US Venture Capital Index Returns for the Periods ending
9/30/2009, 6/30/2009 and 9/30/2008
For the
period 10 15 20
ending Qtr. 1 Year 3 Years 5 Years Years Years Years
======= ======= ======= ======= ======= ======= =======
September
30, 2009 2.3 -12.4 1.3 4.9 8.4 36.6 23.1
======= ======= ======= ======= ======= ======= =======
June 30,
2009 0.2 -17.1 1.3 5.7 14.3 36.3 22.7
======= ======= ======= ======= ======= ======= =======
September
30, 2008 -2.9 -0.9 10.2 10.7 40.2 33.3 22.2
======= ======= ======= ======= ======= ======= =======
Other indices at September 30, 2009
DJIA 15.8 -7.4 -3.3 1.8 1.6 8.7 9.2
======= ======= ======= ======= ======= ======= =======
NASDAQ
Composite 15.7 1.5 -2.0 2.3 -2.5 7.0 7.8
======= ======= ======= ======= ======= ======= =======
S&P 500 15.6 -6.9 -5.4 1.0 -0.2 7.6 8.0
Source: Cambridge Associates LLC
Note: Because the US Venture Capital index is cap weighted, the largest
vintage years mainly drive the index's performance.
"It has taken a full decade after the technology bubble burst for the
venture industry to fully realize the impact of that era and its
aftermath," said Mark Heesen, president of the NVCA. "The significant
returns created by the robust exit markets of the late1990s have carried
the industry for a long period of time. The new reality is much more
somber for many venture firms. There are still healthy returns to be made
in venture capital, but until the venture community sees a more vibrant
exit market we do not expect marked improvement overall."
Said Peter D. Mooradian at Cambridge Associates, "The exit markets have
displayed some welcome signs of life in recent months, and we have noted a
more upbeat outlook among a number of GPs with respect to potential
exits. That said, exits have not recovered to a level that can support
healthy venture capital returns, and it remains to be seen if recent
activity will evolve into more sustainable momentum in 2010."
Vintage Year Return Ratios
The following chart illustrates the relationship between the dollars paid
in to venture capital funds by limited partners and the dollars distributed
back to them by vintage year. The chart also incorporates the residual
value of the portfolios at 9/30/09 for an overall ratio. For example, the
2002 vintage year funds have distributed cash of just .40 times the amount
of capital paid in by LPs. If you account for the current value of the
existing portfolio of .64, the ratio increases to 1.04 times. However, it
is important to note that the residual value is unrealized and will change
as companies exit the portfolio, are revalued, or are written off. The
1995 vintage year funds have the most positive ratio, returning 6.13 times
the cash contributed by LPs, a number which rises to 6.20 should those
funds realize the value of what is currently in the portfolio. Later
vintage years have yet to return significant cash to LPs as most funds do
not begin returning capital until after year 5.
Vintage Year Multiples Analysis
Pooled Mean Net to Limited Partners
As of September 30, 2009
Distribution Residual Value Total Value to
Vintage to Paid in to Paid in Paid in
Year Capital (DPI) Capital (RVPI) Capital (TVPI)
============== ============== ==============
1981-1994 3.24 0.01 3.25
============== ============== ==============
1995 6.13 0.07 6.20
============== ============== ==============
1996 4.70 0.09 4.79
============== ============== ==============
1997 2.80 0.09 2.89
============== ============== ==============
1998 1.29 0.17 1.46
============== ============== ==============
1999 0.63 0.26 0.89
============== ============== ==============
2000 0.47 0.47 0.93
============== ============== ==============
2001 0.38 0.62 1.00
============== ============== ==============
2002 0.40 0.64 1.04
============== ============== ==============
2003 0.32 0.80 1.11
============== ============== ==============
2004 0.15 0.87 1.02
============== ============== ==============
2005 0.09 0.85 0.94
============== ============== ==============
2006 0.04 0.90 0.93
============== ============== ==============
2007 0.01 0.87 0.88
============== ============== ==============
2008 0.00 0.90 0.90
============== ============== ==============
Overall 1.09 0.44 1.53
Source: Cambridge Associates
Additional Performance Benchmarks
To view the full, comprehensive report, which includes tables on additional
time horizons, vintage years and industry returns, please visit the
Cambridge Associates or NVCA Websites.
Cambridge Associates derives its U.S. venture capital benchmarks from the
financial information contained in its proprietary database of venture
capital funds. As of September 30, 2009, the database is comprised of 1,287
venture funds formed from 1981 through 2009 with a value of approximately
$93.8 billion.
The National Venture Capital Association (NVCA) represents more than 425
venture capital firms in the United States. NVCA's mission is to foster
greater understanding of the importance of venture capital to the U.S.
economy, and support entrepreneurial activity and innovation. According to
a 2009 Global Insight study, venture-backed companies accounted for 12.1
million jobs and $2.9 trillion in revenue in the U.S. in 2008. The NVCA
represents the public policy interests of the venture capital community,
strives to maintain high professional standards, provides reliable industry
data, sponsors professional development, and facilitates interaction among
its members. For more information about the NVCA, please visit
www.nvca.org.
Founded in 1973, Cambridge Associates delivers a range of services,
including investment consulting, outsourced portfolio solutions,
independent research, and performance monitoring and tools across all asset
classes, to approximately 850 institutional and private clients worldwide.
The firm has advised clients on alternative assets since the 1970s and
compiles the performance results for more than 2,000 private partnerships
to publish the Cambridge Associates U.S. Venture Capital Index® and
Cambridge Associates U.S. Private Equity Index®, which are widely
considered to be the industry-standard benchmark statistics for those asset
classes. In total, the firm has over 950 employees serving its client base
globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo
Park, CA; London; Singapore, and Sydney, Australia. For more information
about Cambridge Associates, please visit www.cambridgeassociates.com.
Contact Information: Contact: Emily Mendell NVCA 610-565-3904 Itay Engelman Cambridge Associates 212-255-8386