Venture capital (VC) funds are long-term investment vehicles with an investment lifetime of 10 years fixed ex ante. We can look at and understand investment horizons in several ways: (1) from a deterministic perspective, the VC fund investment horizon is often defined as the time until the fund’s liquidation after the end of 10 years. (2) From an agentic perspective, within a fund lifetime, VCs may decide upon an investment horizon that is the ex ante expectation of VC general partners (GPs) about the duration of time over which potential investments will generate returns. Because experienced VCs manage several funds concurrently, the time until the liquidation of these funds can also serve as a proxy for investor horizon. Because VCs realize returns upon exit via an initial public offering (IPO), a trade sale, or a liquidation, scholars and practitioners also refer to investment horizon as time-to-exit.
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