Conventional wisdom says that only ten venture-backed investments matter per year and that an equally concentrated number of certain venture firms makes those investments, but conventional wisdom may lead investors to miss attractive opportunities with managers that can provide exposure to substantial value creation.
The widely held belief that 90% of venture industry performance is generated by just the top ten firms is a catchy but unsupported claim that may lead investors to miss attractive opportunities with managers that can provide exposure to substantial value creation.
Well-diligenced private investments in a skillfully constructed portfolio are important growth drivers that have helped pension funds deliver superior performance and increased the probability of meeting or exceeding long-term required returns.
The Cambridge Associates LLC Global ex US Developed Markets Private Equity and Venture Capital (PE/VC) Index® returned -2.8% in US$ terms in first quarter 2015; the Cambridge Associates LLC Emerging Markets Index® returned 3.1%.
Whether investors are ready to admit it or not, sponsor-to-sponsor transactions—in which one private equity sponsor sells its stake in a company to another private equity sponsor—are here to stay, and that may not be a bad thing.
US private equity and venture capital earned solid returns during first quarter 2015, outpacing the S&P 500 but trailing the Russell 2000® small-cap index. First quarter’s 2.6% return for the Cambridge Associates LLC US Private Equity Index® was an improvement over its 0.8% performance in the previous quarter while the 3.8% return for the Cambridge Associates LLC US Venture Capital Index® was a 6.1 ppt drop from results in the prior quarter.
With a ready supply of technical talent and entrepreneurial opportunities, Los Angeles is emerging as an interesting venture capital opportunity.
The Cambridge Associates LLC Global ex US Developed Markets Private Equity and Venture Capital (PE/VC) Index® was virtually flat (0.1%) in US$ terms in fourth quarter 2014, bringing its return for the year to 3.5%, which was a sharp drop from the prior year. The Cambridge Associates LLC Emerging Markets PE/VC Index® returned 4.5% for the fourth quarter and 14.3% for the year.
Funds in the Cambridge Associates LLC benchmark indexes for US private equity and venture capital earned double-digit returns in 2014, but neither index performed as well as it did in 2013.
Overview During the third quarter, the Cambridge Associates LLC Global ex US Developed Markets Private Equity and Venture Capital (PE/VC) Index fell 5.0% in US$ terms, its first negative quarterly return since second quarter 2012 (breaking its string of eight consecutive positive quarters). The euro weakened in the third quarter, putting pressure on returns measured…