Abstract
The common venture capital adage that there is “too much money chasing too few good deals” is in essence an indirect criticism that limited partners are not demanding sufficient risk premia from their venture portfolios. But the lack of objective, regular pricing data for venture fund assets makes this a difficult charge to evaluate even with the benefit of historical hindsight. How risky is a well diversified portfolio of venture funds and what kind of mean returns should LPs demand? This article explores that question indirectly by using computer simulations to estimate how much underlying asset risk may be masked by venture firms9 portfolio valuation policies. <b>TOPICS:</b>Private equity, VAR and use of alternative risk measures of trading risk, simulations
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