Does Venture Capital Pay? New Evidence on an Old Question
Journal of Corporate Accounting and Finance, 26(5), July-August 2015, pp.93-98
12 Pages Posted: 17 Jun 2015
Date Written: June 16, 2015
Abstract
Using a novel set of risk benchmarks we analyze the performance of U.S. venture capital and find that, over the long term, venture capitalists have achieved a risk-adjusted return of 5.16%. In stark contrast, their passive capital providers have pocketed a dismal, close-to-nil return on venture capital. We suggest a method to solve the imbalance — namely, a practical way for passive investors to negotiate a fairer split of returns with venture capitalists.
Keywords: asset pricing, venture capital, private equity
JEL Classification: G24
Suggested Citation: Suggested Citation