UK venture capital returns at highest level since 2003

UK venture capital funds recorded their highest returns last year since 2003 according to new research from the British Private Equity & Venture Capital Association (BVCA).
Published today in association with PwC and Capital Dynamics, the BVCA’s annual Performance Measurement Survey examines the performance of UK private equity and venture capital funds and how they compare against other asset classes and over time.
VC returns hit 7.7% in 2016 (for post-2002 funds), its highest figure for 13 years, on a since-inception basis - i.e. the time from when the fund made its first capital call from investors. The since-inception return is typically understood to be the most appropriate measure of fund performance due to the long-term and illiquid nature of the asset class.
It marks the latest step in the upward trajectory of venture returns, as too do the numbers for the 10-year annualised rate of return, which sees post-2002 venture pull in 8.6% compared to 7.9% in 2015.
The recent resurgence of venture capital is shown in the three year returns, where it is now the best performing asset class in the BVCA survey, with a return figure of 12.5%, higher than small, mid and large MBO funds.
Other highlights include:
- Combined, UK venture capital and private equity achieved a since-inception return of 14.1% in 2016, the joint highest figure since 2011.
- Small buyout funds are the strongest performers, with an IRR of 15.7%.
- Large buyout funds recorded a figure of 14.9%, the highest number since 2011.
- Combined, private equity and venture capital funds produced three- and five-year annual returns of 12.7% and 13.7% respectively for each time period, compared to the FTSE All-Share which returned 6.1% and 10.1% to investors over the same periods.
Noelle Buckley, Director, Research, BVCA, said: “This report highlights once again how the private equity and venture capital industry is demonstrating its value as a long-term investment providing investors with stable and persistent returns in political uncertainty.”
Mark Drugan, Managing Director and Head of Investment Management Europe, Capital Dynamics, said: “In 2016, private equity and venture capital continued to demonstrate strong performance for investors in a year when uncertainty was increasing because of significant geopolitical events. This was evidenced by the high level of distributions and overall strong net positive cash flows to investors.”
Richard McGuire, Partner, PwC, said: “The continued strong returns of private equity and venture capital funds and their outperformance of the public benchmark show why the fundraising market remains buoyant.”
For further information please contact
Noelle Buckley, Director, Research, BVCA:
[email protected]
Tom Allchorne, Director, Communications, BVCA
[email protected]
Notes to editors:
- This press release was updated on 3 October 2017 following small adjustments to the return figures for large buyout funds (adjusted from 15.1% to 14.9%), and combined private equity and venture capital returns for three-years (12.3% to 12.7%) and five-years (13.6% to 13.7%).
- The BVCA Performance Measurement Survey is one our annual flagship reports. There are 611 UK managed funds included in this year’s dataset and we believe this makes it the most complete country specific survey on the performance of private equity and venture capital funds in the world.
- Today saw the launch of the summary analysis which can be viewed here. The full report will be available in Q3. To view past versions of the BVCA Performance Measurement Survey, please click here.
- The British Private Equity and Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has over 650 member firms, representing the vast majority of UK-based private equity and venture capital houses and their advisers and investors.
- PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 184,000 people in 157 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.
- Capital Dynamics is an independent global asset manager, investing in private equity and clean energy and infrastructure with over USD 27 billion in assets under management/advisement operating from 10 offices across the globe. The firm’s investment history dates back to 1988 and its senior investment professionals average over 20 years of investing experience across the private equity spectrum. Capital Dynamics’ experience and culture of innovation brings its clients tailored solutions in order to meet diverse client needs.