Venture Returns Begin to Reflect Closed IPO Window But Still Exceed NASDAQ and S&P Returns Across All Time Horizons
NEW YORK, Feb. 2 /PRNewswire/ -- Venture capital performance showed positive returns across most investment horizons ending September 30, 2008, according to Thomson Reuters and the National Venture Capital Association (NVCA).
Turmoil in the broader capital markets and the closed IPO window drove the one-year all venture private equity performance index (PEPI) into negative territory to -1.6 percent, with a 6.9 percentage point decrease from the period ending June 30, 2008. Historically, short-term horizons show significant fluctuations quarter over quarter based on current exit market conditions. The next largest consecutive quarterly change occurred in the three-year time horizon where all venture PEPI decreased by 1.9 points quarter-over-quarter. Five-year performance posted a modest decline from the previous quarter, decreasing .2 percentage points. Ten and Twenty-year performance figures showed small quarter-over quarter increases of .8 and .2 percentage points to 17.3 percent and 17.1 percent, 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," said Mark Heesen, 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."
Venture returns across all horizons outperformed public market indices, NASDAQ and the S&P 500, through 9/30/2008.
Thomson Reuters' US Private Equity Performance Index (PEPI)
Investment Horizon Performance through 9/30/2008
Fund Type 1 Yr 3 Yr 5 Yr 10 Yr 20 Yr
Early/Seed VC 0.2 3.8 5.1 37.2 21.6
Balanced VC -6.4 7.4 11.5 14.9 14.7
Later Stage VC 8.6 12.0 10.5 8.9 14.7
All Venture -1.6 6.6 8.6 17.3 17.1
NASDAQ -21.4 -1.1 3.1 2.1 8.7
S&P 500 -22.0 -1.7 3.2 1.4 7.5
All Venture (through 6/30/2008) 5.3 8.5 8.8 16.5 16.9
All Venture (through 9/30/2007) 26.6 11.0 6.8 17.8 16.4
Source: Thomson Reuters/National Venture Capital Association
* The Private Equity Performance Index is based on the latest quarterly
statistics from Thomson Reuters' Private Equity Performance Database
analyzing the cashflows and returns for over 1941 US venture capital
and private equity partnerships with a capitalization of $828
billion. Sources are financial documents and schedules from Limited
Partner investors and General Partners. All returns are calculated
by Thomson Reuters from the underlying financial cashflows. Returns
are net to investor after management fees and carried interest.
About Thomson Reuters
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About National Venture Capital Association
The National Venture Capital Association (NVCA) represents approximately 450 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy, and support entrepreneurial activity and innovation. According to a 2007 Global Insight study, venture-backed companies accounted for 10.4 million jobs and $2.3 trillion in revenue in the United States in 2006. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.
