Analysis of private equity and venture capital industry reveals strong decade of returns for its investors
Investors in private equity and venture capital – including pension funds and academic endowment foundations – have benefitted from a strong industry return of 22.6%1 per annum, from funds which started investing in last decade, according to new research.
Published today, the British Private Equity and Venture Capital Association’s (BVCA) Performance Measurement Survey demonstrates how the industry has delivered impressive returns for its investors by analysing data gathered from across its membership.
It has found that annual returns are equivalent to more than doubling an initial investment, generating a 2.01x return on capital invested across the past decade and 1.85x capital invested since 1980, including the value of unrealised investments as at 31 December 20212.
This compares to an industry return since 1980 (the first year for which the BVCA has data available) of 14.9% per annum, meaning the private equity and venture capital industry has performed better over the last ten years than the collective performance of the industry since 1980.
In 2021, the BVCA introduced analysis looking at aggregate industry returns from a specific year onwards. The industry returns since 2012 - capturing investments made over only the past decade - reflects the current size of the industry, the rough length of a private equity or venture capital fund (so funds which are still active) and strips out the influence of historic data from performance figures.
However, annual returns (IRRs), multiples of invested capital and ‘since inception’ returns are all important measures when assessing performance. Figures for these can now be analysed against this recently introduced metric throughout the report.
BVCA Director General, Michael Moore, said:
“It’s clear that private capital continues to deliver powerful returns for its investors – such as pension funds, university endowment funds and charitable foundations – via its support for the sustainable growth of UK businesses.
“However, it is natural to ask if the industry can maintain this during more challenging economic times - the industry remains confident that it can. Evidence from previous downturns show that private equity and venture capital has been a resilient and long-term asset class in which fund managers can choose both when to invest and when to realise their investments. While the shorter-term returns may fall, the longer term performance, particularly relative to public markets, is expected to remain robust.”
Albertha Charles, PwC UK Asset and Wealth Management Leader, said:
“We are pleased to support the BVCA in the production of their annual Performance Measurement Survey. This report provides regular and detailed insight into the performance of private equity and venture capital, by fund focus and investment stage, helping further demonstrate the industry’s commitment to transparency.”
Notes to editors
- The full report can be found here, the Highlights paper here, and the accompanying data set, here.
- The British Private Equity & Venture Capital Association (BVCA) as the representative body for private equity and venture capital, connects institutional investors, fund managers, companies, advisers and service providers together, with our membership currently comprising more than 700 businesses from across the private capital ecosystem. This includes more than 325 PE and VC firms, 100 institutional investors and 220 professional services firms.
- PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 152 countries with over 328,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
- For more information on any of the above, please contact External Communications Manager, Will English, on [email protected]
1 Internal Rate of Return (IRR) for funds which made their first drawdown between 2012 and 2017
2 Total Value to Paid-In (TVPI) multiple
