Venture Capital Returns Suffer

Venture capitalists saw a drop in their returns for the eighth straight quarter, with back-to-back losses of 20 percent or more the past two years, according to an industry report released Monday.

With initial public offerings hitting lows, along with little movement in the mergers-and-acquisitions markets, returns to investors have been suffering in the short term, the report says.

Thomson Venture Economics and the National Venture Capital Association have been tracking fund returns since 1980. The past two years have been the worst on record since the study began. The decline looks particularly bad after returns flew so high during the dot-com era.

Returns in 2002 showed a loss of 23.3 percent, a slight improvement over the year before, when losses stood at 27.8 percent.

That's in sharp contrast to 1999, when returns soared to an average of 166 percent above the amount that the venture capitalist invested.

Venture Economics website.