Venture Capital Short Term Performance Improves in Q2 2005
"Long Term Private Equity Returns Continue to Outperform Public Markets
Short term venture capital performance showed signs of improvement at the close of the second quarter of 2005 with increases in the one and three year investment horizons, according to Thomson Venture Economics and the National Venture Capital Association (NVCA). The ten and twenty year horizons remain the strongest benchmark for the venture industry and are currently returning 25.8% and 16.0% respectively for the period ending 6/30/2005. For the same time horizon, buyout funds continued their sturdy performance with returns of 9.0% and 13.8%.
"Venture capital returns remain in line with expectations, both in the short and the long term," said Mark Heesen, president of the NVCA. "To stay the course of outperforming the public markets, we will be looking for a widening of the IPO window in the coming months and the continued strength of the M&A market for the remainder of the year."
Despite a weak IPO market during the second quarter with only ten venture backed companies going public, the venture-backed mergers and acquisitions market produced solid results with companies being acquired at high values. The mergers and acquisitions market provides another avenue for general partners to exit their investments and provide distributions back to limited partners. Five year performance for venture capital still is posting a negative return of -6.3% for the period ending 06/30/2005. This continued negative return is due to the remaining losses taken by firms that made investments in the closing stages of the Internet bubble era."
Short term venture capital performance showed signs of improvement at the close of the second quarter of 2005 with increases in the one and three year investment horizons, according to Thomson Venture Economics and the National Venture Capital Association (NVCA). The ten and twenty year horizons remain the strongest benchmark for the venture industry and are currently returning 25.8% and 16.0% respectively for the period ending 6/30/2005. For the same time horizon, buyout funds continued their sturdy performance with returns of 9.0% and 13.8%.
"Venture capital returns remain in line with expectations, both in the short and the long term," said Mark Heesen, president of the NVCA. "To stay the course of outperforming the public markets, we will be looking for a widening of the IPO window in the coming months and the continued strength of the M&A market for the remainder of the year."
Despite a weak IPO market during the second quarter with only ten venture backed companies going public, the venture-backed mergers and acquisitions market produced solid results with companies being acquired at high values. The mergers and acquisitions market provides another avenue for general partners to exit their investments and provide distributions back to limited partners. Five year performance for venture capital still is posting a negative return of -6.3% for the period ending 06/30/2005. This continued negative return is due to the remaining losses taken by firms that made investments in the closing stages of the Internet bubble era."
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