Private equity: European venture firms come of age

Venture capital is private equity’s trump card. When the industry is accused of asset-stripping or loading companies with debt, executives point to job creation machines such as Google in the US or Skype in Europe, both backed by venture capital.

It is disappointing, then, that while a handful of European venture firms have generated substantial returns, the majority have lost money. According to the European Private Equity and Venture Capital Association, Europe’s venture capital firms have returned only 0.7% annually on average over five years, and lost 1.9% annually over 10 years.

Returns in the US are much higher, with firms returning 4.9% over five years and 8.4% over 10 years, according to the National Venture Capital Association.

Tom Anthofer, managing partner of European private equity firm Cipio, said: “From a macroeconomic perspective, European venture capital has clearly one of the most challenging track records of all asset classes in the private equity universe.” (…)


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