(Flickr photo via JMRosenfeld)

Returns at venture capital firms improved across most time horizons during the fourth quarter of last year, driven by a new crop of initial public offerings and some big M&A deals, according to the Cambridge Associates U.S. Venture Capital Index.

“Collective venture capital performance continues to move in the right direction as we are experiencing a further opening of the IPO window and a strong pace of favorable acquisitions, allowing venture funds to distribute a meaningful amount of cash to their limited partners,” said Mark Heesen, president of the NVCA. “With short-term returns improving and a healthy start to 2011, we can expect these performance numbers to continue on a steady upward trajectory through the remainder of 2011 and beyond.”

That’s got to be music to the ears of venture capitalists, many of whom were hit hard during the economic recession as the IPO pipeline dried up.

Seattle venture capital firms have seen a number of good returns in recent months. Just this week, Divergent Ventures said it got a 6X return on its investment in Pliant, a storage company that sold to SanDisk for $327 million. Ignition Partners saw a good outcome when Heroku sold to Salesforce.com and Madrona Venture Group did well in Isilon’s sale to EMC.

And there’s also been a bit of a thawing in the IPO market, with Seattle’s Impinj and Zillow.com filing to go public last month.

Previously on GeekWire: “What’s that sound? It might be the IPO pipeline filling up”

 

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