It also gives comparisons with other market measures such as the FTSE return and the pension fund universe return. Its performance measurement survey gives all sorts of comparisons of private equity and venture capital returns by sector, stage, vintage year etc. The BVCA (British Venture Capital Association) produces performance data too.
It aggregates the information and is able to show clients how well their investment has performed in comparison with others. Venture Economics, which is a part of the Thomson group, also produces data which is sourced from investors. But, though it makes this information available to clients, it doesn’t reveal it publicly. The index – the Cambridge Associates LLC US Venture Capital Index – is based on returns data from funds which represent over 80% of the total dollars raised by US venture capital managers from 1981 onwards.ĭavison says the result is a rather a broad index, encompassing as it does both buyout and venture, and investment horizons of a year, three years, five years and ten years.Ĭambridge Economics says it does compile data on European venture capital investment as well as US. This information is then used to create quarterly performance data. It aggregates performance data from all of its clients, which means its catches sight of a lot of funds. US investment consultant Cambridge Associates has put together a type of benchmark for the sector. There are some standard approaches for venture capital funds, but often, individual funds use their own particular method. Funds put their valuations together often on very different bases. “None of the funds are required to publish any information to anyone other than their investors, so no one can really get hold of the information on a very reliable basis,” he says.Īnd even where the information is available, there are other problems in collating and analysing it. The problem for would-be index providers in the investment sector is the lack of information available. But how can they measure the returns that venture capital generates? The asset class can prove slippery for those trying to report and compare its performance.Ĭhris Davison, head of research at private equity research firm Alt Assets, says proper benchmarks for private equity don’t really exist. Private equity is attracting institutions as they head off the beaten track in search of higher returns.
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