Mercer Capital's Financial Reporting Blog

Venture Capital Returns

Cambridge Associates and the National Venture Capital Association recently released a study of more than 1,400 U.S. venture capital funds. Among other findings, the study indicates:

  • As of the end of Q1 2013, while the VC asset class outperformed the public markets over the prior 15 and 20 years, performance has lagged for shorter holding periods. Net of fees, expenses, and carried interest, ten-year aggregate VC returns were 7.4% (annualized) compared to 8.5% for the S&P 500 index. Returns for early stage companies (6.4%) trailed both late and expansion stage (11.0%), and multi-stage indices (8.0%).
  • In the years after the dot-com bust, the 2004 vintage VC funds have performed the best with returns equaling a 1.44x multiple on paid-in capital (including unrealized gains).

A commentator notes:

“Here’s the thing about venture capital that explains the declining returns and all the contortions and smack-talking and competition between surging and dying firms: It’s incredibly hard to do well. There are only so many huge wins, and it’s not identifying them that’s hard — it’s winning the deal and actually adding enough value so that people want to work with you again. … Individual VCs who are good at this will continue to do well.”


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