PE Tech Report

NEWSLETTER

Like this article?

Sign up to our free newsletter

Venture capital performance in decline at year-end, says report

Venture capital performance showed positive returns across all investment horizons three years and longer for the period ending 31 December 2008, according to Thomson Reuters and the Na

Venture capital performance showed positive returns across all investment horizons three years and longer for the period ending 31 December 2008, according to Thomson Reuters and the National Venture Capital Association.

However, with the exception of the 20 year horizon, most categories experienced quarter over quarter and year over year declines.

Turmoil in the broader capital markets caused the one-year all venture private equity performance index to decline significantly to -20.9 per cent, an 18.8 percentage point decrease from the period ending 30 September 2008. The slowed exit markets in 2008 have driven lower one-year return numbers throughout 2008.

The next largest consecutive quarterly change occurred in the three-year time horizon where all venture private equity performance indices decreased by 2.1 points quarter-over-quarter to 4.2 per cent. Five-year and ten-year performance posted similar declines from the previous quarter, decreasing 2.0 and 1.6 percentage points, respectively. Twenty-year performance was showed no change from the previous quarter at 17.0 per cent.

Venture returns across all horizons outperformed public market indices, Nasdaq and the S&P 500, through 31 December 2008.

‘The next year will be challenging for the venture capital industry as the shuttered IPO window and lower M&A valuations will take a toll on performance numbers in the short term,’ says Mark Heesen, president of NVCA. ‘Additionally, the roll-off of the positive 1999 return figures is expected to drive the longer term performance figures down as well. However, we do believe that venture capital will continue to perform well relative to other alternative investments and once the exit market improves, so too should return numbers.’

Like this article? Sign up to our free newsletter

MOST POPULAR

FURTHER READING

Featured