of embeddedness—relational (direct, trust-based ties) and structural (indirect, network-spanning connections)—moderate the relationship between competition and performance. Using data on 56,953 venture capital (VC) funding rounds involving 4,024 investors and 5,123 start-ups, we find that prior cooperative ties enhance syndicate performance, while prior competitive ties follow an inverted U-shaped pattern. Crucially, we show that these effects are interdependent: moderate competition boosts performance when prior cooperation is low, while low competition is more beneficial when relational embeddedness is high. We triangulate our findings with interviews from senior industry experts representing over 60 years of collective experience. In so doing, we reconceptualize coopetition as a context-dependent capability, extend embeddedness theory to paradoxical dynamics. We also offer concrete guidance for managers and practitioners embedded in interfirm relationships defined as coopetition.