Private equity performance held relatively steady for the quarter ending September 30, 2006, according to a survey by Thomson Financial and the National Venture Capital Association.

See graphic below. What is stands out is how tough it is to be an seed-stage investor. Basically, you’ll have lost your shirt if you have only been in this business five years or less. However, if you have been investing for ten years, you’ll have done better than anyone else by far, including later-stage VCs, private equity firms and public investors (tracked by S&P index).

Note that later-stage VCs have done relatively well in recent years.

For venture capital firms, short term performance showed a slight decrease with the one year venture capital returns posting a 10.8 percent return for Q3 2006, down from 13.7 percent in Q2 2006. Five year returns continued to improve and inch towards positive territory at -1.0 pecent in Q3 2006, up from -3.7 percent in Q2 2006. This negative return continues to reflect the aftermath of the Internet bubble burst. Ten and twenty year returns remained steady at 20.5 percent and 16.5 percent respectively, the survey found.

privateequityperformance.bmp