PitchBook Benchmarks Reveal Slowing Private Equity Distributions, While Recent Venture Funds Have Returned Capital at a Record Clip

15 Mar

Venture Funds

SEATTLENEW YORKSAN FRANCISCO and LONDONMarch 16, 2018 /PRNewswire/ — PitchBook, the premier data provider for the private and public markets, today released fund performance data through 2Q 2017 from its stand-alone performance measurement product, PitchBook Benchmarks. The comprehensive performance data is designed to help limited partners (LPs) and general partners (GPs) better understand private market fund performance relative to broader asset classes and other PE and VC strategies.

Since its initial launch in December 2017, PitchBook Benchmarks has added more than 150 private capital funds, on top of the existing 3,000+ fund vehicles included in the Benchmarks data set. In this edition, PitchBook Benchmarks uncovered that GPs have adapted their strategies to meet the new realities of the high priced private market. Newer venture funds have deployed and distributed capital at a faster clip than ever before, while PE investors have slowed their pace of drawdowns due to factors including an abundance of alternate sources of capital, as well as the need to keep more capital on hand to support add-on transactions.

The PitchBook Benchmarks PDF and Excel data packs are available for download here.

“In today’s private capital markets, the unprecedented amount of capital available has fueled competition, pushing valuations and deal sizes to the highest point in the last decade. The evolving market dynamics have caused fund timelines to accelerate for venture capital, while private equity has seen a slowdown,” said James Gelfer, senior analyst at PitchBook. “These shifts in strategy can manifest themselves in returns, making fund performance data more important than ever as LPs make tough allocation decisions and GPs measure performance against peers.”

Key findings from the latest analysis of PitchBook Benchmarks, include:

  • VC funds are deploying capital faster than ever. The average fund raised in the early 2000s called down less than 60% of capital commitments by its third year, but that has steadily increased to more than 70% for more recent vintages.
  • Drawdown rates for PE funds are trending in the other direction, with managers taking longer to call down funds than they have in the past. PE funds historically have called down more than 80% of commitments by the end of their fourth year, but that has slipped to just 77% for 2012–2015 vintage funds.
  • At the seven-year mark, the average 2008–2011 vintage fund produced a DPI of 0.55x, compared to just 0.37x and 0.40x for the 2000–2003 and 2004–2007 vintage buckets, respectively.
  • The average PE fund raised in the early 2000s generated a DPI of 1.0x before its seventh year, but it now takes the average fund nearly nine years to make investors whole.
PitchBook Benchmarks launched in December 2017 to address the need for deeper transparency within the tools clients use to measure performance. Unlike traditional benchmarking products, which report performance data on an aggregate basis, PitchBook Benchmarks enable clients to gain transparency to the underlying fund details and performance metrics used to calculate its benchmarks. This includes IRRs and cash multiples across strategies and vintage years. Additionally, users are able to access PitchBook Benchmarks in both PDF and Excel formats, enabling the easy re-construction and use of data in any other performance measurement models.

For more information about PitchBook Benchmarks, click here.

About PitchBook
PitchBook is a financial data and software company that provides transparency into the capital markets to help professionals discover and execute opportunities with confidence and efficiency. PitchBook collects and analyzes detailed data on the entire venture capital, private equity and M&A landscape—including public and private companies, investors, funds, investments, exits and people. The company’s data and analysis are available through the PitchBook Platform, industry news and in-depth reports. Founded in 2007, PitchBook has offices in SeattleSan FranciscoNew York and London and serves more than 14,000 professionals around the world. In 2016, Morningstar acquired PitchBook, which now operates as an independent subsidiary.

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SOURCE PitchBook

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