Venture Capital Assets Swell Since Financial Crisis
The industry’s assets under management have nearly doubled since 2008 to $524 billion, according to Preqin data.
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, Preqin’s 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 industry’s 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.