Venture capital funds collectively lost 29percent over the year ended March 31, industry watchers reported yesterday.
Thomson Venture Economics and the National Venture Capital Association also said venture funds lost 17.1 percent over three years.
The groups attributed the declines to start-up companies struggling to generate revenue in a down economy and to sagging equity market values.
Private equity funds, which include venture funds and those that invest in more mature businesses, lost 18.5 percent over the 12- month period, the groups said. Limited chances to cash out, usually through public stock offerings or outright sales, were also blamed for the declines.
But experts said the worst could be over for the private equity funds, thanks to rallying stock markets and an uptick in technology spending by businesses.
“Much of the bloodletting has occurred,” said Todd Dagres, general partner at Battery Ventures in Wellesley. “I’m not saying it’s over, but I think we’re near the bottom.”
Recent venture fund losses are similar to losses recorded in the previous two quarters, said Thomson’s Toby Walters.
Walters said venture funds could still post losses for several more quarters. But improving stock markets – which began to rally in mid-March – could encourage a resurgence of initial public stock offerings. The IPO market has been moribund for at least two years.
“If the public markets behave in the same way that they’ve been doing in the first half of this year, there’s no reason why you shouldn’t be seeing an improvement in private equity returns,” Walters said.
Dagres said the industry’s success usually lags market rallies. But he expects a fall IPO surge.
“I’m starting to see some reason for optimism,” Dagres said.
