U.S. venture funds underperformed public markets in the third quarter of 2016, but distributions to LPs jumped more than 16 percent.
For Q3, venture returns were 3.3 percent, improved from earlier in the year, but continuing 2016’s lackluster performance, Cambridge Associates reported. As of the end September, the industry’s three-year performance stood at 16.8 percent, with its 10-year at 10.3 percent and its 20-year at 26.4 percent.
Distributions in the quarter rose 16 percent from the previous quarter, to $5.4 billion, and have outpaced capital calls in each quarter since the start of 2012. Funds from 2004 to 2010 distributed about three-quarters of the total, with the 2006 vintage in the lead, with about $960 million in distributions, Cambridge said.
Fund managers called $3.1 billion during the period, a 9 percent decline. It was the second lowest level of capital called in five years. Funds from 2012 to 2016 took in 80 percent of the cash.
The 2006 vintage had the best returns for the quarter at 8.6 percent. The 2012 vintage was the worst performer at 1.3 percent. Performance for the four largest vintages was restrained, with returns for 2007, 2008, 2010, and 2012 ranging 1.3 percent to 3.6 percent.
The healthcare sector earned the best returns in the quarter.
Cambridge derives its results from a database of 1,680 U.S. VC funds.
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