One of venture capital’s oldest and most reliable partners was hard to find in 2009, according to an annual survey that examines where the private equity asset class receives its capital.
Endowments and foundations saw their share of the overall venture capital pool fall to 3.2% in 2009 from 13.1% in 2008, according to Private Equity Analyst’s Sources of Capital survey (download it here). That’s a much larger drop than the percentage fall within the overall private equity capital pool, in which the share from endowments and foundations fell to 8.4% in 2009 from 10.3% in 2008.
These institutions tend to have relatively large allocations to private equity, and thus were disproprotionately impacted by the so-called denominator effect. As declines in public stocks and bonds shrank the overall sizes of their portfolios, private equity took up a larger portion of assets under management and sent many of these investors wildly over their target allocations, forcing them to cut back. The problems were severe enough that even as economic conditions improved late in 2009, these limited partners remained skittish.
To read the full, original article click on this link: Where Venture Capital’s Money Came From In 2009 - Venture Capital Dispatch - WSJ
Author: Keenan Skelly