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US economy suffers further blow as Asia steals its venture capital crown

YET more bad news for the US economy: Silicon Valley, favoured haven for the venture capitalist, has been dethroned by Asia.

YET more bad news for the US economy: Silicon Valley, favoured haven for the venture capitalist, has been dethroned by Asia. That, at least, is what many analysts are now arguing, even if venture capital (VC) data is notoriously opaque, as befits all forms of private equity.

VC funds outside Europe and America – nearly all of them Asian – which began investing money in 2003 have achieved an impressive internal rate of return (IRR) of 20.6%, according to Private Equity Intelligence.

Such buoyant figures are in dramatic contrast to US funds of the same vintage, which have notched up miserable IRR of -0.4%. European funds set up in 2003 made returns of 8.3%. (Data for more recently established funds is not meaningful because funds have not had enough time to bear fruit.)

In Britain, VC funds chalked up returns of 13% on UK exits last year, according to a report by Library House, a research group that tracks the sector.

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