IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/35711.html

The Impact of Patient Capital

Author

Listed:
  • Yingxiang Li
  • Tong Liu
  • Ting Xu

Abstract

We show that investor patience shapes venture-capital (VC) investment strategies and outcomes. Through a randomized experiment with Chinese fund managers, we demonstrate that managers explicitly tailor fund duration and project holding periods to the perceived horizons of their limited partner (LP) base. We find consistent evidence in the field, exploiting a 2014 Chinese reform that opened RMB-denominated VC funds to insurers. We compare treated RMB funds to unaffected USD-denominated funds run by the same general partners (GPs), both investing in Chinese startups. Insurer entry reshaped the LP base by displacing shorter-horizon investors such as individuals. Consequently, treated funds shifted strategy toward longer holding periods and earlier-stage investments, leading to improved portfolio company exits and innovation. Our results highlight the importance of patient ultimate investors in building a successful VC ecosystem, and offer a cautionary note on the ongoing retailization of private markets.

Suggested Citation

  • Yingxiang Li & Tong Liu & Ting Xu, 2026. "The Impact of Patient Capital," NBER Working Papers 35711, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35711
    Note: AP CF PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w35711.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:35711. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.