Dow Jones Indexes announced the latest performance data for the Dow Jones U.S. Venture Capital Index. The index is designed to measure changes in the market value of venture capital-financed companies in the United States….
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As of September 30, 2010, the index value was 1,455.12,1 up 20.4% from June 30, 2010. Over the same time period, the Dow Jones U.S. Total Stock Market Index rose 11%. “Venture index values are usually driven by the value of companies exiting during the quarter,” said Susan Woodward, an economist and the founder of Sand Hill Econometrics. “However, this quarter’s total index value is significantly affected by the Facebook round of funding in December 2010. Thus, despite being a fourth-quarter event, Facebook influenced third-quarter values. Overall, the third quarter was a good one for venture capital with an estimated $5.7 billion in new money raised and about $6.5 billion returned to investors — presuming the IPOs hold their value until the lockup expires.”
The methodology for the Dow Jones U.S. Venture Capital Index was developed by Sand Hill Econometrics together with Dow Jones Indexes. The values are based on a combination of values reported to Dow Jones VentureSource and value estimates. Sand Hill previously developed econometric methods for estimating company values when a recent market value is not readily available. Dow Jones VentureSource database is owned by Dow Jones & Company, Inc.
The selection universe for the Dow Jones U.S. Venture Capital Index is based on companies in the Dow Jones VentureSource database, the world’s most comprehensive venture capital database which tracks more than 9,300 private investment firms and approximately 38,000 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. They are removed from the index when they are acquired, merge with another company, make an IPO or go out of business. The index is market-value weighted and is reviewed quarterly.
As of September 30, 2010, there were approximately 7,600 components in the Dow Jones U.S. Venture Capital Index. The Dow Jones U.S. Venture Capital Index was first published on March 31, 2010. The back-tested data shows that the index has an annualized performance of 15.35% since the end of 1991, before expenses and fees. Estimated monthly back-tested history is available back to December 31, 1991.2
The Dow Jones U.S. Venture Capital Index is calculated in U.S. dollars and is published quarterly, as funding events are usually reported at the end of calendar quarters, on a one-quarter delayed basis. Index values for intervening months also will be published quarterly. Index values for October, November and December will be published in May 2011.
The Dow Jones U.S. Venture Capital Index has been licensed to Chicago Alternative Investment Partners, LLC to serve as a basis for financial products.
Source: ETFWorld – Dow Jones Indexes
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