Venture capital gets great press but lousy investment returns. Recently VCs have tried to boost their returns by hiring people with titles like Director of Community to get their portfolio companies to share ideas. Will it pay off in higher investment returns? No, but it will help at the margin.
VC used to be a great business. For example, in 1999, the average VC fund earned a 10 year internal rate of return (IRR) of 83.4% according to Cambridge Associates. Since then, IRRs have plunged to the point where an investor would be far better off — after adjusting for risk — to buy a stock index mutual fund. For example, the recent VC 10-year IRR is just south of 6.1% during which time the S&P 500 rose 8%.
To read the original article: Will Community Boost Venture Capitalist Returns? - Forbes
