U.S. venture capital returned 0.7% in the first quarter and 6.5% for the one year ended March 31, according to the Cambridge Associates U.S. Venture Capital index.
However, for the 10-year period ended March 31, the return was an annualized -3.7%.
“Certain time horizons saw an increase in returns from the previous quarter, reflecting the opening of the IPO window and a record level of merger-and-acquisition activity in the quarter,” according to a Cambridge news release. “However, the improvement was not enough to bolster the 10-year returns which continue to deteriorate as the calculation for this time horizon no longer includes the high performing 1999 calendar year.”
A dynamic venture capital industry as a whole has not been enjoyed by investors since the market crash of 2008, Mark Heesen, president of the National Venture Capital Association, said in the release.
“Top firms continue to perform well above the (U.S. Venture Capital) index, but that band has narrowed over the last several years, fostering the Darwinian environment in which the venture industry is operating,” Mr. Heesen said. “We will need several quarters of healthy and viable IPOs and M&As to widen that pool of top performers and move returns back to the historical levels expected by our investors.”
Vintage year 1995 funds had the most positive return ratios, returning 6.13 times the cash contributed by limited partners, according to the report. Most funds do not begin returning capital until after five years.