Vintage year

Vintage year in the private equity and venture capital industries is a year in which the firm began making investments.^[1][2]

Overview

The year of investing is an important and widely used metric to compare performance of the investments financed in the year in question against that of the investments financed in other years or against that of the general market (S&P 500). As the external market conditions change following the overall business cycle,^[3] so does performance of investments. Therefore, returns of 50% on investments done in good years are not directly comparable to returns of 10% done in crisis years. That is why a vintage year is taken into account.^[4] The returns are comparable if investments share approximately the same timing.

Origin

Most likely, the term vintage year is borrowed from the winemaking industry, where it is also used to divide wines in comparable classes.

References

External links

• 2012 could be a good vintage year for private equity investments
• Private Equity: The Propaganda versus the Facts
• Measuring returns in Private Equity

Private equity and venture capital
Basic investment types	Buyout Venture Mezzanine Growth Secondaries Equity co-investment
History	History of private equity and venture capital Early history of private equity Private equity in the 1980s Private equity in the 1990s Private equity in the 2000s
Terms and concepts	Buyout Financial sponsor Management buyout Divisional buyout Buy–sell agreement Leveraged recapitalization Dividend recapitalization Venture Angel investor Business incubator Post-money valuation Pre-money valuation Seed money Startup company Venture capital financing Venture debt Venture round Structure Private equity firms and funds Limited partnership Limited liability company Carried interest Management fee Publicly traded private equity Business Development Company Venture capital trust Private investment in public equity (PIPE) Pledge fund
Investors	Corporations Institutional investors Pension funds Insurance companies Fund of funds Endowments Foundations Investment banks Merchant banks Commercial banks High-net-worth individuals Family offices Sovereign wealth funds Crowdfunding
Related financial terms	AUM Cap table Capital call Capital commitment Capital structure Distribution waterfall EBITDA Envy ratio High-yield debt IPO IRR Leverage Liquidation preference M&A PME Taxation of private equity and hedge funds Undercapitalization Vintage year
Private equity and venture capital investors Private equity firms Venture capital firms Angel investors Portfolio companies