Wednesday, January 25, 2012
DIFFICULT Q3 2011 DID NOT SLOW IMPROVEMENTS IN LONG TERM VENTURE PERFORMANCE
10-Year VC Returns Continue to See Gains
A challenging IPO market in the third quarter of 2011 was not enough to stop the steady improvement of the 10-year venture capital return numbers, according to the Cambridge Associates LLC U.S. Venture Capital Index®, the performance benchmark of the National Venture Capital Association (NVCA). While performance notably fell for the quarter and one-year time horizons, venture fund returns for the 10-year horizon doubled from the previous quarter. The longer 15- and 20- year numbers remained relatively stable. Additionally, the venture capital index outperformed the DJIA, NASDAQ Composite and S&P 500 across every time horizon with the exception of the 10-year number where, despite recent gains, there remains significant room for improvement.
US Venture Capital Index Returns for the Periods Ending
“In the third quarter, the volatile exit market had an impact on the quarterly and annual return numbers,” said Mark Heesen, president of NVCA. “However, the exit market did stabilize at the end of the year and we now have a record number of venture-backed companies in registration to go public. If these companies are able to successfully IPO in the near term and the acquirers continue to purchase our companies, we expect to see consistent and marked performance improvements across all time horizons in 2012.”
“The marginally negative third quarter performance reflected the recent shakiness of the IPO market,” said Theresa Sorrentino Hajer, managing director and venture capital research consultant at Cambridge Associates. “Maintaining a longer term focus remains important, and we would expect the ten-year number to continue to improve as it moves beyond the poor return years of 2001 and 2002.”
Additional Performance Benchmarks
The full, comprehensive report includes industry sector returns and tables on additional time horizons, vintage years, and industry returns.
Cambridge Associates derives its U.S. venture capital benchmarks from the financial information contained in its proprietary database of venture capital funds. As of September 30, 2011, the database included 1,327 venture funds formed from 1981 through 2011.