How Venture Capital Investments Have Evolved in Technology and AI Over the Last 30 Years in Europe

How Venture Capital Investments Have Evolved in Technology and AI Over the Last 30 Years in Europe

Abstract:

It is well known that performance measurement in Private Markets is a challenging task mainly because of the irregular timing and size of cash flows of private equity funds. When trying to compare different PE funds, benchmark them
against public markets, or other asset classes with a view to multi-asset portfolio allocation, popular metrics, like IRR, show key shortcomings, leading to biased results. IRR, in particular, reflects GPs’ perspective and we continue to be surprised whenever we see LPs buying into it. What this perspective does not incorporate is how much capital, when
and for how long the capital itself is invested. Additional metrics like MOIC, TPVIs or PMEs have been developed and have gained popularity but they also carry several issues. Although the main scope of this article is to focus on private equity performance measurement, similar conclusions can be drawn when analysing other illiquid investments with irregular cash flows patterns, i.e. capital calls and distributions.

Keywords: Private Equity, AI, Technology, VC Evolution, VC Valuation Trends ,Technology Investments, Artificial Intelligence Startups