Premium
Does Venture Capital Pay? New Evidence on an Old Question
Author(s) -
Pereiro Luis E.
Publication year - 2015
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.22070
Subject(s) - venture capital , negotiation , social venture capital , contrast (vision) , capital (architecture) , business , risk–return spectrum , finance , set (abstract data type) , economics , political science , computer science , law , portfolio , archaeology , artificial intelligence , history , programming language
Using a novel set of risk benchmarks, the author analyzes the performance of U.S. venture capital. Findings show, over the long term, that 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. The author suggests a method to solve this imbalance—a practical way for passive investors to negotiate a fairer split of returns with venture capitalists. © 2015 Wiley Periodicals, Inc.