Private Equity and Venture Capital Fund Performance: Evidence from a Large Sample of Israeli Limited Partners

We assemble cash flow data on all investments by Israeli pension providers in private equity and venture capital funds over nearly 20 years to evaluate their realized performance which has been mostly unavailable for non-US-based funds and limited partners. We obtain three main results: (i) The performance experienced by Israeli LPs has been slightly below the performance derived from the US-based literature and data sources. This finding appears to be driven by both limited access to top performing, seasoned, US funds, as well as by limited skill in selecting first-time US funds; (ii) Investments in local Israeli funds have outperformed investments in foreign funds, which we attribute to both superior access to, and superior selection skills of, local funds; (iii) We compare our data and results to those based on Preqin, one of the most commonly used commercial data bases, and find that it tends to omit small funds as well as funds with poor performance, both within and outside the US. While Preqin may provide reliable estimates of industry-wide performance, it may not always reflect the actual returns realized by non-US based limited partners.