The 10-year return figures from Cambridge Associates are probably the best way to measure the performance of a long-term asset class like venture capital. As the profits from the dotcom bubble start to recede beyond that 10-year horizon (the Nasdaq peak was March 2000), the true picture of the industry’s performance starts to come into better focus.
The latest quarterly figures today (for the period up to 30 September 2009) revealed a slump in the 10-year return to 8.4 per cent, down from 40.2 per cent a year before when the full bubble effect was still in the numbers. Bad, certainly, but still respectable: the Nasdaq composite lost 2.5 per cent annually over the same period.
But the really bad news for the venture capitalists is still to come. Read more