If you had invested in venture capital in 1990, you should be sitting pretty. Venture capital funds outperformed all alternative asset classes as well as the public markets by a long mile.
But if you invested in 2000, you have a lot of explaining to do. Except for helping to fund seemingly extravagant VC lifestyles – Napa Valley vineyards, Net Jets shares, 100 meter yachts – as the below chart shows, there is little to show except red ink and capital calls.
So how badly have venture capitalists performed over the last decade?
| Asset Classes |
10-Year Performance |
20-Year Performance |
| Venture Capital |
-1.5% |
17.8% |
| NASDAQ |
-6.2% |
9.1% |
| S&P 500 |
-2.4% |
6.5% |
| Buyouts |
4.0% |
9.0% |
| Private Equity |
2.8% |
11.3% |
Source: Thompson Reuters
Ironically, not as badly as the naysayers would have you believe. Over the last ten years, venture capital funds have actually outperformed the public market indices. That, given the nature of the public markets, shouldn’t be much of a surprise. But when compared to buyout and private equity funds, venture capital has fared poorly. ....