Venture Capital Returns Dip Below Zero
Like almost all investors, those who invested in venture capital funds lost money last year. Venture investments returned -1.6 percent in the year ended Sept. 30, according to new data from the National Venture Capital Association and Thomson Reuters.
The returns represented a 6.9 percentage-point drop from the one-year period ending June 30, 2008 and a 28.2 percentage-point drop from the one-year period ending Sept. 30, 2007, Thomson Reuters’ U.S. Private Equity Performance Index found.
Still, venture losses were much less than those in the public markets. The Nasdaq was down 21.4 percent and the S&P 500 down 22 percent in the year ending Sept. 30.
Short-term returns are so low because of there were fewer ways to exit the investments. With the public markets in turmoil, venture investors have simply been unable to take their portfolio companies public, and acquisitions last year were down 28 percent from 2007.
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