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The interplay of track record and trustworthiness in venture capital fundraising

Andreas Kuckertz, Tobias Kollmann, Patrick Röhm and Nils Middelberg

Journal of Business Venturing Insights, 2015, vol. 4, issue C, 6-13

Abstract: Venture capital (VC) firms raising funds from their limited partners (LPs) have to provide arguments extending beyond the firm's track record to convince those partners to commit to their fund. We suggest that the subdimensions of perceived trustworthiness, that is, perceived ability, integrity, and benevolence, play a vital role in the relationship between VCs and their potential LPs. Our analysis of a worldwide sample of 148 LPs sheds light on LP decision making. In particular, VC firms with medium to high levels of track records seem to benefit from managing trustworthiness. Hence, a VC firm's trustworthiness is not a substitute for a track record but instead something that complements one.

Keywords: Venture capital; Fundraising; Track record; Trustworthiness; Limited partner (search for similar items in EconPapers)
Date: 2015
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