The previous issue of FrontLine focused on the impact of foreign exchange on private equity performance. In light of this, this issue will revisit the performance of European venture capital funds. As illustrated by Table 1, the pooled average performance of these funds usually compares unfavourably with that of their US counterparts. According to eFront Pevara’s data, US venture capital records a pooled multiple on invested capital that is 22.5% higher than its European peer group. As for internal rates of returns, they generated on a pooled average basis 940 basis points more than their European counterparts. Not surprisingly, some fund investors have simply concluded that they should disregard European venture capital when setting their asset allocation.

Table 1 – Compared performance of US and Western European venture capital funds in USD

Table 1 – Compared performance of US and Western European venture capital funds in USD

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