Venture capital funds are private equity investment vehicles that seek to invest in firms that have high-risk/high-return profiles, based on a company's size, assets, and stage of product development. Venture capital ( VC) is a type of equity financing that gives entrepreneurial or other small companies the ability to raise funding before they have begun operations or started earning revenues or profits. Investors in a VC fund will earn a return when a portfolio company exits, either through an IPO, merger, or acquisition.Venture capital funds are used as seed money or "venture capital" by new firms seeking accelerated growth, often in high-tech or emerging industries.As a result, these are only available to sophisticated investors that can handle losses, along with illiquidity and long investment horizons Hedge funds target high-growth firms that are also quite risky.This provides a tangible example of the Pareto Principle. The challenge for investors is not necessarily. For funds that had returns above 5x, less than 20 of deals produced roughly 90 of the funds returns. For more information on the performance of venture capital funds and all other types of private equity fund, please click here. Venture-capital-fund performance is languishing amid the broader downturn for tech startups, denting returns for university endowments, pensions and other investors that increased their exposure. Venture capital funds manage pooled investments in high-growth opportunities in startups and other early-stage firms. Specifically, 45 of VC firms are likely to repeat their funds first quartile performance in a subsequent fund. Bottom quartile funds show similar trends, with their upper boundary in the 0-20 range for vintages 1990 to 1997, while since vintage 1998 they have remained negative.
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