Venture Capital Performance Held Steady In 2012, With Continued 10-Year Improvement

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Venture Capital Performance Held Steady In 2012, With Continued 10-Year Improvement

Venture capital performance for the 10-year horizon continued its upward climb for 11th consecutive quarter, as returns across the 1-, 3-, 5 and 20- year horizons fell slightly as of December 31, 2012, according to the Cambridge Associates LLC U.S. Venture Capital Index®, the performance benchmark of the National Venture Capital Association (NVCA).  Slightly higher returns were also seen in the quarterly and 15-year horizons. Additionally, the venture capital index outperformed the DJIA, NASDAQ Composite and S&P 500 across the quarter, 3- 5-, 15- and 20- year time horizons, falling short of these public indices in the 1- and 10- year periods. 

“It is interesting to note that 2012 is the first post-bubble year in which venture funds collectively distributed more cash to limited partners than they brought in,” said Mark Heesen, president of NVCA.  “While this favorable ratio was likely driven by several large exits, we are hopeful this trend will take hold in 2013 and we can begin to fortify returns within the asset class. With lower IPO and acquisitions volumes in the first half of the year, we are counting on a more robust exit market beginning in the third quarter to continue along this constructive path.”

"The continued climb of the 10-year venture capital return is certainly good news,” said Peter Mooradian, managing director and venture capital research consultant at Cambridge Associates. “A more reasonable supply of capital pursuing deals should translate to further improvement, but the exit markets will need to cooperate more broadly as well."

Vintage Year Return Ratios

The chart on the next page lists the ratio between the dollars paid into venture capital funds by limited partners (LPs) and the dollars distributed to them by vintage year. For example, the 2001 vintage year funds have distributed cash of 0.71 times the amount of capital paid in by LPs and the residual value is 0.40 times the paid-in capital; the total value multiple is therefore 1.11 times. It is important to note that the residual value is unrealized and will change as companies exit the portfolio, are re-valued, or are written off.

The 2004 vintage year funds continue to have the most positive ratio of the last decade, returning 1.47 times the capital contributed by LPs, should those funds realize the value of what remains in the portfolio. More recent vintage years have yet to return significant cash to LPs as most funds do not have the opportunity to begin returning capital until after year five.

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 December 31, 2012, the database included 1,420 venture funds formed from 1981 through 2012.

About The National Venture Capital Association

Venture capitalists are committed to funding America’s most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community’s preeminent trade association, NVCA serves as the definitive resource for venture capital data and unites nearly 400 members through a full range of professional services. For more information about the NVCA, please visit

About Cambridge Associates

Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 950 global investors and delivers a range of services, including investment consulting, outsourced portfolio solutions, research services and tools (Research Navigatorsm and Benchmark Calculator), and performance monitoring, across all asset classes. The firm compiles the performance results for over 5,300 private partnerships and their more than 67,000 portfolio company investments to publish its proprietary private investments benchmarks, of which the Cambridge Associates LLC U.S. Venture Capital Index® and Cambridge Associates LLC U.S. Private Equity Index® are widely considered to be among the standard benchmark statistics for these asset classes.  Cambridge Associates has been selected to provide data and to develop and maintain customized industry benchmarks for a number of prominent industry associations, including the Institutional Limited Partners Association (ILPA), Australian Private Equity & Venture Capital Association Limited (AVCAL); the African Venture Capital Association (AVCA); the Hong Kong Venture Capital and Private Equity Association (HKVCA); the Indian Private Equity and Venture Capital Association (IVCA); the New Zealand Private Equity & Venture Capital Association Inc. (NZVCA); the Asia Pacific Real Estate Association (APREA); and the National Venture Capital Association (NVCA). Cambridge also provides data and analysis to the Emerging Markets Private Equity Association (EMPEA). Cambridge Associates has more than 1,100 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. Cambridge Associates consists of five global investment consulting affiliates that are all under common ownership and control. For more information about Cambridge Associates, please visit

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