Has Persistence Persisted in Private Equity? Evidence from Buyout and Venture Capital Funds

Abstract

We present new evidence on the persistence of U.S. buyout and venture capital (VC) fund performance using high quality cash-flow data sourced from Burgiss’s large sample of institutional investors. Using ex post returns, we find that persistence of VC funds has remained remarkably strong. We also find persistence in buyout performance, but this has become weaker for funds raised post-2000. However, when we focus on the information available to investors ex ante – previous fund performance at the time of fundraising, rather than final fund performance – we find little evidence of persistence for buyouts but continued strong persistence for VC funds.

Keywords: Private equity, performance persistence, venture capital

JEL Classification: G2, G11