Not surprisingly, the dearth of initial public offerings is taking its toll on venture capital performance, which declined slightly as of the third quarter, finds a report
released Monday from Thomson Reuters and the National Venture Capital Association. Despite the dip, venture returns across all time horizons in the quarter outperformed the Nasdaq and the S&P 500, the NVCA points out.
Turmoil in the broader capital markets and the closed IPO window drove
the one-year all venture private equity performance index, or PEPI, into
negative territory ( -1.6%), down nearly 7% from the previous quarter. Five-year performance
posted a more modest decline, decreasing .2%. Ten and 20-year performance figures showed small
quarter-over-quarter increases of .8% and .2% to 17.3% 17.1%, respectively.
"The venture capital performance numbers as of the end of the third
quarter are reflective of the shuttered IPO window and slowing M&A
market for venture-backed companies which deteriorated during 2008,"
says Mark Heesen (pictured) president of the NVCA. "We expect to see further
declines in the short term performance numbers into 2009 until the exit
markets improve. Longer term performance will hold steady for the time
being, but a prolonged capital markets crisis will begin to impact
these numbers ultimately as well." -
Mary Kathleen Flynn
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