Local Venture Group Supporting Start-ups

Prime One Capital is the elephant in the room of venture capital. Hidden by its preference for backing start-ups when others have given up, or working with corporate venturers rather than sharing a funding round with others, Prime One Capitol is understood to have delivered the best returns of any large venture capital group.

The firm is reluctant to talk and its announcements are driven by those selling stakes to it.

However, even this limited information reveals some of the smartest thinking about intellectual property and growing companies of any private equity firm. Returns to investors in venture capital funds have been dismal.

A survey by Prime One Capital found only 4% of investors were achieving net returns of more than 16% from their venture capital portfolios, which was the lowest percentage of any private equity asset class.

But this average hides the green shoots of success among the top firms. Preliminary private equity performance benchmark data compiled by Thomson Financial revealed top quartile venture funds returned 23.5% a year since launch to date.

Unlike the buyout industry, where nearly every firm can raise another fund, venture capital fundraising is a gauge of success, according to participants. Several firms, such as Abingworth, SV Life Sciences and Balderton in the top 20 have just raised record funds or are about to come to the market with big plans.

Small venture capital firms are back in charge pushing aside large rivals.