“Healthy exits” for venture-backed companies are helping improve the return on investments for venture capital firms in the second quarter, according to statistics from Thomson Financial and the National Venture Capital Association.
The Private Equity Performance Index as compiled by Thomson Financial shows that VC returns improved 1.9 percentage points from the first quarter to an average of 4.6 percent in the second quarter this year.
As of June 30, VC returns were 17.5 percent for one year, 10.2 percent for two years, 4.6 percent for five years, 19 percent for 10 years and 16.4 percent for 20 years. Those returns track closely to or better than returns on the Nasdaq and Standard & Poors performance in those time frames with the exception of the five year window.
Dating back to the “dot com” and telecom busts, five-year VC returns were sharply lower than the Nasdaq (14.4 percent) and S&P (10.5 percent).
"We have seen constant improvement in the five year performance horizon for the last several quarters, reflecting continued healthy exits particularly in the last year,” said Mark Heesen, president of the NVCA, in a statement.
“However, to maintain this positive momentum and continue with the long term out performance of the public markets, we will need to see more exits in terms of [initial public offerings] and acquisitions in the coming year,” he added.
For a chart tracking the VC returns, see the Web link with this story.