The venture asset class has seen promising aggregate returns as a whole.
The Thomson Reuters Venture Capital Research Index was launched in 2012 seeking to track the performance of the US venture capital universe. It saw 26.38% for aggregate yearly returns for a 5-year period, while NASDAQ only saw 18.47%.
This is especially the case for angel/ seed investments. But don’t just take our word for it: a study by the Angel Capital Education Foundation in 2016 saw an aggregate 22% IRR over an average hold period of 4.5 years, which translates to a 2.5x multiple for return on investment.
Cambridge Associates’ US Venture Capital Early Stage Index 1 year pooled end-to-end returns also outperformed a number of other indexes.
Substantial potential continues to exist for this asset class. Significant returns from exits in Q1 2017 seem more optimistic against the slowing market end-2016 – Snapchat’s $3.4 billion IPO alone raised more than twice as much as every 2016 venture-backed tech IPO combined. There is also the potential for the development of a secondary trading market and investors have also enjoyed an overall increase in full participating liquidation preferences.
View the infographic on 4 Reasons To Invest In Startups below, or download it here.
This post was written by AnMaree Williams on November 21, 2017
4 Reasons To Invest In Startups