Metrics & Performance
Public Market Equivalent (PME)
A methodology for comparing VC fund returns against what the same capital would have earned in public markets.
PME calculates what would have happened if every capital call had been invested in a public index (like S&P 500) and every distribution had been sold from that index. A PME above 1.0 means the VC fund outperformed public markets. It's considered the most rigorous way to evaluate VC performance.
In Practice
The fund had a 2.5x MOIC and 22% IRR. But its PME against the S&P 500 was 1.4x, meaning it only outperformed public markets by 40% — less impressive after accounting for illiquidity and fees.
Why It Matters
PME answers the fundamental LP question: 'Was I better off investing in this VC fund versus just buying index funds?' It's the ultimate performance benchmark.
VC Beast Take
PME is the mirror that most VC funds don't want to look into. After fees, illiquidity, and time, many funds would have been better off buying SPY.
Related Concepts
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