Venture Capital Returns by Vintage Year
Hamilton Lane's Portfolio Construction Vol. II is a useful model for how LPs can read vintage-year venture returns. The article compares vintage-year IRRs by strategy and then asks whether the return beat a public-market alternative. Venture performance should be judged by vintage context, not by a single absolute return number.
Hamilton Lane notes that post-GFC venture vintages averaged roughly 20% net IRRs, while also warning that some of those years still had substantial unrealized value.
Compare Funds With the Same Starting Year
Venture returns should be compared by vintage year because funds that start in different years buy at different prices and face different financing and exit markets. A 2018 fund and a 2022 fund may both report a 1.5x TVPI, yet the older fund has had much more time to turn value into cash. Vintage comparison is useful only when the peer group also matches the fund's stage, geography, size, and reporting basis. One calendar year does not make every strategy comparable.
Fund Age Changes Which Metric Matters
| Fund stage | What the numbers may show | What deserves caution |
|---|---|---|
| Early years | Investment pace, cost, early write-downs, and first marks | IRR can move sharply on small valuation changes |
| Middle years | Portfolio separation, follow-on choices, and growing TVPI | Large unrealized positions may dominate the result |
| Later years | DPI, exit quality, tail value, and extension needs | High RVPI may signal slow liquidity or stale marks |
Market Conditions Enter at More Than One Point
Entry valuations affect the ownership a fund can buy. Later financing markets affect dilution and the amount of reserve capital needed. Exit markets affect when a company can be sold and what price is available. A vintage year sits across all three. This means one "good" market can help and hurt. A fund may raise in a year with abundant capital but pay high prices. A fund launched after a reset may buy more ownership but wait longer for exits. The final result depends on the whole path.
Do Not Rank Young Vintages Too Quickly
Interim quartiles can move. A young fund may look strong because one company raised at a high valuation, while another appears weak because it carries assets near cost. Over time, follow-ons, exits, and write-downs can reverse the order. LPs should ask how much of each vintage's value is realized and how old the underlying marks are. Comparing TVPI without DPI and RVPI can reward aggressive marks rather than better cash outcomes.
A Better Vintage Review
- Do not compare one fund's latest quarter with another fund's older report.
- Match strategy: Seed, early-stage, and growth funds mature at different rates.
- Show DPI and RVPI next to TVPI.
- Check the peer count: A small sample can make quartiles unstable.
- Look through to entry years: Funds may deploy over several years even when they share one vintage label.
The practical consequence becomes easier to see. It does not replace the harder work of understanding what the manager bought, what remains, and how much cash has reached LPs.
Why Vintage Year Changes the Comparison
A fund that invested heavily in 2021 may face a different valuation path from a fund that started deploying in 2023, even if both target the same stage.
The reported benchmark spread can be wide. Cambridge reported a first-half 2025 range of 11.1 percentage points between the weakest and strongest key VC vintage returns in its index.
Read Vintage Returns With Fund Age
A 3-year-old venture fund with 0.1x DPI and 1.5x TVPI is mostly unrealized; a 10-year-old fund with 1.7x DPI and 2.0x TVPI has returned far more cash.
Young venture fund vintages often rely on residual value, while older vintages should show more distributions.
Vintage Age and Return Interpretation
The same TVPI is more credible when a larger share has converted into DPI.
View maturity assumptions
| Fund age | DPI | TVPI | Interpretation |
|---|---|---|---|
| 3 years | 0.1x | 1.5x | Mostly mark-driven; compare carefully. |
| 7 years | 0.8x | 1.8x | Realization evidence is emerging. |
| 10 years | 1.7x | 2.0x | DPI becomes central to judgment. |
Compare the Fund With Its Own Vintage
Stage, geography, vintage, fund size, and strategy should be close enough for the comparison to mean something. The best analysis tells the LP what would change the commitment plan, and not merely show where the fund ranks.
Frequently Asked Questions
Is vintage year the same as investment year?
No: Vintage year usually refers to the year a fund begins investing, while capital may be deployed over several years.
Can one weak vintage ruin a venture portfolio?
It can hurt, but timing helps: A portfolio built over 7 to 10 vintage years is less dependent on one market environment.
Related Reading
building a mature allocation, measurement periods, and venture benchmarks.