Inside the venture capital syndicate, each investor is assigned with different roles. Typically, in order to achieve the satisfaction of syndication objectives, firms may adopt a series of techniques to realize the cooperation among investors.
According to Wright and Lockett’s (2003) review, shared equity ownership can promote the acquisition of information and enhance the mutual trust levels at the cost of coordination problems while an imbalanced ownership may lead to an efficient decision making.
Although the distribution of equity stakes (shared equity ownership or imbalance in ownership) is remaining as a controversial issue, the lead investor still prefers to occupy a larger stake than nonlead syndicate members.
The reason is the lead investor seeks more compensation due to its responsibility of promoting the coordination in the syndication. The equity stake also can be treated as an indication that distinguishes the contributions involved in venture capital funding for each member.