Return to Venture Capital in the Aggregate

Shumiao Ouyang, Jiaheng Yu and Ravi Jagannathan

No 27690, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the performance of the Aggregate Portfolio of All Equity Investments (APAEI) in 17,242 ventures with first funding round between 1980 and 2006 by following them till 2018, or their exits if earlier. The Gornall and Strebulaev (2020) upward bias in later-stage pre-money-valuations, while affecting all funding-round-to-exit returns, does not affect APAEI’s performance. APAEI had an internal rate of return of 22%, and a superior Generalized Public Market Equivalent of 1.44. When the best 5% of the ventures are dropped from the APAEI portfolio, the risk adjusted return becomes negative. The APAEI portfolio return declines after 1999.

JEL-codes: G0 G00 G1 G10 G12 G19 (search for similar items in EconPapers)
Date: 2020-08
Note: AP PR
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