The interplay of track record and trustworthiness in venture capital fundraising

• We analyze limited partners' (LPs) decisions for venture capital (VC) funds.
• The analysis is based on a global sample of 148 LPs.
• The decisions of LPs are shaped by a VC firm's track record and trustworthiness.
• Trustworthiness comprises perceived ability, benevolence, and integrity.
• Trustworthiness helps VC firms with a proven track record to attract potential LPs.

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.