Venture capitalists continue to outperform the Nasdaq and the S&P 500. However, venture returns fell last quarter as the exit markets dried up, according to a report released today from Thomson Reuters and the National Venture Capital Association. Taking the biggest hit was one year returns, which came in at negative 20.9 percent for the quarter ended December 31.
That compares to negative 2.1 percent for the previous quarter. Three year, five year and 10-year returns also took a hit. Five year returns, for example, came in at 6.4 percent across all venture classes. That compares to 8.4 percent for the previous quarter.
The report indicates bad news ahead for venture capitalists, who rely on companies going public or getting acquired in order to make money. Both the IPO and M&A markets have slowed considerably in the past 12 months, causing concern for VCs.
Given that the report lags by one quarter, it is likely the returns will decline further later this year.
The only bright spot is that public markets are faring much worse. The Nasdaq's one return was a negative 38 percent, while the S&P 500 was down 36 percent for the same period.
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