Venture Capital & Private Equity Returns See Short Term Slip In First Quarter, But VC Funds Improve Long Term

Venture capital long-term fund performance edged up in the first quarter of the year even as short-term returns suffered.

Private equity saw a similar slide in short-term returns in the first quarter. But 10-year performance was a solid 10.8%.

This assessment from Cambridge Associates Wednesday morning obviously did not factor in the present-day public market panic, which could have a dampening impact on both asset classes. But especially for venture, these latest performance figures tell an improving story.

Behind the better times for venture are stronger exit markets for initial public offerings and M&A. Venture firms were the beneficiaries in particular of public market and corporate enthusiasm for technology and Internet companies. Solid public market returns and rising commodity prices aided private equity firms, Cambridge said.

The result is that both asset classes continue to solidly outperform the public markets over the 15- and 20-year time horizons.

During the quarter, private equity firms returned $24 billion to investors while calling $15.3 billion (down $10.7 billion from what was called in the fourth quarter), Cambridge said.

Venture firms distributed less cash than the fourth quarter – $3.8 billion – and called $3.7 billion, also lower. Also, with negative 2001 returns dropped from the 10-year calculation, 10 year returns of -0.1% were decidedly better than the -2% of the fourth quarter.

Please see detail returns data from Cambridge in the chart below. The press release can be found on this page.