PT - JOURNAL ARTICLE AU - Luis E. Pereiro TI - The Opportunity Cost of Venture Capital AID - 10.3905/jpe.2015.18.4.008 DP - 2015 Aug 31 TA - The Journal of Private Equity PG - 8--18 VI - 18 IP - 4 4099 - https://pm-research.com/content/18/4/8.1.short 4100 - https://pm-research.com/content/18/4/8.1.full AB - Using a new set of risk benchmarks, the authors estimate the opportunity cost of equity capital for entrepreneurs, limited partners, and general partners of venture capital funds. The figures turn out to be well below the internal rates of return (IRRs) customarily targeted in the private equity industry. Those venture capitalists who keep employing target IRRs to discount cash flows may thus be risking a free fall into a loser’s curse—the systematic bypassing of potentially profitable investments deals.TOPICS: Private equity, portfolio construction, statistical methods, performance measurement