When venture capital is patient capital: seed funding as a source of patient capital for high-growth companies

Patient capital is vital to start-up companies which often struggle to access traditional finance. This article conceptualizes the conditions in which venture capital (VC) demonstrates patience in an effort to better understand the sources of patient capital available for start-up companies. VC investment stage is identified as a key determinant of VC patience. VC ‘seed stage’ investing demonstrates patience through its long intended investment horizon, engagement focused on long-term value and loyalty in the face of poor short-term performance. Companies receiving seed funding, then ‘follow-on’ funding, receive the most patient form of VC. An empirical analysis reveals that VC seed activity has proliferated across the USA, UK, Germany and Japan since the run-up to the Global Financial Crisis. The article concludes that VC is a growing source of patient capital for high-growth start-up companies, though several factors confound its intertemporal and intra-portfolio patience.