U.S. Venture Capital & Buyouts Post Strong Performance Thru Q2

Private equity performance showed stability in the short and long term for the period ending June 30, 2006 according to Thomson Financial and the National Venture Capital Association (NVCA). 

The one year venture capital returns posted a 16.2% return for Q2 2006 down from 19.2% in Q1 2006. Five year returns improved, but still remained in negative territory at -3.5%, though up from -4.3% in Q1 2006. This negative return continues to reflect the aftermath of the tech bubble burst. Ten and twenty year returns remained steady at 20.8% and 16.5% respectively.

The one year buyout returns saw a small decrease as well posting 27.3% for Q2 2006 compared to 28.3% for Q1 2006. Ten and twenty year buyout returns were relatively steady at 8.9% and 13.4% respectively.

Long term performance private equity performance remained steady and continued to outperform both the S&P 500 and NASDAQ for the ten and twenty year horizons. 

Thomson Financials' US Private Equity Performance Index (PEPI)
Investment Horizon Performance through 06/30/2006

Fund Type

1 Yr

3 Yr

5 Yr

10 Yr

20 Yr

Early/Seed VC

11.20

5.40

-7.60

36.90

20.50

Balanced VC

20.50

12.50

-0.20

17.00

14.50

Later Stage VC

16.40

9.40

-1.10

9.50

13.70

All Venture

16.20

9.00

-3.50

20.80

16.50

Small Buyouts

12.10

9.60

3.70

7.10

25.90

Med Buyouts

21.50

11.80

5.00

11.10

16.10

Large Buyouts

26.80

15.80

6.30

8.60

12.50

Mega Buyouts

28.50

17.50

7.20

8.90

11.60

All Buyouts

27.30

16.30

6.60

8.90

13.40

Mezzanine

9.70

5.30

2.60

6.20

8.70

All Private Equity

22.50

13.40

3.60

11.40

14.20

NASDAQ

5.6

10.2

0.0

6.2

11.7

S & P 500

6.6

9.2

0.7

6.6

9.79

Source: Thomson Financial/National Venture Capital Association

*The Private Equity Performance Index is based on the latest quarterly statistics from Thomson Financials’ Private Equity Performance Database analyzing the cashflows and returns for over 1862 US venture capital and private equity partnerships with a capitalization of $679 billion. Sources are financial documents and schedules from Limited Partners investors and General Partners. All returns are calculated by Thomson Financial from the underlying financial cashflows. Returns are net to investors after management fees and carried interest. Buyout funds sizes are defined as the following: Small: 0-250 $Mil, Medium: 250-500 $Mil, Large: 500-1000 $Mil, Mega: 1 Bil +

Matt Marshal at VentureBeat and Dan Primack at PE Week provide some interesting perspective on these performance numbers.

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