The limited partnership emerged as a key societal innovation during the early modern age. It allowed an effective separation between partners – those acting and those conferring capital – and it granted limited liability to partners in case of insolvency. The diffusion of limited partnership – between the Sixteenth and Seventeenth centuries - came at a crucial crossroad in the economic history of early modern Italian cities. Banking on new archival sources this paper will argue that in Bologna the diffusion of this new societal form was closely associated to a fundamental renewal of the city economic landscape. On the one hand the rise of the limited partnership came as a response to the international banking crisis of the last quarter of the Sixteenth century, the string of financial bankruptcies and the ensuing dramatic credit squeeze that affected the city. The limited partnership offered investors a new (and less risky) outlet for capital, and eased the credit crunch businesses were reeling from. On the other hand its diffusion was not business neutral, as a matter of fact it was closely related to the expansion of the silk manufacturing sector, that emerged as the forward sector of the city economy.