Vintages between 1990 and 1997 show exceptional median IRRs, with the majority lying in the range of 20-40%. The median IRR peaks for funds with a 1997 vintage at 46%; this is in contrast to funds of the following vintage year, which produced a median IRR of 10%. Since then the median IRRs have stayed low, in negative territory for most vintages, and vintage 2006 is generating a median IRR of -11% at present. It is interesting to note that when equivalent analysis was conducted last year, venture returns were higher for vintages 2001 to 2005 – around the 5% mark – but as the effects of the financial crisis on the industry have taken hold, performance has declined further.
The quartile ranges for venture focused funds show a wide range in the 1990s but have narrowed significantly since. As the industry boomed, top quartile funds generated outstanding returns in excess of 40-80%, but vintages since then have had top quartiles boundaries of 5-10%, demonstrating how tough the market has become for fund managers. Bottom quartile funds show similar trends, with their upper boundary in the 0-20% range for vintages 1990 to 1997, while since vintage 1998 they have remained negative.
For more information on the performance of venture capital funds and all other types of private equity fund, please click here.