Written by PitchBook
Introduction
Assessing the performance of private equity and venture capital funds is crucial and challenging in equal measure. The timeline of performance reporting is just one of the key considerations; as fund performance data trails overall investment activity statistics by a matter of months, accurately analyzing those separate datasets to produce a comprehensive overview of how fund results have shaped and will continue to shape investors’ actions can be difficult. But not overly difficult, and, furthermore, armed with not only broad dealmaking numbers but also fund performance figures, clearer and more comprehensive insights into the current private investment landscape are achievable. As an illustration, the primary storyline of the past few months has been a growing incidence of investor caution in both private and public markets, with PE fund managers dialing back activity somewhat in light of persistently high valuations and competition for quality targets. For venture investors, the existence of a true tech bubble remains uncertain, but at the very least, it’s clear that quite a few vaunted valuations garnered by late-stage startups may have been overly exuberant. Yet, looking at the most recent influx of PE and VC fund performance data, it’s clear that limited partners still have plenty of reasons to recommit to their investors. Last year saw venture fund managers worldwide return no less than $57 billion to their backers, while 1Q 2015 posted an immense $19.7 billion. Global PE cash flows were comparably mammoth, with a staggering $467.8 billion distributed back to LPs in 2014 and $168.2 billion through the end of March. The M&A boom and surging public markets that helped produce those massive sums may have shifted since, but in light of such success, PE and VC firms that have demonstrated success will likely continue to enjoy commitments on the part of their LPs, at least for some time. We hope the information contained in this report proves insightful and acts as a starting point in your efforts to benchmark the performance of PE, VC and other asset classes.
