We now use the VentureSource database. We merged data with VentureSource so much of our research on shutdowns and acquisitions has been incorporated into the data. Using the Dow Jones VentureSource database, the Sand Hill Index of Venture Capital is built from the ground up—at the level of the individual venture-backed company.

There are approximately 25,000 individual companies and 77,000 valuation events (rounds of funding, bridge rounds, public offerings, acquisitions, and shutdowns) in the data.

Among the 15,500 companies that have exited:

• 12% did IPOs
• 16% were acquired at values higher than total amount of money raised from venture investors
• another 30% were acquired at values lower than the total investment
• and the remaining 42% failed worthless

The average returns to venture capital are high despite the high fraction of poor outcomes. The annual return, gross of expenses and carry, is about 18 percent per year. This is the return an investor would have earned, before expenses and carry, by investing in all venture deals in proportion to deal size, and re-investing all money distributed through IPOs and acquisitions into the remaining venture universe.