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. 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 selection universe for the DJ 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 DJ Venture Capital Index. The back-tested data shows that the index has an annualized performance of 15.35% since the end of 1991, before expenses and fees.
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