US venture returns continue to deteriorate

US short term private equity fund performance shows no signs of improvement at the end of Q2 2002, according to figures released from Venture Economics/ NVCA. The previous two quarters had shown a slight improvement but the recent drop in short term performance indicates that the private equity market continues to suffer from the poor US economy, volatility in the public markets and limited liquidity options.

See table below for full data set.

Venture Economics’ US private equity performance index (PEPI)

Investment horizon performance as of June 30, 2002

Fund type Year 1 Year 3 Year 5 Year 10 Year 20

Early/seed VC -35.3 36.9 46.2 32.6 20.2

Balanced VC -20.8 27.7 26.2 22.4 15.0

Later stage -20.5 11.8 17.6 24.1 16.5

All venture -27.0 26.5 30.6 26.1 16.9

All buyouts -11.4 -1.3 3.4 9.8 12.9

Mezzanine -4.4 6.0 7.8 11.6 11.4

All private equity -16.5 5.5 10.9 16.1 15.2

Source: Thomson Venture Economics/ NVCA

Venture Economics private equity performance index (PEPI) is calculated quarterly from Venture Economics’ private equity performance database (PEPD.) PEPD tracks the performance of 1,400 US venture capital and buyout funds formed since 1969. Returns are net to investors after fees and carried interest.