Cash on Cash Returns at VCs are Horrible?
November 12, 2007
Fred Wilson has an interesting post that looks at the performance of venture capital funds in the aggregate from a cash on cash return basis instead of the more common IRR basis. Here is the chart from his post:
The chart shows that the venture capital business was a lucrative investment from the mid-80s to the mid-90s, offering a return between 2.5x to 5x on your money. Of course, starting in 1999 the industry has been a horrible place to invest your money. Fred sees light at the end of this tunnel explaining, “My expectation is that this chart will look at lot differently in three or four years and we’ll see a return to a money making business. But I doubt the numbers will get to where they were in the early/mid 90s.”
