Venture Capitalists Post Strong Gains in ’04

Venture capitalists ended 2004 on their most profitable run since the dot-com bust, according to a report issued Monday.

The return on venture capital funds averaged 19.3% in 2004, a big jump from the 11.7% average gain in 2003, the National Venture Capital Assn. and research firm Venture Economics said.

Last year’s performance represented the venture industry’s best one-year showing since 2000, when the average fund generated a 24.7% return.

Venture capitalists provide financing for small companies, with the goal of eventually reaping a profit by taking the firms public or selling them to other companies.

Ninety-three companies financed by venture capitalists went public last year, raising $11 billion, the report said.

A total of 333 companies funded by venture capitalists were sold last year, up from 291 in 2003, the report said. The average sales price of venture-backed firms was $84.5 million, a 35% increase from $62.8 million in 2003.