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Alternative Market Briefing

Venture capital AUM surpasses $2tn for the first time

Friday, May 13, 2022

Laxman Pai, Opalesque Asia:

Global venture capital (VC) assets under management (AUM) recorded by Preqin surpassed the $2tn mark for the first time, hitting $2.03tn as of September 2021.

Venture capital has grown to become the second-largest asset class in the alternatives industry, with a huge increase in AUM since December 2008, when the industry's AUM was around $270bn.

Preqin also said that venture capital firms have continued to raise capital in 2022 and have amassed $497bn of dry powder as of 11 May 2022.

However, the VC segment is still a third of the size of private equity, which had an AUM of $6.03tn as of September 2021, but has grown faster, with a compound annual growth rate (CAGR) of 20.2% since the end of 2012, compared to 11.5% for private equity over the same period.

Furthermore, the proportion of PEVC (Private Equity & Venture Capital) AUM in venture capital has risen from 16.3% in 2012 to 33.7% at the end of 2021.

Meanwhile, traditional "60/40" equities and fixed income portfolios have struggled to perform in recent years. On the one hand, real yields have declined, leading to lower overall returns. On the other hand, these portfolios have failed to truly protect investors in periods of market stress, prompting allocators to invest trillions of dollars in alternative assets after the Global Financial Crisis.

The Preqin report found that adding venture capital to the mix of traditional assets could significantly help with return en......................

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