Venture Performance Improves

Venture funds are doing better lately — posting somewhat bigger gains on investments and returning more capital to limited partners.

Overall, venture capital performance improved across most time horizons as of the end of the first quarter, according to the Cambridge Associates LLC U.S. Venture Capital Index, published today.

Higher returns were seen in the quarterly, 3-, 5-, 10- and 20-year horizons with declines in the 1- and 15-year periods. The 10-year performance continued its steady upward climb for the 12th straight quarter.

The venture capital index outperformed the DJIA, NASDAQ Composite and S&P 500 across the 15- and 20- year time horizons, falling short of these public indices in all other time periods.

Limited partners also received more distributions from VC funds than they paid into funds during the first quarter, continuing what Theresa Sorrentino Hajer, a Cambridge managing director, called “a most welcomed trend.”

Nevertheless, political headwinds weighed heavily on the exit environment for VC funds, as the number of M&A exits and IPOs were seasonably low, she added. She predicted exits will improve going forward, however, given continued strength in public markets.

Mark Heesen, president of the National Venture capital Association, agreed, noting: “The surge of the public markets in the first quarter of this year was very difficult to compete with from a returns perspective, yet there is clearly a silver lining if these indices remain strong.”

The full report is here.

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