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November 9, 2004
New Private Equity and Venture Capital Research
Topic: 3) Ventures
There is some new research by the University of Chicago GSB's Neubauer Family Professor of Entrepreneurship and Finance Steven N. Kaplan. Although so far I've only had the chance to skim the presentation and cross-ref some of the paper details, some interesting aspects to note are:

- the fact that some new data not accessible before through Venture Economics is utilized
- the sad story on returns (slide 12) since 1999 ... all average returns across all quartiles of performers is negative ...
- the Public Market Equivalent (PME) measure (slide 19) used to gauge partnership returns against the S&P 500 is kind of a novel measure which I've not seen before (the measurement is useful in terms of making the measurement of returns more invariant to sequencing)
- one finding (promising story) is that some GPs *do* persist superior returns over time ... factors and explanations probably include the access to proprietary deal flow and evidence of better negotiated deal terms against early-stage company owners, founders, etc. (gee whiz, the story is getting sad again since I have mostly represented operating companies in the past ...)

Here's the presentation and paper (the latter for the benefit of the academics!).

Although Business Week magazine and others have always ranked Professor Kaplan as one of the premier professors in Entrepreneurial Finance using traditional means, from my perspective Professor Kaplan has always done a great job at making academic research and papers accessible by the general business community. I'm sure as I dig further I will find more of the same caliber work.

Steve Shu
Managing Director
S4 Management Group

Posted by sshu-s4 (c) S4 Management Group LLC at 11:43 AM CST
Updated: November 10, 2004 11:51 PM CST
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