1. INTRODUCTION Venture Capital ("VC") as an asset class has captured the public imagination of late. But unlike in public market funds, where benchmarks and factor models allow for a dissection of performance to truly separate the legendary investors from the rest, there seem to be few frameworks to evaluate VC funds. Newbie investors to this asset class often fall prey to the trap of focusing on just one or two historical metrics (e.g., IRR) that are easier to calculate – but don't necessarily capture the real drivers of returns that are replicable over cycles.
A DuPont framework to measure VC performance
A DuPont framework to measure VC performance
A DuPont framework to measure VC performance
1. INTRODUCTION Venture Capital ("VC") as an asset class has captured the public imagination of late. But unlike in public market funds, where benchmarks and factor models allow for a dissection of performance to truly separate the legendary investors from the rest, there seem to be few frameworks to evaluate VC funds. Newbie investors to this asset class often fall prey to the trap of focusing on just one or two historical metrics (e.g., IRR) that are easier to calculate – but don't necessarily capture the real drivers of returns that are replicable over cycles.