Limited partners’ contribution to venture capital fund returns: newbies versus experienced

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.