11 ms·
A) The quarterly pooled MEAN metric does not necessarily tell you how the majority of venture firms perform over any sustained duration. Looking at the MEDIAN
by secretasiandan 16y ago
A) The quarterly pooled MEAN metric does not necessarily tell you how the majority of venture firms perform over any sustained duration. Looking at the MEDIAN vintage year performance on page 7 does (at least a better job of it). From that, it appears most vintage years haven't made money since 1998.
B) We have data for vintage years, but not necessarily firms. I don't think its a terrible generalization to say that the last 10 or 15 vintage years represents VC firms now in business, else there are funds that have been open for 15 years and I believe they usually have a fixed lifetime of less than that.
C) Given points A and B, do you still believe they are drawing their conclusion (and poorly so) only from 10 year returns?
- asr 16y agoThanks for pointing out that interesting, and relevant, data (upvoted). The problem with looking at negative median returns since 1999 is that from 1999-2002 this is just picking up the bubble, and as you point out many funds from vintage years 2003-present are very much still in business, so a current negative return for these vintages is not particularly meaningful. Unless the authors have some methodology I'm not aware of to deal with the fact that venture funds often don't carry companies at anywhere close to their current value. Finally, even if (B) were true, there's a huge difference between "Most venture funds lose money" and "Most venture funds currently open have lost money." While the first would make me worry about the business model, the second wouldn't.