The latest tally of venture capital returns shows slumps in the short term.

The decision by OVP Venture Partners to wind down operations after nearly 30 years in business is just one example of the troubles facing the venture capital industry. And now here comes some more bad news.

According to a report out today from Cambridge Associates and the National Venture Capital Association, venture capitalists experienced lower returns across the quarter; one-year-; three-year; and five-year time periods ended June 30th.

The lower returns were driven by declines of venture-backed companies in the public markets, and signal that not all is rosy in venture capital land.

Photo via Images of Money

“The down public markets took their toll on venture capital performance in the short term putting valuation pressure on both later stage companies in portfolios and public companies that funds are obligated to retain for a certain period of time,” said Mark Heesen, president of NVCA. “Yet despite these problems, the 10-year horizon number improved by nearly a full percentage point, demonstrating the growing strength of this time period compared to the early 2000s. And, we are seeing venture capitalists collectively distributing more money to LPs then they are taking in, which bodes well for future return numbers and fundraising prospects.”

In the Seattle area, a number of firms are on the hunt for new cash (Ignition, Divergent, Frazier Healthcare and Voyager). Their success will obviously be tied to individual performance of the funds, and not everyone is hitting a brick wall on the financing trail. After all, Madrona Venture Group raised a new $300 million fund earlier this year, the largest in the firm’s history.

Nonetheless, the troubles in the VC industry come after the Kauffman Foundation released a blistering report earlier this year in which it found that the majority of funds in its portfolio failed to exceed returns available from the public markets, after fees and carry were paid.

Comments

  • http://twitter.com/Seattle_Startup Seattle Startup

    The reality continues to set in. Investing in venture funds – dumb. Being a venture partner: Priceless!

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