Slight Improvement In Venture Returns Reported

A better exit market brought a welcome lift to short-term venture returns in the third quarter, but 10- and 15- year returns slumped as the venture capitalists continue to right the ship.

The improvements were small, but suggested the first signs of recovery from the financial markets crash of 2008. The gains are predicted to continue this year.

Quarterly returns for venture funds rose to 3.7% and one-year returns climbed to 8.2%, according to Cambridge Associates and the National Venture Capital Association. While 3-year returns stayed in negative territory, the loss narrowed (please see the accompanying chart for a full break down of return periods).

Ten- and 15-year returns worsened, though the decline was modest, according to the Cambridge and NVCA study.

“The third quarter of 2010 brought a change of direction to a performance trend that has been pointed downward for several quarters,” said NVCA President Mark Heesen.

Through the third quarter of 2010, 40 venture-backed companies launched IPOs and 322 were acquired, increases from 2009.