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The effect of a general partner´s management experience in venture capital funds on fundraising success and deal activity during the 2020 Covid-19 crisis
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This paper investigates the relationship of management experience of Venture Capital fund managers with fundraising success and deal activity during the Covid-19 pandemic. To test the hypothesis that more years of management experience results in raising larger funds and doing more deals in times of the current crisis, a regression analysis was performed. The empirical analysis indicates that GP’s experience had a positive effect on fundraising during the current crisis while not being significantly correlated to the deal activity of a GP. This study has confirmed prior knowledge on the positive relationship of reputation, track record, and good networks on fundraising, while showing that there seems to be no correlation of these aspects with deal activity, at least in the current context. Furthermore, it could be found that the Crunch base investor’s rank of a Venture Capital firm, is positively correlated to both fundraising and deal activity. These findings provide the insight that personal relationships and reputation, both aspects developed only over time, have more value for fundraising than for making deals. Additionally, the findings contribute to the theory that during economic downturns, investors tend to become more risk-averse and choose to invest in proven management teams.
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Venture capital Fundraising Deal activity General partner Management experience Covid-19 pandemic