Private Equity KeyTrends – Record Distributions in 2015 Mask a Complex Reality - btbirkett@gmail.com - Gmail

Private Equity KeyTrends – Record Distributions in 2015 Mask a Complex Reality - btbirkett@gmail.com - Gmail



AN OLD VENTURE CAPITAL ADAGE IS DEBUNKED. “The widely held belief that 90 percent of venture industry performance is generated by just the top ten firms” is no longer true, according to a Cambridge Associates study. The study found that “in the post-1999 (i.e. post-bubble) period, the majority of value creation” has been “generated by deals outside the top 10.” Moreover, since 2005, “new and emerging firms have consistently” accounted “for 40 percent to 70 percent” of “value creation.” Writing in Business Insider, Alan Patricof and and Ian Sigalow, both co-founders of Greycroft Partners, call this “the new normal.” They add that since 2005, “managers with less than $500 million have accounted for a majority” of VC returns, “despite investing less money on average than the larger funds.” Cambridge concludes that if investors don’t take account of the democratization of venture capital, “they may miss attractive opportunities” to significantly boost returns.