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Here’s the good news: Venture capital returns are on the rebound across many time horizons. Now, here’s the bad news. You’d still have made more money investing in the public markets.

That’s the latest takeaway from the Cambridge Associates U.S. Venture Capital Index, released today by the National Venture Capital Association.

Mark Heesen
Mark Heesen

“The surge of the public markets in the first quarter of this year was very difficult to compete with from a returns perspective, yet there is clearly a silver lining if these indices remain strong,” said Mark Heesen, president of NVCA. “Venture-backed companies that have been waiting for the right time to go public or an attractive acquisition price will be able to move forward in a favorable manner which will improve valuations across the board. All of these factors will drive improved performance over the remainder of 2013.”

As the chart above shows, 5-year returns in the VC index came in at 4.79 percent. That compares to a 6.5 percent increase for the Dow Jones Industrial Average and a 7.47 percent increase for the Nasdaq. Long-term horizons still show venture capital outpacing the stock indices, but the short-term gaps are having an impact on the venture business as a whole.

IPOs are on the rebound, a good sign for venture capitalists. But, as was reported earlier today, technology M&A transactions are now at a 4-year low. That will need to pick up if VCs want to start beating out the public markets again.

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