Venture capital investments have nearly doubled since the
financial crisis, led by a rapid expansion in Asia.
The industry held $524 billion of assets in June, up from
$271 billion in 2008, according to the latest available data
from Preqin, which tracks alternative-asset information.
The venture capital industry has enjoyed great success
since the global financial crisis, and is expanding at an
accelerating rate as both fund managers and investors remain
committed to the asset class, said Felice Egidio,
Preqins head of venture capital products, in a statement Thursday.
While North America continues to account for more than half
of the assets held by venture funds, Asia-based venture capital firms have ballooned since
2008, with the sector more than quadrupling from $30 billion to
$133 billion in mid-2016. Asia-focused funds are also currently
targeting the most assets, making up four out of the five
largest funds currently in market.
Asia is now starting to rival the U.S. as the primary
global venture capital market, with a number of state-backed
mega funds looking to encourage and channel investment in a
burgeoning entrepreneurial class, Egidio said. In
order to sustain their current rate of expansion, [fund
managers] will have to ramp up their level of distributions and
prove that the industry can provide long-term gains for
investors in order to drive further commitments.
Based on data currently available, Preqin said 2016 could be
a record year for venture capital distributions, surpassing the
all-time high of $54 billion paid out in 2014. In the first six
months of last year, venture funds returned $42 billion to
investors, according to Preqin. In its research report this month, the data
provider also noted a measured uptick in exits so far in
2017, which could contribute to capital distributions in
the near to medium term.
Meanwhile, dry powder remains at industry highs, measuring
$166 billion globally in April, according to the report.
Venture capital fund managers, at least, are still betting
that the industrys growth will continue. Currently, a
record 995 venture capital vehicles, including 421 first-time
managers, are seeking a collective $132 billion, according to
Preqin. So far, $36 billion has been secured through interim
closes. In addition, 97 new funds closed in the first four
months of 2017, with $13 billion in secured capital.