Transcript of "Private Equity Performance Continues to Reflect Industry Realities"
Jeanne Metzger, NVCA, 703-524-2549 ext. 116, email@example.com
Joshua Radler, Venture Economics, 973-353-7139, firstname.lastname@example.org
PRIVATE EQUITY PERFORMANCE CONTINUES TO REFLECT
Short Term Performance Continues to Suffer From Lack of Exits
August 7, 2002 – Newark, NJ - Thomson Venture Economics and the National Venture Capital
Association (NVCA) announced the private equity performance results for Q1 2002, the latest data
available. While short term results continue to be negative, they showed an increase for a second straight
quarter, with a one-year return for venture capital partnerships of –24.4% as compared to –27.8% at the
end of Q4 2001. This possibly indicates that the worst may have already passed and the slow climb to
recovery has begun. Much of the performance results can be attributed to the dearth of exit opportunities in
the public and M&A markets as the volatility in the public markets has all but shut down the IPO market
and kept technology company valuations at low levels.
According to Jesse Reyes , Vice President at Venture Economics, “VCs have a lot of good companies ready
to exit, however the roiling public markets, and the downward pressure on valuations continue to degrade
short term performance. The industry needs exits to realize returns to their investors.” Consequently, time
will only tell how this will affect long-term returns, which have continued to outperform the public
markets. However, it is likely given the drop in valuations, the continued volatility in the public markets,
and the lack of exit opportunities that returns may remain in the negative for some time.
Investment Horizon Performance as of 3/31/2002
Fund Type 1 Yr 3 Yr 5 Yr Yr Yr
Early/Seed VC -31.8 65.0 48.3 32.0 20.6
Balanced VC -19.2 36.7 31.2 22.0 15.2
Later Stage VC -17.0 19.1 21.6 24.0 16.9
All Venture -24.4 41.0 34.9 25.9 17.3
All Buyouts -10.7 -0.6 4.6 10.5 14.0
Mezzanine -3.2 7.0 8.1 11.1 10.9
All Priv Equity -14.6 10.0 13.5 16.6 15.7
Source: Thomson Venture Economics/National Venture Capital Association
Thomson Venture Economics’ Private Equity Performance Index is calculated quarterly from Thomson Venture Economics’ Private
Equity Performance Database (PEPD). The PEPD tracks the performance of 1400 US venture capital and buyout funds formed since
1969. These statistics are calculated net to investors (net of fees and carried interest) using both cash on cash returns (distributions
and capital calls) and the unrealized net asset value of funds as reported by private equity fund managers. For further information on
how these returns are calculated please visit the methodology section of our website
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