NEW YORK, Sept. 20, 2011 (GLOBE NEWSWIRE) -- The estimated market value of venture capital-financed companies in the U.S. rose 10.1% in 2011's first quarter from the end of 2010, according to the Dow Jones U.S. Venture Capital Index. The index's performance topped the Dow Jones U.S. Total Stock Market Index's total return gain of 6.4% over the same time period.
The return on the Dow Jones U.S. Venture Capital index for the 12-month period ended March 2011 was 32.7%. The largest gains for the quarter and year ended in March 2011 were in software companies.
Venture capitalists invested an estimated $6.5 billion in 661 deals in the first quarter of 2011, a decrease of 23% in dollars and 14% in deals compared with the fourth quarter of 2010, according to Dow Jones VentureSource.
"With the financial markets zig-zagging for most of the year, a 10% gain in the market value of venture capital-financed companies in the U.S. for the first quarter of 2011 is impressive," said Jamie Farmer, Executive Director, Global Business Development and Communications, Dow Jones Indexes. "As the only venture capital index to track the estimated value of VC-financed companies rather than VC-fund performance, the Dow Jones U.S. Venture Capital Index can provide valuable market insight that's difficult to find anywhere else."
The Dow Jones U.S. Venture Capital Index was launched on September 30, 2010, by Dow Jones Indexes, a leading global provider of indexes such as the Dow Jones Industrial Average.
The methodology for the Dow Jones U.S. Venture Capital Index was developed by Sand Hill Econometrics together with Dow Jones Indexes. It is based on a combination of estimated company values (utilizing econometric methods when market values are not readily available) and valuations reported by individual venture capital-funded companies to Dow Jones VentureSource.
The Dow Jones U.S. Venture Capital Index is based on U.S. domiciled companies in the Dow Jones VentureSource database (owned by Dow Jones & Company, Inc.), the world's most comprehensive venture capital database. VentureSource tracks more than 5,000 investment firms and approximately 27,000 venture-backed companies -- in all industries and stages of development.
The index tracks the value of companies headquartered in the U.S. that have received equity funding from institutional venture capital funds. Excluded from the index are companies that receive funding solely from "angels," affluent private investors, or leveraged buyout funds. Component companies enter the index when they get a first round of venture funding and exit the index when they are acquired, merge with another company, make an IPO, or go out of business. This rules-based index is market-value weighted and continuously invested. It is calculated in U.S. dollars and published quarterly because funding events are typically reported at the end of calendar quarters, on a one-quarter delayed basis. Index values for intervening months are also made available quarterly.
As of March 31, 2011, there were about 7,800 active companies in the Dow Jones U.S. Venture Capital Index. The index, first published on March 31, 2010, has an annualized return of 17.4% (before expenses and fees) from the end of 1991 through the present, based upon back-tested monthly index history available to December 31, 1991.
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About Dow Jones Indexes
Dow Jones Indexes is a leading full-service index provider that develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best-known for the Dow Jones Industrial Average, Dow Jones Indexes offers more than 130,000 equity indexes as well as fixed-income and alternative indexes, including measures of hedge funds, commodities and real estate. Dow Jones Indexes employs clear, unbiased and systematic methodologies that are fully integrated within index families. Dow Jones Indexes is part of a joint venture company owned 90 percent by CME Group Inc. and 10 percent by Dow Jones & Company, Inc., a News Corporation company (Nasdaq:NWS) (Nasdaq:NWSA) (ASX:NWS) (ASX:NWSLV).
"Dow Jones®", "Dow Jones Indexes", "Dow Jones Venture Capital Indexes", and "Dow Jones U.S. Total Stock Market Index" are service marks of Dow Jones Trademark Holdings LLC ("Dow Jones"), and have been licensed for use by CME Group Index Services LLC ("CME Indexes"). Investment products based on the indexes are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes or their respective affiliates and none of Dow Jones, CME Indexes and their respective affiliates make any representation regarding the advisability of investing in such products. Inclusion of a company in any of the indexes does not in any way reflect an opinion of Dow Jones, CME Indexes or any of their respective affiliates on the investment merits of such company. None of Dow Jones, CME Indexes or any of their respective affiliates is providing investment advice in connection with these indexes.
Index values may have been revised from previous published values. These are normal, ongoing revisions that occur when previously unreported transactions become known.
The Dow Jones U.S. Venture Capital Index was first published on March 31, 2010. All estimated daily historical closing prices prior to that date are based on back-testing (i.e., calculations of how the index might have performed in the past if it had existed). Back tested performance information is purely hypothetical and is solely for informational purposes. Back tested performance does not represent actual performance, and past performance is not indicative of future results.
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