Modeling Risk Contagion in the Venture Capital Market: A Multilayer Network Approach

<div><svg height="11.927pt" id="M231" style="vertical-align:-3.291101pt" version="1.1" viewbox="-0.0498162 -8.6359 14.282 11.927" width="14.282pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M743 375C743 570 607 650 407 650H136L130 622C214 612 220 606 204 526L125 122C110 43 105 36 24 27L17 0H250C382 0 482 23 571 76C680 141 743 248 743 375ZM644 379C644 188 520 36 305 36C277 36 249 38 229 46C205 55 202 71 212 126L293 553C300 588 306 600 317 606C330 613 356 617 390 617C547 617 644 537 644 379Z"></path></g><g transform="matrix(.0091,0,0,-0.0091,9.893,3.132)"><path d="M387 400C387 425 348 451 303 451C247 451 176 414 132 376C69 322 24 228 24 148C24 43 74 -12 147 -12C211 -12 301 33 363 103L346 128C319 99 249 51 193 51C148 51 112 84 112 165C112 230 130 287 154 330C170 359 199 400 243 400C277 400 304 383 326 354C333 345 343 343 354 348C378 360 387 382 387 400Z"></path></g></svg> as the function of average degree of internal links <svg height="12.4698pt" id="M232" style="vertical-align:-3.18147pt" version="1.1" viewbox="-0.0498162 -9.28833 25.3186 12.4698" width="25.3186pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M360 -163L167 270L360 703H298L106 273V267L298 -163H360Z"></path></g><g transform="matrix(.013,0,0,-0.013,5.369,0)"><path d="M480 416C480 431 465 448 438 448C388 448 312 383 252 330C217 299 188 273 155 237H153L257 680C262 700 263 712 253 712C240 712 183 684 97 674L92 648L126 647C166 646 172 645 163 606L23 -6L29 -12C51 -5 77 2 107 8C115 62 130 128 142 180C153 193 179 220 204 241C231 170 259 106 288 54C317 0 336 -12 358 -12C381 -12 423 2 477 80L460 100C434 74 408 54 398 54C385 54 374 65 351 107C326 154 282 241 263 299C296 332 351 377 403 377C424 377 436 372 445 368C449 366 456 368 462 375C472 386 480 402 480 416Z"></path></g><g transform="matrix(.0091,0,0,-0.0091,11.843,3.132)"><path d="M135 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transform="matrix(.013,0,0,-0.013,0,0)"><path d="M620 675H597C578 656 570 650 541 650H144C112 650 104 653 94 675H72C59 618 42 552 23 493L53 491C71 534 88 564 105 585C124 608 144 615 238 615H290L197 121C182 40 174 34 88 28L82 0H361L367 28C275 34 266 38 281 121L374 615H441C522 615 543 608 553 583C562 560 566 531 565 493L597 494C603 551 612 629 620 675Z"></path></g><g transform="matrix(.013,0,0,-0.013,11.917,0)"><path d="M535 323V373H52V323H535ZM535 138V188H52V138H535Z"></path></g><g transform="matrix(.013,0,0,-0.013,23.18,0)"><path d="M241 635C89 635 35 457 35 312C35 153 89 -12 240 -12C390 -12 443 166 443 312C443 466 390 635 241 635ZM238 602C329 602 354 454 354 312C354 172 330 22 240 22C152 22 124 173 124 313S148 602 238 602Z"></path></g><g transform="matrix(.013,0,0,-0.013,29.42,0)"><path d="M113 -12C146 -12 170 11 170 46C170 78 146 103 114 103S58 78 58 46C58 11 82 -12 113 -12Z"></path></g><g transform="matrix(.013,0,0,-0.013,32.384,0)"><path d="M285 378C315 398 338 416 353 432C373 451 384 474 384 503C384 579 325 635 236 635H235C182 635 136 610 108 579L65 516L85 496C110 533 150 575 205 575C258 575 300 543 300 481C300 407 232 369 141 339L147 310C163 315 188 321 211 321C268 321 338 284 338 192C338 94 288 40 217 40C160 40 119 68 93 91C85 98 77 97 69 91C60 84 47 71 46 58C44 46 48 35 62 22C75 10 116 -12 162 -12C234 -12 424 62 424 224C424 297 373 359 285 376V378Z"></path></g><g transform="matrix(.013,0,0,-0.013,38.624,0)"><path d="M241 635C89 635 35 457 35 312C35 153 89 -12 240 -12C390 -12 443 166 443 312C443 466 390 635 241 635ZM238 602C329 602 354 454 354 312C354 172 330 22 240 22C152 22 124 173 124 313S148 602 238 602Z"></path></g></svg> (a) and <svg height="9.16851pt" id="M234" style="vertical-align:-0.2063904pt" version="1.1" viewbox="-0.0498162 -8.96212 45.1003 9.16851" width="45.1003pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M620 675H597C578 656 570 650 541 650H144C112 650 104 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623Z"></path></g><g transform="matrix(.013,0,0,-0.013,38.626,0)"><path d="M241 635C89 635 35 457 35 312C35 153 89 -12 240 -12C390 -12 443 166 443 312C443 466 390 635 241 635ZM238 602C329 602 354 454 354 312C354 172 330 22 240 22C152 22 124 173 124 313S148 602 238 602Z"></path></g></svg> (b) and for different weight distributions: uniform (black), exponential (red), truncated normal with <svg height="8.55521pt" id="M235" style="vertical-align:-0.2063904pt" version="1.1" viewbox="-0.0498162 -8.34882 28.6589 8.55521" width="28.6589pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M548 455L523 469C505 448 490 439 461 439C416 439 374 447 316 447C144 447 23 310 23 161C23 47 89 -12 179 -12C312 -12 429 106 429 244C429 303 419 344 368 386L371 388C404 383 440 378 474 378C507 378 530 411 548 455ZM350 274C350 191 308 25 198 25C144 25 108 75 108 157C108 264 170 395 276 395C296 395 320 384 333 360C347 334 350 316 350 274Z"></path></g><g transform="matrix(.013,0,0,-0.013,10.979,0)"><path d="M535 323V373H52V323H535ZM535 138V188H52V138H535Z"></path></g><g transform="matrix(.013,0,0,-0.013,22.242,0)"><path d="M241 635C89 635 35 457 35 312C35 153 89 -12 240 -12C390 -12 443 166 443 312C443 466 390 635 241 635ZM238 602C329 602 354 454 354 312C354 172 330 22 240 22C152 22 124 173 124 313S148 602 238 602Z"></path></g></svg> (magenta), <svg height="8.55521pt" id="M236" style="vertical-align:-0.2063904pt" version="1.1" viewbox="-0.0498162 -8.34882 28.6589 8.55521" width="28.6589pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M548 455L523 469C505 448 490 439 461 439C416 439 374 447 316 447C144 447 23 310 23 161C23 47 89 -12 179 -12C312 -12 429 106 429 244C429 303 419 344 368 386L371 388C404 383 440 378 474 378C507 378 530 411 548 455ZM350 274C350 191 308 25 198 25C144 25 108 75 108 157C108 264 170 395 276 395C296 395 320 384 333 360C347 334 350 316 350 274Z"></path></g><g transform="matrix(.013,0,0,-0.013,10.979,0)"><path d="M535 323V373H52V323H535ZM535 138V188H52V138H535Z"></path></g><g transform="matrix(.013,0,0,-0.013,22.242,0)"><path d="M384 0V27C293 34 287 42 287 114V635C232 613 172 594 109 583V559L157 557C201 555 205 550 205 499V114C205 42 199 34 109 27V0H384Z"></path></g></svg> (green) and <svg height="8.55521pt" id="M237" style="vertical-align:-0.2063904pt" version="1.1" viewbox="-0.0498162 -8.34882 28.6589 8.55521" width="28.6589pt" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink"><g transform="matrix(.013,0,0,-0.013,0,0)"><path d="M548 455L523 469C505 448 490 439 461 439C416 439 374 447 316 447C144 447 23 310 23 161C23 47 89 -12 179 -12C312 -12 429 106 429 244C429 303 419 344 368 386L371 388C404 383 440 378 474 378C507 378 530 411 548 455ZM350 274C350 191 308 25 198 25C144 25 108 75 108 157C108 264 170 395 276 395C296 395 320 384 333 360C347 334 350 316 350 274Z"></path></g><g transform="matrix(.013,0,0,-0.013,10.979,0)"><path d="M535 323V373H52V323H535ZM535 138V188H52V138H535Z"></path></g><g transform="matrix(.013,0,0,-0.013,22.242,0)"><path d="M285 378C315 398 338 416 353 432C373 451 384 474 384 503C384 579 325 635 236 635H235C182 635 136 610 108 579L65 516L85 496C110 533 150 575 205 575C258 575 300 543 300 481C300 407 232 369 141 339L147 310C163 315 188 321 211 321C268 321 338 284 338 192C338 94 288 40 217 40C160 40 119 68 93 91C85 98 77 97 69 91C60 84 47 71 46 58C44 46 48 35 62 22C75 10 116 -12 162 -12C234 -12 424 62 424 224C424 297 373 359 285 376V378Z"></path></g></svg> (blue). The internal degree distribution corresponds to an ER network. The initial shock is on the venture capital market.</div>

Complexity

fig10

Figure 10

Figure 10: Modeling Risk Contagion in the Venture Capital Market: A Multilayer Network Approach 