The Impact of Patient Capital

Yingxiang Li, Tong Liu and Ting Xu

No 35711, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show that investor patience shapes venture capital (VC) investment strategies and outcomes. A randomized experiment with Chinese fund managers shows that managers tailor fund duration and project holding periods to the perceived horizons of their limited partners (LPs). We then exploit a 2014 reform that opened RMB-denominated VC funds to insurers, comparing treated RMB funds with unaffected USD funds run by the same general partners (GPs). Insurer entry displaced shorter-horizon LPs and shifted funds toward longer holding periods and earlier-stage investments, improving portfolio company outcomes. This pass-through of patience weakens when secondary markets for LP stakes are more liquid.

JEL-codes: G22 G23 G24 G32 O3 (search for similar items in EconPapers)
Date: 2026-09
New Economics Papers: this item is included in nep-cna and nep-exp
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