| |||||||||||
| |||||||||||
Ten-year venture capital returns are falling sharply and are expected to continue to decline, according to the Cambridge Associates U.S. Venture Capital Index, the performance benchmark of the National Venture Capital Association. While venture capital performance remained largely unchanged in most time horizons for the quarter ending June 30, there was notable deterioration in the 10-year returns, which sank to 14.3% from 26.2% in the previous quarter -- and from the 33.9% figure of the year-ago period. The NVCA said one reason for the sharp declines is that returns for the first half of 1999, when the exit market was unusually active and profitable, no longer get included in the 10-year calculation. The absence of late 1990s exit activity will continue to dampen returns for future quarters. "We are now entering a period of time when the stark differences between today's exit market and the exit market 10 years ago will be manifested in the return numbers in a meaningful way," NVCA president Mark Heesen said. At the height of the dot-com bubble, 1999 was boom time for venture capitalists. It was also the year The Deal launched. For more on 1999, see The Deal's A Decade of the Deal video interview with Fred Wilson, co-founder of Flatiron Partners in the '90s and Union Square Ventures now. Despite the decline in 10-year returns, the venture capital index continued to outperform other major market indices during the second quarter of 2009 across all time horizons. "Without a stronger IPO market, and by stronger I am suggesting a multiple of 8 to 10 times the current volume, these longer-term performance numbers will continue to deteriorate over the next few years," Heesen said. "Venture capital may still outperform the other major market indices, but by far less than the industry did in the last decade." (The Deal Pipeline subscribers may read more here.) - Mary Kathleen Flynn
CategoriesPrivate capital video
Categories
Blog roll
Archives
| |||||||||||
|
|
|
|
|
