Limited partners’ contribution to venture capital fund returns: newbies versus experienced
Abstract
Purpose
This study aims to investigate limited partners’ (LPs) influence on venture capital (VC) fund returns.
Design/methodology/approach
We merge data from Preqin and SDC’s VentureXpert spanning from 1993 to 2014 and conduct multiple regression analysis to examine the influence of LPs on VC fund performance. Additionally, we conduct three distinct robustness tests to verify the credibility of our findings.
Findings
Our empirical analysis demonstrates that newbie LPs consistently exert a significant positive influence on VC fund returns.
Research limitations/implications
VC and LP data is self-reported, and there is no comprehensive dataset as some LPs prefer to maintain anonymity.
Originality/value
Extant literature on LPs’ contribution to VC fund performance is limited. The general assumption is that the role of LPs in VC fund performance is confined to funding. We introduce a new variable, LP track record, as a proxy for LP experience to examine if this variable influences VC performance.
Keywords
Acknowledgements
We thank Dr Don Johnson, the editor and an anonymous referee for their valuable comments and feedback, which significantly enhanced our manuscript. Additionally, we would like to express our appreciation to members of the venture capital community and conference participants for their insightful comments during the paper presentations. Any remaining errors are solely ours.
Citation
Abdou, K. and Gupta, P. (2024), "Limited partners’ contribution to venture capital fund returns: newbies versus experienced", Managerial Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MF-10-2023-0606
Publisher
:Emerald Publishing Limited
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