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Performance Analysis of Venture Capital Healthcare Funds vs. Venture IT Funds – October 2013

by Hayley Wong

  • 18 Oct 2013
  • PE

Preqin’s Performance Analyst currently holds performance data for over 1,600 venture funds. Narrowing this down to vintage 1996-2010 venture capital funds that predominantly target investment opportunities in either healthcare or information technology (IT), there are over 590. This analysis examines the performance of funds that invest in these two innovative industries.

Vintage 1996-1998 IT-focused venture capital funds were investing during the height of the technology boom and as such, funds within this period have historically reported the highest median returns. In particular, vintage year 1997 yielded the highest median returns (38.9%) of all similar strategy funds, across all time. Healthcare-focused funds of the same vintages report lower returns in the range of 6.8% and 1.0%. Notably, data shows that for vintage 1999 funds that are focused on either industry, median returns fall in the red, as these funds’ performance would have been most affected by the technology crash.

Vintage 2000 IT-focused funds produce median returns in the black (0.1%) and across the vintages  for IT-focused funds, the median returns have shown a general trend of steady increase. Preqin’s most up to date data reveal that the most recent vintages 2009 and 2010 yield returns of 12.7% and 7.7% respectively. Comparing these returns to healthcare-focused funds, vintage 2000-2002 report median returns in the range of 2.6% and 6.5%, which are higher than the median returns for IT-focussed funds of the same vintage. However, the median returns for healthcare-focused funds enter negative territory for vintage 2003-2006 while IT-focused funds have returns in the black. Post-vintage 2006 healthcare-focused venture capital funds report positive returns which have steadily increased across the vintages, with vintage 2010 funds reporting a median return of 8.2%.

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