I was looking through some of the training videos we’re uploading for the Certified Private Equity Professional program and I found a topic that I had not defined on here: vintage year.

The vintage year is the year in which the private equity or venture capital fund first makes its investment.  So, this is the time when the capital is first contributed from the private equity fund.  This should be distinguished from vintage returns which refers to the years of the highest returns within a private equity investment.

Here is more on Vintage Year Private Equity:

Investors can use the vintage year of an investment to further explain its returns. Having a vintage year occur at the peak or bottom of a business cycle can affect the later returns on the initial investment. During peaks in the market, new companies are more likely to be overvalued based on the current economic outlook. This increases the expectations on an investments’ return because more money is initially contributed. Inversely, companies are typically undervalued during low points in the market; because less capital is initially contributed, these companies or projects have less pressure to generate big returns.  Source