Success Factors of First Time Fund in Venture Capital

• Main Author: Ye, Zihan
• Format: Others
• Published: Scholarship @ Claremont 2018
• Subjects: first time funds; venture capital; limited partners; vintage year; fund size; Economics; Finance and Financial Management
• Online Access: http://scholarship.claremont.edu/cmc_theses/1786; http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=2831&context=cmc_theses

Using data of first time fund in venture capital in United States from 1995 to 2015, I explore characteristics of the funds in relation to the fund performances. Three groups of characteristics that examined are fund characteristics, manager characteristics and limited partners’ characteristics. The paper also incorporates the time effects to show if market cycles have influences in these relationships. Some of the critical findings include that fund sizes have essentially zero impact on the fund return. In manager characteristics, it is very helpful to have a lead manager with MBA or equivalent degree. For limited partners, it is useful to have school endowments as limited partners which could influence the funds’ return positively. Both general partners and limited partners could learn from this paper and be more mindful of certain factor when investing in first time fund.