WASHINGTON, DC – Venture capital performance improved slightly in the shortest and longest time horizons ending September 30, 2009 but continued to deteriorate in the 5 and 10-year periods ending in the quarter, according to the Cambridge Associates U.S. Venture Capital Index, the performance benchmark of the National Venture Capital Association.
The 10-year return fell to 8.4 percent from 14.3 percent in the previous quarter – and from 40.2 percent one year earlier.
The decline was not unexpected as the lucrative 1999 exits are no longer included in the 10-year calculation. The 5-year returns also declined to 4.9 percent from 5.7 percent in the previous quarter and from10.7 percent one year ago.
Impact of Net bubble took a decade
“It has taken a full decade after the technology bubble burst for the venture industry to fully realize the impact of that era and its aftermath,” said Mark Heesen, president of the NVCA.
“The significant returns created by the robust exit markets of the late1990s have carried the industry for a long period of time. The new reality is much more somber for many venture firms. There are still healthy returns to be made in venture capital, but until the venture community seesa more vibrant exit market we do not expect marked improvement overall.”
Peter D. Mooradian at Cambridge Associates, said, “The exit markets have displayed some welcome signs of life in recent months, and we have noted a more upbeat outlook among a number of GPs with respect to potential exits. That said, exits have not recovered to a level that can support healthy venture capital returns, and it remains to be seen if recent activity will evolve into more sustainable momentum in 2010.”
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- Ten-year VC returns falling fast
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