All private investors, from venture capitalists to buyout guys, are doing very well.
If you look at the table below, you’ll see that the early stage venture capitalists who invested over the past ten years have averaged a whopping 37 percent return annually, according to the latest data from Thomson Financial. Those VCs have done the best among all investors.
But then you’ll see that the next best performing group is “mega buyout.” Those investors spend billions to buyout major companies, are reporting a 28.5 percent uptick in their investment performance over the past year alone. That shows you why there’s so much excitement in this buyout area, and Silicon Valley is seeing its share of action.
Dan Primack, at PE Week, provides some good perspective on these numbers. It’s important remember that much of the short-term (one-year) performance is “on paper” only, meaning it includes when investors mark up the value of their investments on internal books, but haven’t actually been sold those companies or taken them public yet. Still the good results do raise more questions about Sevin Rosen’s argument that the venture model is broken.
Also, keep in mind that the numbers above are averages, and so individual firms may be faring much better or worse.