SAN FRANCISCO, Aug 12 (Reuters) - Returns on venture capital investment declined in the first quarter of 2009, but still did better than other kinds of investments, the National Venture Capital Association reported on Wednesday.
The report by the industry group and Cambridge Associates said the U.S. Venture Capital Index declined by 17.49 points, while eight stock market indexes including the Nasdaq and Dow Jones declined between 32 and 40 percent during the same period.
For now, the head of the group remains pessimistic.
"Unfortunately, this recovery seems to be a way off as the number of IPOs (initial public offerings) and acquisitions ... remain at low levels," Mark Heesen, president of the NVCA, said in a statement.
Venture capitalists invest in start-up companies and help them grow, with the goal of achieving "exits" by either selling them to large, established companies or making initial public offerings of stock. Profits are returned to investors.
Astrid Noltemy of Cambridge Associates said investors in venture capital funds cannot look forward to good profits in this climate.
"Because of the shortage of exit opportunities, venture fund managers will need either to own companies longer or potentially sell at reduced values. Either will hurt future returns," she said.
Noltemy said that although the report covered only the first quarter of the year, she had seen little indication that the venture capital market had turned a corner in recent days.
"It's going to take awhile," she said. "I don't think anyone can prognosticate as to what happens. We've seen a moderate increase in some merger and acquisition activity, but the last few days have been a bumpy ride" in the markets. (Reporting by David Lawsky, editing by Gerald E. McCormick)