And even though IRRs have dropped since then, the gulf between median and top-quartile performance had persisted: in 2007, when the median manager’s return was zero, the standard deviation among IRRs was 25.2 per cent. Amid this variance in returns, some managers have shut shop. The venture universe expanded rapidly from 1996, when it was populated by fewer than than 400 managers, to number 1,790 in 2009. But since 2000, a number of firms have failed to raise a fund and were now considered inactive, eventually resulting in a drop-off in the number of managers in Preqin’s database, which now numbers about 1700.

In recent years, investors’ attitudes to the industry became mixed: “Some claim that the venture capital model is broken, while others believe that an evolution is required if the industry is to improve upon the overall performance experienced in the past 10 years,” Preqin wrote. In the past five years, investors have continued to favour IT deals, a tradition stemming from the industry’s long association with technology-based industries – “due to their innovative nature and the potential rates of return from disruptive technology”. Health care companies had also gained attention, with 35 per cent of venture funds aiming to include health care in their portfolios.

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