Venture capital performance for the 10-year horizon continued its upward climb for 11th consecutive quarter, as returns across the one, three, five and 20- year horizons fell slightly as of 31 December 2012, according to the Cambridge Associates US Venture Capital Index, the performance benchmark of the National Venture Capital Association (NVCA).
Slightly higher returns were also seen in the quarterly and 15-year horizons. Additionally, the venture capital index outperformed the DJIA, NASDAQ Composite and S&P 500 across the quarter, three, five, 15 and 20- year time horizons, falling short of these public indices in the one and 10-year periods.
“It is interesting to note that 2012 is the first post-bubble year in which venture funds collectively distributed more cash to limited partners than they brought in,” says Mark Heesen, president of NVCA. “While this favourable ratio was likely driven by several large exits, we are hopeful this trend will take hold in 2013 and we can begin to fortify returns within the asset class. With lower IPO and acquisitions volumes in the first half of the year, we are counting on a more robust exit market beginning in the third quarter to continue along this constructive path.”
"The continued climb of the 10-year venture capital return is certainly good,” says Peter Mooradian, managing director and venture capital research consultant at Cambridge Associates. “A more reasonable supply of capital pursuing deals should translate to further improvement, but the exit markets will need to cooperate more broadly as well."
