1997 Appears The Top Year For Venture Returns; 2008 Median IRR Still In The Red

I came across a smidgen of data today that may not surprise anyone, but is worth mentioning.

Vintage year 1997 venture capital funds appear to lead the industry in returns. Two years later, performance entered a downward slide that hasn’t completely reversed.

According to a Preqin analysis of fund IRRs, vintage 1997 funds “have achieved the highest median net IRR of 32.7%.”

This mid-1990s success is evident in many publicly available pension and endowment fund portfolio reports. The University of California’s venture capital portfolio is a prime example. Funds from 1994, 1995 and 1996 have impressive returns. One example is the Kleiner Perkins Caufield & Byers VII from 1994, with an IRR of 121.7%, according to online data updated through December. Then there is Institutional Venture Partners VII from two years later, which sports a 96.2% internal rate of return.

Median returns for vintage 1999 and 2000 funds are much lower in the wake of the dot-com market collapse, Preqin finds. And the difficult times haven’t disappeared.

“Vintage 2008 venture funds are currently in the red showing a median IRR of -2.4%,” says the report, which uses data updated through December.

As I said, no surprise. Just confirmation.