Q2 2013 Venture Performance Update

// Wiley Becker - Guest Contributor

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October 4, 2013
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10 Year Venture Index Continues to Rebound
Venture Remains Competitive with Rising Public Markets
Recent Vintage Average Net IRRs Top 10% and Upper Quartile Nears 20%+

Q2 2013 Venture Performance Update Chart 1

Q2 2013 Venture Performance Update Chart 2

Cambridge Associates LLC U.S. Venture Capital Index®, the Performance Benchmark of the National Venture Capital Association (NVCA) ; Data as of 06/30/13; Average Net IRR and Net Multiple figures are the Arithmetic Mean, hence how the Average can be greater than the Top Quartile; Net Multiple is Total Value to Paid In Capital (TVPI); Vintage year funds formed since 2010 are too young to have produced meaningful returns 

The 10 year time horizon of the US Venture Capital Index ® by Cambridge Associates LLC continued its improvement in Q1 2013 to 7.8%.  However, due to a resurgence in the public markets, average venture capital performance fell slightly below the public indices in the sub 10 year time horizons.  The Late Stage US Venture Capital Index still outperformed the public indices in the five year time horizon, while the Early Stage Index continued to outperform dramatically over the 15 and 20 year periods.

Average Net IRRs and Net Investment Multiples continued to increase on a quarterly basis for the recent 2007-2010 vintages.  Additionally, the upper quartile threshold of Net IRRs remained over 17% for each of these vintages.

Post 2007 vintage US venture capital fund performance signifies a rebound from the aftermath of the internet bubble.  Average Net IRRs are above 10% for the most part, while the upper quartile threshold is nearing 20%.  With less capital and fewer funds currently in the industry, lower competition is likely to lead to a continuation of this upward swing in performance.

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