RETURNS, RISKS AND LIQUIDITY OF VC FUNDS IN Q3 2020

At the close of Q3, 2020 has shown to be an exceptional year for venture capital performance, with funds globally recording an increase in aggregated multiple of invested capital (TVPI), rising from 1.58x in Q3 2019 to 1.63x in Q3 2020. At the same time, selection risk – as measured by the difference in the performance of top and bottom 5% of funds – has also reached a record high, with a TVPI spread of nearly 2x, potentially signaling more challenging market conditions. For active US funds, Q2 leads to a rebound and Q3 a stabilization, mimicking the price of listed stocks of American technology companies. Western European funds, meanwhile, recorded a decline in performance in Q3 2020.

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