Venture Capital Slams Wall Street
Today the National Venture Capital Association released numbers for the PEPI (private equity performance index).
What these numbers show is that despite the lack of IPO liquidity venture capital firms have squished wall street performance over every measurable time period. This year, as wall street and the S&P have tanked creating an IRR of -11.1% and -13.1% respectively, VC firms have created positive value for their limited partners. The average rate of return accross the entire industry has been 5.1%.
What does this mean? As risky as VC investments may appear to be, these funds are a) not leveraged, b) investing in hard IP based assets, and are relatively recession proof. Think about this when deciding what to do with your cash.
The full report can be found here
“The Private Equity Performance Index is based on the latest quarterly statistics from Thomson Reuters’ PrivateEquity Performance Database analyzing the cashflows and returns for over 1941 US venture capital and privateequity 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.”
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