US Venture Capital Index Returns for the Periods ending
3/31/2009, 12/21/2008 and 3/31/2008
1st 1 3 5 10 15 20
For the period ending Qtr. Year Years Years Years Years Years
----- ----- ----- ----- ----- ----- -----
Mar. 31, 2009 -2.9 -17.5 1.3 5.8 26.2 34.2 22.5
----- ----- ----- ----- ----- ----- -----
Dec. 31, 2008 -12.5 -16.5 4.1 7.1 35.0 33.7 22.3
----- ----- ----- ----- ----- ----- -----
Mar. 31, 2008 -1.8 11.7 14.1 11.6 32.8 32.9 21.8
----- ----- ----- ----- ----- ----- -----
Other indices at March 31, 2009
DJIA -12.5 -35.9 -9.5 -3.6 -0.4 7.4 8.8
----- ----- ----- ----- ----- ----- -----
NASDAQ Composite -3.1 -32.9 -13.2 -5.2 -4.7 4.9 6.8
----- ----- ----- ----- ----- ----- -----
S&P 500 -11.0 -38.1 -13.1 -4.8 -3.0 5.9 7.4
----- ----- ----- ----- ----- ----- -----
Source: Cambridge Associates LLC
Note: Because the US Venture Capital index is cap weighted, the largest
vintage years mainly drive the index’s performance.
Said Astrid Noltemy, Managing Director who specializes in the
non-marketable alternative asset area at Cambridge Associates, "The venture
benchmark's first quarter return reflected public market declines, the
difficult economic environment, and the absence of IPOs. Recent negative
returns coupled with the technology bust at the beginning of the decade
have severely impacted the index's performance since 2000. Long-term
performance, however, remained strong. Yet because of the shortage of exit
opportunities, venture fund managers will need either to own companies
longer or potentially sell at reduced values. Either will hurt future
returns."
"It is going to take a full-fledged recovery of the venture-backed IPO and
acquisitions market to move these returns back to historical levels," said
Mark Heesen, president of the NVCA. "Unfortunately, this recovery seems to
be a way off as the number of IPOs and acquisitions, and the pipeline of
registrations remain at low levels. The venture capital industry is not
alone in this predicament. We are performing better than most other asset
classes, yet that is hardly a consolation for investors. Once the exit
market improves, so too shall these returns."
As a result of the partnership between the NVCA and Cambridge Associates,
additional benchmark information, such as vintage year and gross sector
returns, will be available on the U.S. venture capital industry. The
following highlights the enhanced data cuts.
Vintage Year Returns
The selected benchmark report provides annualized performance numbers for
each vintage year going back to 1981. For 1998 vintage year funds, for
example, the chart shows a pooled annualized return of 12.7%. A fund
returning 18.4% or better would fall into the upper quartile while funds
returning (8.7%) or worse would fall into the bottom quartile. As a group,
the 1998 funds have already distributed 1.29 times the amount of
contributed capital paid in. In addition, another 0.17 of the contributed
capital remains in current portfolios. Therefore the total value created by
this vintage year is currently 1.46 times the original capital paid in.
Sample Vintage Year Returns Chart
Sample Vintage Year Returns Chart
Ratio of Residual
Upper Lower Distributed Value to Total Value
Vintage Pooled Quartile Quartile to Paid In Paid In To Paid In
Year Mean (%ile=75) (%ile=25) (DPI) (RVPI) (DPI+RVPI)
------ --------- ---------- ------------ --------- -----------
1998 12.7 18.4 -8.7 1.29 0.17 1.46
------ --------- ---------- ------------ --------- -----------
Note that while recent fund information is presented for all years for
comparison purposes, successful portfolio companies exit typically after
several years. So returns for 2005 and more recent funds will not reflect
future exits and will likely be negative reflecting the so called hockey
stick principle.
Gross Performance by Sector
The selected benchmarks report provides gross sector returns analyzed by
the year a portfolio company received its first funding. Looking at the
Health Care/Biotech sector, one of the larger in the index, we see that
companies receiving first venture financing in 1996 returned an annualized
17.6%. Companies first funded in 1997 returned an annualized 12.8%. The
data for that sector show lower returns as we approached and went through
the millennium, reflecting a tougher investing environment for that sector.
Sample Industry IRR Return Chart
Sample Industry IRR Return Chart
Sector 1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ------ ------
Health Care/
Biotech 17.6 12.8 21.6 13.9 3.4 7.5
------ ------ ------ ------ ------ ------
To view the full comprehensive report which includes tables on additional
time horizons, vintage years and industry returns, please visit the report
on the Cambridge Associates or NVCA Websites.
Cambridge Associates derives its U.S. venture capital benchmarks from the
financial information contained in its proprietary database of venture
capital funds. As of March 31, 2009, the database comprised 1,271 venture
funds formed from 1981 through 2009 with a value of approximately $82.5
billion. Ten years ago, as of March 31, 1999, the index included 607 funds
whose value was slightly more than $34.0 billion.
The National Venture Capital Association (NVCA) represents approximately
460 venture capital firms in the United States. NVCA's mission is to foster
greater understanding of the importance of venture capital to the U.S.
economy, and support entrepreneurial activity and innovation. According to
a 2009 Global Insight study, venture-backed companies accounted for 12.1
million jobs and $2.9 trillion in revenue in the U.S. in 2008. The NVCA
represents the public policy interests of the venture capital community,
strives to maintain high professional standards, provides reliable industry
data, sponsors professional development, and facilitates interaction among
its members. For more information about the NVCA, please visit
www.nvca.org.
Founded in 1973, Cambridge Associates delivers investment consulting,
independent research, and performance monitoring services to approximately
850 institutional and private clients worldwide. Cambridge Associates has
advised its clients on alternative assets since the 1970s and today serves
its clients with more than 180 professionals dedicated to consulting,
research, operational due diligence, and performance reporting on these
asset classes. The firm compiles the performance results for more than
2,000 private partnerships to publish the Cambridge Associates U.S. Venture
Capital Index® and Cambridge Associates U.S. Private Equity Index®,
which are widely considered to be the industry-standard benchmark
statistics for these asset classes. In total, the firm has over 950
employees serving its client base globally and maintains offices in
Arlington, VA; Boston, MA; Dallas, TX; Menlo Park, CA; London, England;
Singapore, and Sydney, Australia. For more information about Cambridge
Associates, please visit www.cambridgeassociates.com.
Contact Information: Contact: Emily Mendell NVCA 610-565-3904 Adria Greenberg Cambridge Associates 212-255-8386