The Dow Jones US Venture Capital Index measured 1,183.21 at the end of the second quarter 2010, down 18.29 per cent from 31 December 2009.
According to Sand Hill Econometrics, which co-developed the index’s methodology, there were two factors behind the decline.
One is several “disappointing exits” – companies that failed or were acquired for low values.
The other is the general decline in equity values during the quarter – the Dow Jones US Total Stock Market Index fell 11.52 per cent during the second quarter of 2010.
As Sand Hill notes, venture capital is not immune to a drop in equity values and the stock market is an indicator of equity values overall.
“We are pleased to present the latest index performance results,” says Susan Woodward, an economist and the founder of Sand Hill Econometrics. “Year-to-date we have a drop in values, with most of that decline in the second quarter. However, venture values are up 57 per cent from the trough in February 2009, confirming that venture capital is here to stay.”
The methodology for the Dow Jones US Venture Capital Index was developed by Sand Hill Econometrics together with Dow Jones Indexes. The values are based on a combination of values reported to Dow Jones VentureSource and value estimates.
The index tracks the value of companies headquartered in the US that have received equity funding from institutional venture capital funds.
As of 30 June 2010, there were approximately 7,500 components in the index.
