The Death of Serial Persistence?

Venture folks and private equity industry observers are fond of talking about serial persistence — the idea that performance from period to period is so highly correlated that you’re wasting your time looking at anything other than first-tier funds. Well, there is an interesting chart in a new Collier Global PE report that touches on the subject:

According to the report, 56% of LPs worldwide had declined to re-invest in their current funds, up from 45% six months ago. Most cited performance as the issue. The figure is even higher in North America, where two-thirds (65%) declined to reinvest.

Granted, some of this is working off the VC bubble, with many LPs choosing not to reinvest in 1999-2000 vintage funds that have now passed their sell-by date, but it is still, given the recent increase, a fairly remarkable figure.

Related posts:

  1. A Return to Venture Skewness (& Serial Persistence)
  2. Rethinking Serial Persistence of VC Returns
  3. Serial Persistence, the Kleiner Effect, & Lead Swaps in Venture Capital
  4. Performance Persistence at Venture Funds
  5. The Myth of the Serial Entrepreneur

Comments

  1. Tom says:

    This is true, yet even as “smart” money declines to reup with existing managers there is still a waiting list of new money that can’t wait to sign up. Two obvious factors at play:
    1.) It’s pretty clear that in this environment, sitting out a fund means you probably won’t get back in anytime soon, maybe ever. Maybe it’s worth buying an option to stay in the game?
    2.) For every $1 that muddled through the ’90s and learned something from it, there is $20 that doesn’t have a clue and is re-invoking the mantra “this time is different.”
    This will end badly … again